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Income Tax Appellate Tribunal, DELHI BENCHES : F : NEW DELHI
Before: SHRI R.S. SYAL & SMT BEENA PILLAI
ITO, Vs. Rana Enterprises, Khatauli, Kandhla Road, Muzaffarnagar. Budhana, Muzaffarnagar. PAN: AAKPR0269C (Appellant) (Respondent) Assessee By : None Department By : Shri Atiq Ahmad, Sr. DR Date of Hearing : 15.11.2017 Date of Pronouncement : 16.11.2017 ORDER PER R.S. SYAL, VP: This appeal filed by the Revenue is directed against the order passed by the CIT(A) on 14.08.2015 confirming the penalty of Rs.14 lac imposed by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2010-11.
The facts leading to the imposition of penalty are that the assessee made certain purchases for which payments were made in violation of section 40A(3) of the Act. The Assessing Officer made disallowance under the respective provision and, thereafter, imposed penalty in respect of such disallowance. The ld. CIT(A) deleted the penalty by relying on an order passed by the Tribunal in the case of Saurabh Garg.
The Revenue is aggrieved against the deletion of penalty.
We have heard the ld. DR and gone through the necessary record.
There is no appearance from the side of the assessee despite notice. As such, we are proceeding to dispose off the appeal ex parte qua the assessee. Penalty in this case was imposed with reference to the disallowance made u/s 40A(3) of the Act.
It is seen that the only basis for imposition of penalty by the Assessing Officer is disallowance u/s 40A(3) of the Act. Mere disallowance of an expenditure u/s 40A(3) cannot be equated with concealment of income or furnishing of inaccurate particulars of income warranting penalty u/s 271(1)(c) of the Act.
The Hon'ble Supreme Court in the case CIT Vs. Reliance Petro Products Pvt. Ltd. (2010) 322 ITR 158 (SC) has held that simply for the reason that the Assessing Officer did not find the claim of the assessee to be sustainable in law up to a certain extent, cannot be a case for penalty u/s. 271(1)(c), more so, when the particulars furnished by the assessee were not inaccurate. Ratio decidendi of the judgment is fully applicable to the instant case as well. In view of the foregoing discussion, we uphold the impugned order deleting the penalty imposed u/s 271(1)(c) of the Act. The ld. CIT(A), in our considered opinion, rightly relied on the Tribunal order passed in the case of Saurabh Garg for deleting the penalty. We, therefore, uphold the same and approve the deletion of penalty.
In the result, the appeal is dismissed.
The decision was pronounced in the open court on 16th
November, 2017.