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Facts
The Assessing Officer added Rs. 90,500 to the assessee's income as unexplained expenditure for foreign travel, based on information from the Immigration Department. The CIT(A) sustained an addition of Rs. 68,400, and consequently, a penalty of Rs. 21,136 under section 271(1)(c) was levied.
Held
The Tribunal noted that the penalty was levied on an addition that was based on an estimate. It was held that the conduct of the assessee was not contumacious, and therefore, the penalty under section 271(1)(c) was not leviable in these circumstances.
Key Issues
Whether penalty under section 271(1)(c) is leviable when the addition is on an estimate basis and the assessee's conduct is not contumacious.
Sections Cited
271(1)(c), 153A, 143(3), 69C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
This appeal filed by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals) - 27, New Delhi (‘CIT(A) in short’) dated 17.07.2023 arising from the assessment order dated 29.12.2018 passed by the Assessing Officer (AO) under section 153A read with section 143(3) of the Income Tax Act, 1961 (‘the Act’) pertaining to Assessment Year 2016-17.
The issue raised by assessee is that the learned CIT(A) has erred in sustaining the penalty of Rs.21,136/- under section 271(1)(c) of the Income- tax Act, 1961 (hereinafter referred to as ‘the Act’).
Brief facts leading to the levy of penalty as noted by Assessing Officer are as under: “3.3 On the perusal of the information received from Immigration Department, it was evident that the assessee went abroad 1 time in the F.Y. 2015-16 and stayed overseas 6 days as per the details above. Accordingly, the assessee was show caused that why an amount of Meena Nayyar. vs. DCIT 2 Rs.58,500/- considering the average expense of each day stayed in foreign country is 150 USD approx. i.e. Rs.9,750/- (@ Rs 65 per USD) (50 USD for hotel room, 50 USD for diet and 50 USD for other misc.) and average fair of both side is Rs.32,000/- (approx.) for every trip. The assessee has not furnished any satisfactory reply to the show cause issued from this office with regard to the foreign travel expenses. In view of the same an amount of Rs.90,500/- (Rs.58,500/- Rs.32,000/-) is added to the total income of the assessee being unexplained expenditure as per section 69C of the I.T. Act, 1961. Looking at the above facts and circumstances, assessee has failed to discharge his onus.”
Upon assessee’s appeal, learned CIT(A) further granted relief and the addition sustained was Rs.68,400/-. On this amount penalty under section 271(1)(c) of the Act was levied which was sustained by learned CIT(A).
Against this order, assessee is in appeal before ITAT.
I have heard both the parties and perused the records. I note that penalty has been levied on an addition which is only on an estimate basis. In my considered opinion in these circumstances penalty under section 271(1)(c) of the Act is not leviable. Furthermore, the conduct of the assessee is not found to be contumacious to warrant levy of penalty under section 271(1)(c) of the Act. In these circumstances, I direct that penalty amounting to Rs.21,136/- under section 271(1)(c) of the Act be deleted.
In the result, appeal of assessee stands allowed.
Order pronounced in the open court on 12.01.2024