Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCHES : SMC-II : NEW DELHI
Before: SHRI R.S. SYAL
This is an appeal by the assessee against the order passed by the CIT (A) on 31.5.2016, confirming penalty of Rs.144,633/- imposed by the Assessing Officer (AO) u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2003-04.
Briefly stated, the facts of the case are that the assessee filed return claiming deduction for business expenses and municipal taxes. The AO did not allow these deductions. In the first round of the proceedings before the Tribunal, the matter was restored to the file of AO for examining the assessee’s claim. In the second round, certain deductions were allowed, but, some disallowances were still sustained. The Tribunal, again, restored the matter to the AO for a fresh decision giving certain directions. In the third round, the assessee agreed to certain disallowances of expenses to buy peace specifically subject to no penalty. The assessment was finalized accordingly. Thereafter, the AO imposed penalty of Rs.1,44,633/- in respect of such disallowances, which came to be affirmed by the ld. CIT(A).
I have heard the rival submissions the perused the relevant material on record. It is noticed that the assessee is engaged in the regular business, which is apparent from a copy of the assessee’s Trading account available on page 3 of the paper book. From such Trading account, it can be seen that the assessee effected sales to the tune of Rs.86,267/- with the corresponding figure of the preceding year’s sales at Rs.83,912/-. The assessee claimed certain expenses which have been disallowed and constituted the bedrock for the imposition of the extant penalty. It has been noticed above that three rounds of assessment took place before the AO. Some of the expenses claimed by the assessee were allowed by the AO in the second round and just to settle the dispute, the assessee agreed to surrender some of the expenses for insufficiency of profits, subject to the condition of no penalty.
Notwithstanding that, the AO has imposed penalty in respect of disallowance of such expenses. I fail to appreciate the view point of the AO and the ld. CIT(A) in imposing and confirming penalty in respect of disallowance of certain expenses without disproving the genuineness of expenses. The Hon’ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC) has held that simply for the reason that the AO did not find the claim of the assessee to be sustainable in law up to a certain extent, cannot justify penalty u/s 271(1)(c), more so, when particulars furnished by the assessee were not found to be inaccurate. The facts of the instant case as tested on the 3 ratio decidendi of the judgment of the Hon’ble Supreme Court in the above judgment, do not warrant any penalty on such additions. Respectfully following the precedent, I order for the deletion of penalty.
In the result, the appeal is allowed.
The order pronounced in the open court on 27.10.2016.