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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A.MOHAN ALANKAMONY
आदेश / O R D E R
Per A. Mohan Alankamony, AM:-
This appeal by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals), Salem dated 30.03.2017 in for the assessment year 2010-11 passed U/s.250(6) r.w.s. 271(1)(c) of the Act.
The assessee has raised several grounds in its appeal however the crux of the issue is that the Ld.CIT(A) has erred in confirming the order of the Ld.AO who had levied penalty of Rs.1,50,000/- U/s.271(1)(c) of the Act even though the assessee had agreed for the addition.
The brief facts of the case are that the assessee is engaged in the business of civil construction filed its return of income for the assessment year 2010-11 on 14.10.2010 admitting total income of Rs.30,26,660/-. Initially the return was processed U/s.143(1) of the Act and subsequently the case was selected for scrutiny under CASS and notice U/s.143(2) of the Act was issued on 23.09.2011. Finally the assessment order was passed U/s. 143(3) of the Act on 31.01.2013 wherein the Ld.AO made addition of Rs.4,39,185/- towards the difference in sundry creditors based on the confirmation letters received from the creditors and the assessee had agreed for the addition. Thereafter the Ld.AO had initiated the penalty proceedings U/s. 271(1)(c) of the Act and levied penalty of Rs.1,50,000/- by stating that the assessee had willfully conceded the particulars of income and furnished inaccurate particulars. On appeal the Ld.CIT(A) confirmed the order of the Ld.AO by agreeing with his view.
The Ld.AR submitted before us that there was a disparity between the accounts maintained by the assessee and its creditors and the same was not periodically reconciled. It was further submitted that the assessee did not want to dispute with the creditors keeping in view of their business relationship. Hence the assessee did not confront with the creditors and accepted the additions made by the Ld.AO. He therefore argued by stating that the assessee had neither willfully furnished inaccurate particulars of income nor concealed the particulars of income.
It was therefore pleaded the penalty levied by the Ld.AO may be deleted.
The Ld.DR on the other hand argued vehemently in support of the orders of the Ld.Revenue Authorities and relied in the decision of the Hon’ble Apex Court in the case MAK Data (P) Ltd. Vs. CIT reported in 358 ITR 593.
We have heard the rival submissions and carefully perused the materials available on record. From the facts of the case it is apparent that there is a disparity between the accounts maintained by the assessee with that of the creditors. To a certain extent such disparities normally take place which are now and then reconciled. But in the case of the assessee, it seems that such reconciliation was not made during the course of the business. Further considering the turnover of the assessee the amount of difference being Rs.4,39,185/- is quite nominal. The explanation offered by the assessee that in order to maintain relationship with its creditors the assessee had not confronted appears to be reasonable. In this situation we are of the opinion that though the addition is sustainable in the hands of the assessee, levy of penalty will not be appropriate. Further there is no clear cut finding by the Revenue that the difference had arose due to the malpractice indulged by the assessee by making fictitious entry in its books of accounts. Hence we are of the opinion that the case of the assessee is not a fit for case for levy of penalty. The decision of the Hon’ble Apex Court cited by the Ld.DR herein above is not applicable to the facts of the case of the assessee. In that case Hon’ble Apex court had held that penalty shall be imposed even when the assessee agrees for addition towards certain share application money credited in the books of accounts which are bogus, because surrender was made in view of the bogus entries being detected by the Ld.AO during the course of the search conducted in the sister concern of the assessee and therefore it cannot be said that surrender of income was voluntary. However in the case of the assessee the situation is totally different. Therefore we hereby direct the Ld.AO to delete the penalty levied by the Ld.AO which was further sustained by the Ld.CIT(A).
In the result, the appeal of the assessee is allowed.
Order pronounced in on the 05th March, 2018 at Chennai.