SH. NARESH CHAUDHARY,NEW DELHI vs. ACIT, NEW DELHI

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ITA 1793/DEL/2014Status: DisposedITAT Delhi08 April 2016AY 2009-105 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 the disallowances were made on an ad-hoc basis and did not constitute concealment of income or inaccurate furnishing of particulars. Therefore, the penalty under Section 271(1)(C) was not sustainable.

What were the facts?

The assessee's appeal concerns a penalty levied under Section 271(1)(C) of the Income Tax Act. The Assessing Officer made an addition to the assessee's income on an ad-hoc basis, which was partly confirmed by the CIT(A).

What were the issues?

Whether penalty under Section 271(1)(C) can be levied when additions are made on an ad-hoc basis without any finding of concealment of income.

Which sections of the Income-tax Act were involved?

Section 271(1)(C)

AI-generated summary — verify with the full judgment below

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Before: SHRI G. D. AGRAWAL & SMT SUCHITRA KAMBLE

Hearing: 07.04.2016Pronounced: 08.04.2016

This appeal is filed by the assessee against the order dated 28/1/2014 passed by CIT(A)-XXIII, New Delhi.

2. The grounds of appeal are as follows:

“1. That the impugned penalty order is against law and facts of the case.

2.

That the appellant furnished the entire details of expenses incurred and nothing was concealed during the assessment proceedings.

3. That the Assessing Officer erred in observing that the appellant himself has accepted the wrong furnishing of details which is not accepted at all. 4. That the appellant never willfully concealed the particulars of income. 5. That the A.O did not appreciate the latest Supreme Court ruling as contained in M/s Reliance Petro Products Pvt. Ltd. regarding imposing of penalty under section 271(a)(c) of the Income tax Act. 6. That the Commissioner of Income Tax (Appeal) erred in confirming the penalty on account of disallowances such as business promotion expenses and expenses of conference as well as expenses incurred in cash for purchase of mobiles. 7. That the Commissioner (Appeal) did not distinguish the judgment of Hon’ble Supreme Court in the case of M/s (P☺ Reliance Petro Products Ltd and M/s Zoom Communications (P) Ltd. confirming the imposition of penalty in the facts and circumstances of the case. 8. That the decision of ITAT (Delhi) in dated 20/6/2013 is applicable in the present case as such the penalty imposed and confirmed in 1st appeal be quashed. 9. That the appellant craves to raise any other ground during the course of hearing. It is respectfully prayed that the order of penalty imposed being illegal may kindly be quashed and or be given any other relief as deemed fit in the facts and circumstances of the case.”

3.

This appeal pertains to penalty u/s 271(1)(C). The assessment was completed u/s 143(3) on 19/12/2011 at an income of Rs.67,19,904/- making an addition of Rs.7,80,910/-. The addition was mainly on ad-hoc basis. The assessee did not file any appeal against the said assessment order. Therefore, the penalty order u/s 271(1) (C) was passed on 19/22-6-2012 against which the assessee went in appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee thereby sustaining the penalty in respect of disallowance under conference expenses to the extent of 20%. The said disallowance was on the ad-hoc basis.

4.

The Ld. AR submitted that the entire penalty order was based on ad-hoc basis expenses disallowed by the Assessing Officer and there was no finding at all that there is a concealment of particulars of income. Therefore, penalty u/s 271(1)(C) should have not been levied. The Ld. AR relied upon the judgment of the Hon’ble Apex Court in the case of Reliance Petro Products Pvt. Ltd 322 ITR 158 (S.C.)

5.

The Ld. DR submitted that the penalty order as well as the CIT (A)’s order are just and proper. The Ld. D.R referred Para 4.2 & 4.3 of the CIT (A)’s order.

6.

We have perused all the records and heard both the parties. It is found that there is no concealment as such and merely the disallowance was made on ad-hoc basis which cannot tantamount to concealment or inaccurate furnishing of the documents. The judgment in the case of Reliance Petro Products (supra) is applicable in the present case. Therefore, we are inclined to allow the appeal of the assessee.

7.

In result, the appeal is allowed.

The order is pronounced in the open court on 8th of April, 2016.

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