Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH “G”: NEW DELHI
Before: SHRI H.S.SIDHU & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the assessee against the order of the ld CIT(A)-XII, New Delhi dated 28.01.2014 for the Assessment Year 2006-07. 2. The assessee has raised the following grounds of appeal:- “1. That the Hon’ble Commissioner of Income Tax (Appeals) has erred in law as much as on the facts of the case by sustaining the unwarranted penalty of Rs. 342860/- levied u/s 271(1)(c) of the Income Tax Act, 1961.
2. That the Hon’ble Commissioner of Income Tax (Appeals) while upholding the penalty u/s 271(1)(c) of the Act has not appreciated that the disallowance of expenses were purely made on adhoc and estimated basis which is outside the ambit of penalty proceedings u/s 271(1)(c) of the Act. It is therefore, kindly prayed that the unwarranted penalty of Rs. 342860/- wrongly upheld by the Hon’ble Commissioner of Income Tax (Appeals) may kindly be deleted after providing an opportunity of being heard to the appellant.”
3. Assessee is an private limited company engaged in the business of running and maintaining Cineplex. It filed its return of income for Rs. 54688/- on 27/11/2006. The assessment order under section 143 (3) of the Income Tax Act, 1961 was passed by the Ld. Assessing Officer on 22/12/2008. The total income was determined at Rs. 2052490/–. The Ld. Assessing Officer made certain disallowances to the total income of the assessee of Rs. 1505605/–. On appeal before the Ld. CIT (A) some of the additions were deleted and the matter reached the coordinate bench. The coordinate bench has upheld the disallowance to the extent of Rs. 1120443/–. Therefore, the Ld. Assessing Officer initiated the penalty proceedings vide issue of the penalty notice dated 1/10/2012. Consequently, the Ld. assessing officer after considering the reply of the assessee held that the assessee has concealed income by furnishing inaccurate particular’s of total income and levied the penalty of Rs. 342860/–.
4. Assessee aggrieved with the order of the Ld. assessing officer preferred an appeal before the Ld. CIT (A) who confirmed the penalty holding that assessee has filed incorrect particulars of income to the extent and further the amount claimed on business promotion expenses has not been substantiated by supporting the vouchers, meaning thereby concealment of income by filing inaccurate particular’s.
On appeal before us the Ld. Authorised Representative submitted that the Ld. Assessing Officer in the assessment proceedings, has issued penalty notice for furnishing inaccurate particulars of income. However, in the penalty order, the penalty is levied holding that assessee has concealed income by furnishing inaccurate particulars. It was further submitted that Ld. CIT(A) has also held that assessee has furnished inaccurate particulars and thereby concealed the income. He submitted that merely the disallowance has been confirmed by the appellate authorities which does not entail the levy of penalty under section 271 (1)(c) of the Income Tax Act. He further submitted the plethora of judgment on this issue. He stated that he has raised an additional ground of appeal
for the twin charges on which the penalty has been levied by the Ld. assessing officer. However, he substantiated that it is covered in the 1st ground of appeal itself.
6. The Ld. departmental representative vehemently relied upon the orders of the lower authorities.
7. We have carefully considered the rival contentions and also perused the orders of the lower authorities. In the present case the penalty has been levied for the reason that legal and professional expenses of Rs. 1052383/-which has been incurred on the litigation between the 2 directors where the assessee is also a party. Furthermore, the business promotion expenditure of Rs. 6 8060 was also disallowed as assessee failed to produce the necessary vouchers. Therefore, in the present case the penalty has been levied for the reason of disallowance of certain expenditure which are claimed by the assessee as allowable expenditure. For the expenditure on the legal and professional fees of Rs. 1052383/–, the assessee submitted that this was paid to defend the suit filed by one of the Ex-Director of the company against the assessee company and 2 other directors of the company. Company in order to protect such interest had to defend itself and accordingly solicitors were appointed and expenditure was claimed as business expenditure. Furthermore with respect to the business promotion expenditure, merely because the assessee could not produce the supporting vouchers for some of the expenditure, they were disallowed. In fact mere Page | 2