SEABROS OVERSEAS PVT. LTD.,GHAZIABAD vs. ITO, NEW DELHI

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ITA 4646/DEL/2013Status: DisposedITAT Delhi29 January 2016AY 2007-084 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that for a penalty under Section 271(1)(c) to be imposed, there must be a positive finding of concealment or furnishing of inaccurate particulars, which was absent. Furthermore, the conflicting reasons provided by the AO and CIT(A) for levying the penalty rendered it unjustified.

What were the facts?

The assessee filed a return of income which was later selected for scrutiny. The Assessing Officer (AO) framed an assessment under Section 144, estimating the income and initiating penalty proceedings under Section 271(1)(c). The penalty was sustained by the CIT(A) despite the AO not specifying whether it was for concealment or furnishing inaccurate particulars.

What were the issues?

Whether penalty under Section 271(1)(c) is justified when the addition is based on estimation and there is no clear finding of concealment or inaccurate particulars. Whether differing reasons for penalty by AO and CIT(A) invalidate the penalty.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 144,Section 143(1)

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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI

For Respondent: Smt. Anima Barnwal, Sr. DR
Hearing: 27.11.2015Pronounced: 29.01.2016

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’, NEW DELHI Before Sh. N. K. Saini, AM And Sh. Kuldip Singh, JM Asstt. Year : 2007-08 Seabros Overseas Pvt. Ltd., Vs Income Tax Officer, 606, Coral Heights, Sector-7, Ward-8(1), Vaishali, Ghaziabad-201010 New Delhi-110002 (APPELLANT) (RESPONDENT) PAN No. AAACS4189H Assessee by : Sh. Jitendra Garg, Adv. Revenue by : Smt. Anima Barnwal, Sr. DR Date of Hearing : 27.11.2015 Date of Pronouncement : 29.01.2016 ORDER Per N. K. Saini, AM:

This is an appeal by the assessee against the order dated 13.06.2013 of ld. CIT(A)-XI, New Delhi.

2.

The only grievance of the assessee in this appeal relates to the sustenance of penalty of Rs.3,11,383/- levied by the AO u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act).

3.

Facts of the case in brief are that the assessee filed the return of income on 31.10.2007 declaring an income of Rs.8,250/- which was processed u/s 143(1) of the Act. Later on, the case was selected for scrutiny and the AO framed

Seabros Overseas Pvt. Ltd. the assessment u/s 144 of the Act at an income of Rs.8,00,000/- which was estimated by taking into consideration, the gross turnover of Rs.63,54,350/-. The AO also estimated the value of fringe benefits at Rs.1,00,000/-. The AO initiated the penalty proceedings u/s 271(1)(c) of the Act but did not mention in the assessment order dated07.12.2009, as to whether the said penalty proceedings were initiated for concealment of income or for furnishing the inaccurate particulars of income. However, penalty u/s 271(1)(c) of the Act was levied by considering the estimated income of Rs.8,00,000/- as concealed income.

4.

Being aggrieved the assessee carried the matter to the ld. CIT(A) who sustained the penalty by observing that the assessee had not given any explanation for not complying to notices issued, not attending the proceedings and not submitting the evidences in support of its contention before the AO. He also mentioned that the assessee had deliberately furnished inaccurate particulars of its income with a view to concealment of income.

5.

Now the assessee is in appeal. The ld. Counsel for the assessee submitted that in the assessment order, the AO did not mention as to whether there was concealment of income

Seabros Overseas Pvt. Ltd. or the assessee furnished inaccurate particulars of income. It was further stated that the addition was made on estimate basis u/s 144 of the Act, therefore, the levy of penalty u/s 271(1)(c) of the Act was not justified. The reliance was placed on the following case laws:

� DCIT Vs Kalindi Rail Nirman Engg. Ltd. (2012) 21 taxmann.com24 (Del.) � CIT Vs M/s Siltech Engineering (P) Ltd., ITA 1082/2010, order dated 06.08.2010 of Hon’ble Delhi High Court 6. In his rival submissions the ld. DR supported the orders of the authorities below.

7.

We have considered the submissions of both the parties and perused the material available on the record. In the present case, it is an admitted fact that the AO estimated the addition in the ex-parte assessment order passed u/s 144 of the Act and no where mentioned that the assessee either furnished inaccurate particulars of income or concealed the income. It is well settled that in order to impose a penalty u/s 271(1)(c) of the Act, there has to be concealment of income and there has to be a positive finding that the assessee have furnished inaccurate particulars of income or concealed the income. In the instant case, no such finding

Seabros Overseas Pvt. Ltd. has been given by the AO, therefore, the penalty u/s 271(1)(c) of the Act, on the estimated addition levied by the AO and sustained by the ld. CIT(A) was not justified. Moreover, in the present case, the AO levied the penalty u/s 271(1)(c) of the Act on account of concealment of income while the ld. CIT(A) confirmed the penalty by mentioning that the assessee furnished inaccurate particulars of income. Therefore, the stand of the AO for levying the penalty and that of the ld. CIT(A) while confirming the said penalty are different and not the same. In that view of the matter also the penalty sustained by the ld. CIT(A) was not justified. In view of the aforesaid discussion and considering the totality of the facts, the penalty u/s 271(1)(c) of the Act levied by the AO and sustained by the ld. CIT(A) is deleted.

8.

In the result, the appeal of the assessee is allowed. (Order Pronounced in the Court on 29/01/2016)

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