DATTA NARAYANRAO CHAPKE,PURNA vs. ACIT, CIRCLE JALNA, JALNA

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ITA 1452/PUN/2023Status: DisposedITAT Pune12 March 2024AY 2016-17Bench: SHRI SATBEER SINGH GODARA (Judicial Member), SHRI G D PADMAHSHALI (Accountant Member)5 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 found no substance in the Revenue's stand supporting the penalty. It held that an estimated disallowance, especially when made on an ad-hoc basis without specifying parties, is not sustainable in law for attracting penalty under Section 271(1)(c).

What were the facts?

The assessee's appeal concerns a penalty levied under Section 271(1)(c) of the Income Tax Act for the assessment year 2016-17. The penalty was based on an estimated disallowance of labor charges.

What were the issues?

Whether a penalty under Section 271(1)(c) can be levied based on an ad-hoc estimated disallowance of expenses. Whether the penalty order correctly specified the charge for levy of penalty.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, PUNE “A” BENCH : PUNE [VIRTUAL HEARING]

Before: SHRI SATBEER SINGH GODARA & SHRI G D PADMAHSHALI

Hearing: 08.03.2024Pronounced: 12.03.2024

BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI G D PADMAHSHALI, ACCOUNTANT MEMBER I.T.A.No.1452/PUN./2023 [E-APPEAL] Assessment Year 2016-2017 Shri Datta Narayanrao ACIT, Circle, Chapke, AT Kanteshwar Aaykar Bhavan, Near TV Post, Kanteshwar Taluka, Centre, Srivaldi Road, vs. Purna – 431 511 Jalna – 781 005. Maharashtra. Maharashtra. PAN AAXPC3985H (Appellant) (Respondent) For Assessee : -None- For Revenue : Shri Ramnath P Murkunde Date of Hearing : 08.03.2024 Date of Pronouncement : 12.03.2024 ORDER PER SATBEER SINGH GODARA, J.M. : This assessee’s appeal for assessment year 2016-17, arises against the National Faceless Appeal Centre [in short the “NFAC”] Delhi’s Din and Order No. ITBA/NFAC/S/250/2023- 24/1058171954(1), dated 23.11.2023, involving proceedings u/s. 271(1)(c) of the Income Tax Act, 1961 (in short “the Act”).

Case called twice. None appears at assessee’s behest. He is accordingly proceeded ex-parte.

2.

The assessee pleads the following substantive grounds in the instant appeal :

1.

“On the facts and in the circumstances of the case and in law lower authorities have erred in confirming the penalty of 2 ITA.No.1452/PUN./2023 Rs.4,86,665/- without specifying correct charge for levy of penalty, as per Assessment order and notice of penalty, it is initiated for furnishing inaccurate particulars of income and in the final penalty order same is levied for concealment of income in penalty order.

2. On the facts and in the circumstances of the case and in law lower authorities have erred in confirming the penalty of Rs.4,86,665/- levied under section 271(1)(c) of IT Act on the estimated disallowance of Rs.15,90,410 being estimated disallowance out of the total labor charges, since the disallowance is made on adhoc basis, the entire penalty deserves to be deleted.

3.

Your appellant prays for deletion of entire addition. Your appellant craves for to add, alter amend, modify, delete any or all grounds of appeal before or during the course of hearing.”

3. Mr. Murkunde vehemently argued that the NFAC herein has rightly affirmed the Assessing Officer’s impugned action levying sec.271(1)(c) penalty of Rs.4,86,665/- vide following detailed discussion :

3 ITA.No.1452/PUN./2023

4 ITA.No.1452/PUN./2023

4.

We have perused the assessee’s pleadings and considered the Revenue’s foregoing vehement submissions. We find no substance in the Revenue’s impugned stand supporting the penalty herein relating to estimation of labour as well as other miscellaneous and sub-contract expenses involving varying sums. Mr. Murkunde could hardly dispute the clinching fact that the Assessing Officer’s assessment dated 28.12.2018 inter alia, had disallowed the assessee’s sub-contract and labour charges’ claim at uniform estimated rates of 20% thereby accepting the remaining claim of 80% in principle without specifying the corresponding parties concerned. We are afraid that such a penal action of an 5 ITA.No.1452/PUN./2023 estimated disallowance would hardly be sustainable in law going by settled legal position as per CIT Vs. Reliance Petro Products (2010) 322 ITR 158 (SC). Their lordships’ have settled the law long back that each and every disallowance/addition in quantum proceedings does not ipso facto attract the impugned penalty provision. We draw strong support therefrom to delete the impugned penalty of Rs.4,86,665/-. Ordered accordingly.

5.

This assessee’s appeal is allowed in above terms.

Order pronounced in the open Court on 12.03.2024.

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