SH. SAJAL GUPTA,NEW DELHI vs. DCIT, NEW DELHI

This appeal by the assessee is directed against the order passed by the CIT(A) on 18.7.2014 confirming the penalty of Rs.1,35,960/- imposed by the AO u/s 271(1)(c) of the Income-tax Act, 1961, in relation to the Assessment Year 2010-11.

The Department has requested for adjournment in all the cases, including the present case, fixed today for hearing before the Bench by giving the reason that: “Sr. DR is not available.” There is neither any one from the side of the Revenue to represent the Revenue nor to explain the reasons as to why the Bench be allowed to crash. The ld. AR strongly opposed to the granting of adjournment. I am satisfied that the Revenue’s prayer for adjournment cannot be accepted. The same is, therefore, rejected and the appeal is being taken up for disposal on merits ex parte qua the Revenue.

Briefly stated, the facts of the case are that the assessee is engaged in share trading business. A sum of Rs.10,50,000/- was claimed as deduction on account of professional and management charges. These charges were paid to three persons as commission for giving tips to the assessee for the shares to be purchased. One of the recipients included Smt. Shanti Divi to whom a sum of Rs.4,40,000/- was paid. The AO required the assessee to produce Smt. Shanti Devi. It was submitted that she had expired. For verification of the same, the AO issued summons u/s 131 to one Shri Birbal Singh, S/o Smt. Shanti Devi. Shri Birbal Singh appeared and got his statement recorded. He did not deny that Smt. Shanti Devi was 80 years of age before her death. He showed ignorance as to whether she was actively engaged in any share market.

I have heard the ld. AR and perused the relevant material on record. It is observed that the assessee claimed to have paid a commission of Rs.4,40,000/- to Smt. Shanti Devi, who expired at the time when the AO took up the assessment proceedings. This fact was confirmed by Shri Birbal Singh, s/o Smt. Shanti Devi that the old lady was no more. This shows that the assessee’s claim for payment of commission remained unsubstantiated because of the death of the recipient. It is noticed that apart from this payment, the assessee also paid similar commission to two other parties amounting to Rs.6,10,000/- which has been allowed by the AO. Under such circumstances, it is difficult to hold that the assessee concealed income or furnished inaccurate particulars of income qua the payment of Rs.4,40,000/- to Smt. Shanti Devi attracting penalty u/s 271(1)(c) of the Act. I, therefore, order to delete the penalty.

In the result, the appeal filed by the assessee is allowed.