RAMA SAHAEBRAO WAGHMARE, MUMBAI vs. ITO 22(3)(3), MUMBAI

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ITA 4385/MUM/2016Status: DisposedITAT Mumbai12 April 2017AY 2009-102 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that penalty under Section 271(1)(c) is not imposable on debatable issues, such as the prior period expenses which were genuinely claimed by the assessee but disallowed by the AO. Therefore, the penalty was directed to be deleted.

What were the facts?

The Assessing Officer (AO) levied penalty under Section 271(1)(c) based on several additions to the assessee's income. The Commissioner of Income Tax (Appeals) deleted most of these additions, leaving only prior period expenses.

What were the issues?

Whether penalty under Section 271(1)(c) can be levied on a debatable issue like prior period expenses, especially when the CIT(A) has deleted other additions.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 41(1),Section 40A(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D”, BENCH MUMBAI

Before: SHRI R.C.SHARMA, AM & SHRI SAKTIJIT DEY, JM Shri

For Appellant: Shri Haresh P. Shah
For Respondent: Shri Vikash Kumar Agarwal
Hearing: 10/04/2017Pronounced: 12/04/2017

PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against the order of CIT(A)—26, Mumbai dated 28/03/2016 for the A.Y.2009-10 in the matter of penalty imposed u/s.271(1)(c) of the IT Act.

2.

Rival contentions have been heard and record perused.

3.

AO has levied penalty vide its order dated 25/06/2012 with respect to the following additions:-

1.

Prior Period Expenses Rs. 3,18,466/-

2.

Cessation of liability U/s. 41(1) Rs. 2,58,216/-

3.

Addition u/s.40A(3) Rs. 12,505/-

4.

Interest paid on loans Rs. 1,89,205/-

5.

Unverified loans and advances Rs.61,95,692/- Total Rs.69,74,084/-

2 Shri Rama Sahebro Waghmare

4.

In an appeal filed before the CIT(A) vide order dated 22/12/2015, the CIT(A) deleted all the additions except addition made on account of Prior Period Expenses amounting to Rs.3,18,466/-.

5.

In view of the quantum additions being deleted by CIT(A), penalty do not survive in respect of addition so made except Prior Period Expenses. We found that issue of prior period expenses is debatable in so far as assessee has genuinely claimed the expenditure incurred during the year, but the AO disallowed the same by presuming that it is related to the earlier year. As per our considered view, penalty u/s.271(1)(c) is not imposable in respect of such debatable issue. Accordingly AO is directed to delete penalty imposed for disallowance of prior period expenses of Rs.3,18,466/-.

6.

In the result, appeal of the assessee is allowed. Order pronounced in the open court on this 12/04/2017 (SAKTIJIT DEY) JUDICIAL MEMBER Mumbai; Dated 12/04/2017 Karuna Sr.PS Copy of the Order forwarded to : The Appellant

1.

The Respondent.

2.

The CIT(A), Mumbai.

3.

CIT

4.

DR, ITAT, Mumbai

5.

BY ORDER,

6.

Guard file. सत्यापित प्रतत //// (Asstt.

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