JOHN AUGUSTY POOMKUDY,KOCHI vs. ACIT CIRCLE 1(2), KOCHI, KOCHI

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ITA 621/COCH/2022Status: DisposedITAT Cochin22 August 2024AY 2008-2009Bench: SHRI SATBEER SINGH GODARA (Judicial Member), SHRI AMARJIT SINGH (Accountant Member)3 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 a failure to substantiate a claim, without more, does not automatically attract penalty under Section 271(1)(c). Relying on the Supreme Court decision in CIT vs. Reliance Petro Products (P) Ltd., the penalty was deleted.

What were the facts?

The assessee claimed interest expenditure against interest income but failed to substantiate it. This led to a quantum disallowance and a penalty under Section 271(1)(c) of Rs. 75 lakhs.

What were the issues?

Whether a penalty under Section 271(1)(c) is leviable solely on account of a quantum disallowance due to lack of substantiation of a claim.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 57(iii)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, COCHIN BENCH : COCHIN

Before: SHRI SATBEER SINGH GODARA & SHRI AMARJIT SINGH

Hearing: 20.08.2024Pronounced: 22.08.2024

This assessee’s appeal, for the assessment year 2008- 2009, arise against the CIT(A)-National Faceless Appeal Centre [in short the “NFAC”], Delhi, Delhi’s DIN & Order no.ITBA/NFAC/ S/250/2021-22/1040972497(1), dated 17.03.2022, in proceedings u/sec.271(1)(c) of the Income Tax Act, 1961 (in short the "Act").

Heard both the parties. Case file perused.

2 ITA.No.621/COCH./2022 2. It emerges at the outset that both the learned lower authorities have levied the impugned sec.271(1)(c) penalty in assessee’s case amounting to Rs.75 lakhs pertaining to the quantum disallowance of interest u/sec.57(iii) of the Act wherein the taxpayer had claimed interest expenditure against interest income which he failed to substantiate despite filing all the relevant details.

3.

Suffice to say, even the Revenue could not rebut the clinching fact that such a failure on assessee’s part in filing all the relevant details along with the return and lack of substantiation thereof on his part, would hardly invite the impugned penal provision as per CIT vs. Reliance Petro Products (P) Ltd., [2010] 3 SCR 510 (SC) wherein their lordships’ have settled the law that on each and every quantum addition/ disallowance does not attracts the impugned penal provision automatically. We find force in learned counsel’s vehement submissions for deleting the impugned penalty of Rs.75 lakhs. Ordered accordingly.

4.

Delay of 02 days is condoned by considering the assessee’s condonation petitions explaining the delay(s) as well as going by the decision in the case of Collector Land Acquisition

3 ITA.No.621/COCH./2022 vs. Mst. Katiji & Ors(1987) 167 ITR 471 (SC) settling the issue long back that that all such technical aspects must make way for the cause of substantial justice the delay is condoned and the appeals are admitted for adjudication.

5.

This assessee’s appeal is allowed in above terms.

Order pronounced in the open court on 22.08.2024.

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