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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-I’, NEW DELHI
Before: SHRI J. SUDHAKAR REDDY
This is an appeal filed by the Assessee directed against the order of the Ld.Commissioner of Income Tax (Appeals)-IX, New Delhi dated 19.05.2014 pertaining to the Assessment Year (A.Y.) 2007-08.
Facts in brief:- The brief facts of the case are enumerated in para 3.1 of Ld.CIT(A)’s order, which is extracted for ready reference. “3.1. The appellant company is engaged in the business of developing of software in the field of health and hospitality. The return of income for the A.Y. 2007-08 was filed on 24.10.2007 declaring loss of Rs.1,79,441/-. This return was processed initially u/s 143(1) of the Act and subsequently selected for scrutiny and the assessment was completed on 22.12.2009 at an income of Rs.3,77,310/-. The assessment was completed with an addition of Rs.4,06,000/- as loss on sale of asset and Rs.12,650/- u/s 43B of the Act. Subsequently, the AO levied penalty vide order dt. 23.3.2012 u/s 271(1)(c ) of the Act amounting to Rs.1,40,918/-.”
On appeal the First Appellate Authority confirmed the penalty. Further aggrieved the assessee is in appeal before us on the following grounds . “1. The assessee’s jurisdiction since A.Y. 2008-09 lies with the ACIT, Circle 6(1), hence the Ld.AO had no jurisdiction over the assessee as on 1.3.2012, therefore the proceedings u/s 271(1)(c ) of the Act are without proper legal jurisdiction.
2. The assessment proceedings u/s 143(3) of the Act were also illegal and void.
3. The Ld.AO has also imposed the penalty ignoring the facts of the case on record.
4. The Ld.CIT(A) has erred in law as well as on facts of the case in confirming the order of the Ld.ITO. It is prayed:
1. That the penalty proceedings may kindly be quashed being illegal and also without proper legal jurisdiction.
2. That in view of the various facts of the case on record the penalty imposed by the Ld.AO u/s 271(1)(c ) amounting Rs.1,40,918/- may kindly be cancelled in the best interest of justice to the assessee company.”
I have heard Shri Pranjal Srivastava, the Ld.Counsel for the assessee and Shri T.Vasanthan, Ld.Sr.D.R. on behalf of the Revenue. On a careful consideration of the facts and circumstances of the case, perusal of material on record, orders of lower authorities, case laws cited, I hold as follows.
I am of the considered opinion that the explanation of the assessee, that it made a genuine and bonafide mistake while filing of its return of income as the loss of account of sale of an asset amounting to Rs.4,06,000/- was wrongly claimed as business loss. Similarly deduction of bonus, which was an ascertained liability, was inadvertently made, though the same was paid after the date of filing of the return of income. This deduction was to be claimed and allowable only in the next year. In our view, the explanation given by the assessee is bonafide explanation and both these disallowances in my view arise out of bonafide mistakes committed while computing this income. Thus, applying the propositions laid down by the Hon’ble Supreme Court in the case of M/s Price Water House Coopers vs. CIT reported in 348 ITR 306 (S.C.), I delete the addition. 6. In the result assessee’s appeal is allowed. Order pronounced in the Open Court on 15th December,2015.