M/S. KASI SALES & SERVICES PVT. LTD.,BHUBANESWAR vs. ACIT, CIRCLE-2(1), BHUBANESWAR

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ITA 467/CTK/2015Status: DisposedITAT Cuttack27 July 2017AY 2010-114 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 disallowances were made on an estimate basis or due to lack of satisfactory explanation, not because the expenses were bogus or inflated. Therefore, no penalty under Section 271(1)(c) could be imposed.

What were the facts?

The Assessing Officer made disallowances on miscellaneous, club, and business promotion expenses. Subsequently, a penalty under Section 271(1)(c) was levied for furnishing inaccurate particulars of income. The CIT(A) confirmed this penalty.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when disallowances are based on estimation or lack of satisfactory explanation, without finding expenses to be bogus or inflated.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK

Before: S/SHRI N.S SAINI & PAVAN KUMAR GADALE

For Respondent: Shri Suvendu Dutta, DR
Hearing: 26/07

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No.467/CTK/2015 Assessment Year :2010-2011

Vs. M/s Kasi Sales & Services Pvt ACIT, Circle 2(1), Ltd., Plot No.220, Sec-A, Bhubaneswar Zone-B, Mancheswar Industrial Estate, Bhubaneswar. PAN/GIR No. AABCK 3041 K (Appellant) .. ( Respondent)

Assessee by : None Revenue by : Shri Suvendu Dutta, DR

Date of Hearing : 26/07/ 2017 Date of Pronouncement : 27 /07/ 2017

O R D E R Per N.S.Saini, AM

This is an appeal filed by the assessee against the order of CIT(A)-1,

Bhubaneswar, dated 14.9.2015, for the assessment year 2010-2011.

2.

The sole issue involved in this appeal is that the ld CIT(A) erred in

confirming the order of the Assessing Officer levying penalty u/s.271(1)(c)

of the Act for Rs.69,820/-.

2 ITA No. 467/CT K/ 2015 Asse ssment Year :20 10- 201 1

3.

The brief facts of the case are that the Assessing Officer while making

the assessment made disallowance of Rs.91,410/- under the head “

miscellaneous expenses” on the ground that the assessee has not

satisfactorily explained the expenses. Further, disallowance of Rs.35,761/-

under the head “ club expenses” was made on the ground that expenses

are personal in nature and not business expenses of the assessee. Further,

disallowance of Rs.43,717/- was made out of business promotion expenses

@ 20% of the total expenses of Rs.2,18,587/- claimed by the assessee on

the ground that it is not wholly spent for business promotion.

4.

Thereafter, the Assessing Officer levied penalty u/s.271(1)(c) of the

Act of Rs.69,820/- on the ground of furnishing inaccurate particulars of

income by the assessee.

5.

On appeal, the CIT(A) confirmed the action of the Assessing Officer.

6.

Being aggrieved by the said order of the CIT(A), the assessee is in

appeal before us.

7.

Ld A.R. of the assessee has filed an adjournment application. The

Bench finding the reasons for seeking adjournment as not plausible one,

rejected the adjournment application and the appeal was disposed of after

hearing ld D.R. and on the basis of materials available on record.

8.

Ld D.R. supported the orders of lower authorities.

3 ITA No. 467/CT K/ 2015 Asse ssment Year :20 10- 201 1

9.

We have heard ld D.R., perused the orders of lower authorities and

materials available on record. In the instant case, the Assessing Officer

has made disallowance out of expenses claimed by the assessee under the

head “miscellaneous expenses” of Rs.91,410/- on the ground that it was

not satisfactorily explained by the assessee. He made disallowance out of

club expenses on the ground that it was personal expenses and not

business expenses of the assessee. Further, disallowance of Rs.43,717/-

out of business promotion expenses was made being 20% total expenses

of Rs.2,18,587/- on the ground that it is wholly spent for business of the

assessee. We find that disallowances of the expenses have been made by

the Assessing Officer either on estimate basis or on the ground that the

assessee could not prove that they were incurred wholly for the business

of the assessee. There is no finding by the Assessing Officer in his order

that the expenses claimed by the assessee are not genuine or bogus. The

disallowances have been made only on the ground that the assessee could

not satisfactorily explained the same. In the above facts and circumstances

of the case, we are of the considered view that as there is no finding by the

Assessing Officer that the expenses claimed by the assessee are either

bogus or inflated, no penalty under section 271(1)(c) of the At can be

imposed on the assessee for furnishing inaccurate particulars of his income.

We, therefore, set aside the orders of lower authorities and delete the levy

of penalty of Rs.69,820/- under section 271(1)(c) of the Act and allow the

ground of appeal of the assessee.

4 ITA No. 467/CT K/ 2015 Asse ssment Year :20 10- 201 1

10.

In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 27 /07/2017 in the presence of parties. Sd/- sd/- (Pavan Kumar Gadale) (N.S Saini) JUDICIALMEMBER ACCOUNTANT MEMBER Cuttack; Dated 27 /07/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The appellant: M/s Kasi Sales & Services Pvt Ltd., Plot No.220, Sec-A, Zone-B, Mancheswar Industrial Estate, Bhubaneswar. 2. The Respondent. ACIT 2(1), Bhubaneswar. 3. The CIT(A)-1, Bhubaneswar. 4. Pr.CIT-1, Bhubaneswar. 5. DR, ITAT, Cuttack BY ORDER, 6. Guard file. //True Copy// SR.PRIVATE SECRETARY ITAT, Cuttack

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