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Income Tax Appellate Tribunal, BENCH “C”, MUMBAI
Before: SHRI B.R.BASKARAN & SHRI PAWAN SINGH
O R D E RU/S 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JM: 1. This appeal u/s 253 of the Income-tax Act (‘Act’) is directed by the assessee against the order of Commissioner of Income-tax (Appeals) [ CIT(A)]-33, Mumbai dated 03.11.2014 for Assessment Year (AY) 2008-09. The assessee has raise following grounds of appeal: i. The ld AO was wrong in imposing the penalty on the assessee u/s 271(1) (c) of the Act, because the assessee neither concealed the particulars of his income, nor furnished inaccurate particulars of his income and ld CIT (A) erred in confirming the same. ii. The ld CIT(A) erred in confirming the levy of penalty of Rs.12,37,680/ - u/s 271(1) (c ) of the Act, on the ground that the appellant has purchased goods from the non-genuine dealers which were engaged in issuing the false invoices only and there were no actual transaction of purchases and sale among the parties. Whereas neither this ground, was before AO during the assessment proceedings nor penalty proceedings therefore the impugned order of CIT(A) taking a fresh / different ground without following the procedure u/s 251(2) of the Act, is bad in law.
2 Mrs. Charuta Pravin Kulkarni 2. Brief facts of the case are that the assessee is an individual deriving income from Salary, Lecture, and Consultancy and Promotional activity. For the year under consideration return of income was filed on 01.07.2009 declaring total income of Rs. 10,75,810/-. The Assessing Officer (AO) made the disallowance of Rs. 40,57,028/- on account of cost of gifts and presentation articles. On appeal the addition was upheld by ld. CIT(A) and in second appeal by Tribunal.. The AO initiated the penalty by issuing notice u/s 274 rws 271(1) (c) dated 24.01.2013. The AO after giving an opportunity of hearing to the assessee levied the penalty of Rs. 12,37,608/- being 100% on the tax sought to be evaded on account of furnishing inaccurate particular of income. On appeal before CIT(A) the penalty was confirmed. Further aggrieved by the order of AO, the assessee filed the second appeal before us. Though the assessee has raised two grounds of appeal
, however as per our considered opinion the only substantial ground of appeal is; “ Whether the ld CIT(A) erred in confirming the order of penalty u/s 271(1) (c ) of the Act.” Rest of the part of grounds of appeal is argumentative in nature.
3. We have heard ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for Revenue and perused the material available on record. The ld AR for assessee argued that no penalty is leviable on mere disallowance of claim. The ld AR for the assessee relied upon the decision of ITAT, Chandigarh in H.P. State Forest Corporation Ltd. vs. DCIT reported vide [2005] 93 ITD 442 (CHD.) and on the decision of Ahmedabad Tribunal in Goyal Industries Ltd. vs. DCIT [2010] 40 SOT 336 (AHD.) On the other hand, the ld. DR for Revenue supported the order of authorities below. It was argued by ld. DR for Revenue that assessee made a bogus claim in the return of income. The assessee has failed to substantiate the bogus claim. The assessee has shown the alleged purchases at fag end in the month of March. The Ld. DR for Revenue further argued that has the assessment not selected for scrutiny; the Revenue to the exchequer would have gone. The appeal filed by the assessee in the quantum assessment, challenging the addition was dismissed by Ld CIT(A) as well as by this Tribunal.
4. We have considered the rival contention of the parties and gone through the orders of authorities below. We have noticed that during the assessment proceedings the assessee claimed the purchases of gift articles worth Rs.40,75,028/- from Sachi 3 Mrs. Charuta Pravin Kulkarni Mercantile Private limited, Ginni Mercantile Private Limited and KRC Trading Company and the same was shown in the list of creditors in the Balance sheet. The assessee failed to substantiate the claim, therefore, the AO made the disallowance of Rs. 40,57,028/- The addition made by AO was confirmed by Commissioner (Appeals). The ld CIT(A) not only confirmed the disallowance also changed the head of income from “ Income from business and profession” to income to the head of “ income from other sources”. Thus, the income was enhanced by the ld CIT(A). On further appeal before Tribunal the enhancement was set-aside. However, after considering the contention of assessee the Tribunal observed that as per invoices relating to M/s KRC Trading Co would fall in Assessment Year 2009-10 and not in AY 2008-09. Thus, the expenses of Rs. 26,00,000/- was held that not to belong to current Assessment Year. Though the Tribunal sustained the entire disallowance. Therefore, no penalty is levy able on Rs 26,00,000/-. So far as penalty on disallowance on remaining Rs. 728,514/- (each) related with Sachi Mercantile Pvt Limited and Ginni Mercantile Pvt Limited are concerned the AO passed the penalty order after providing the opportunity of hearing. During the penalty proceeding the AO concluded that the assessee has not given any fresh argument or submission except made before ld CIT(A), which was dully considered ( in quantum appeal) before dismissing the pleas. The ld CIT(A) while considering the contention of the assessee concluded that the assessee at all stages fail to provide the complete details of expenses claimed, nor gave reasonable explanation as to how these expenses were incurred wholly and exclusively for the purpose of his business. It was also observed that his predecessor has already noted that there is no correlation with the income earned and the expenses incurred. We have noted that the ld AR for assessee has not explained before us as to how the expenses allegedly incurred by the assessee has any correlation with the income earned during the year. Therefore, the case of assessee is covered by Explanation (1) B of section 271(1) (c ) of the Act. We are conscious that penalty proceedings are separate and independent from the assessment proceedings. The ld AR for the assessee made only submission that mare disallowance would not attract the penalty u/s 271(1) (c). The decision relied by the ld AR for the assessee are not applicable on the facts of the present case. Thus, we sustain the penalty @ 100% of the amount of tax sought to be evaded, on