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Income Tax Appellate Tribunal, “A” BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI & SHRI CHALLA NAGENDRA PRASAD
आदेश / O R D E R
PER CHANDRA POOJARI, ACCOUNTANT MEMBER
This appeal by assessee is directed against the order of the Commissioner of Income Tax (Appeals)-19, Chennai, dated 27.11.2014 for the assessment year 2007-08.
I.T.A.No.301/Mds/2015 :- 2 -:
The grievance of the assessee in this appeal is with regard to confirming the levy of penalty u/s.271(1)(c) of the Income Tax Act at �1,98,420/-
The facts of the case are that the assessee filed her return of income for assessment year 2007-08 on 20.2.2008 admitting a total income of �3,72,393/-. The source of income has been shown as ‘income from other sources’. As discussed in the case of Shri Mainraj, as a result of the survey/search conducted in the case of M/s Rajarathinam Constructions Pvt. Ltd on 27.2.2008, it was noticed that the assessee had sold a piece of land measuring 3.5 cents situated at Perumbakkam village for a consideration of �6,75,000/-. The relevant details of this transaction are as under:
Sl.No Name of Seller Extent of Consideration Nature of Date land � document 01 Smt. Usharani 3.5 cents 6,75,000/- Sale deed 01.03.2007 In this background, this case was notified to Central Circle III(2) vide notification No.13/2008-09 dated 23.12.2008 in C.No.6121/Centrn/2008-9/VI, as a result of which a notice u/s 148 was issued on 14.12.2009. subsequently, notices u/s 143(2) and 142(1) were issued on 23.12.2009. These notices were complied with as the I.T.A.No.301/Mds/2015 :- 3 -: assessee’s ld.AR appeared and filed the requisite details. The main issue in this case is with regard to capital gains on the sale of piece of land. The assessee claimed an expenditure of �8,15,000/-. Out of total expenses of �8,15,100/- claimed on account of dealer’s commission at �5,16,650/-, marketing expenses of � 2,98,450/-. The ld. CIT(A) has allowed � 7 lakhs because the entire expenses are not properly explained. On appeal to Tribunal, it was held that the disallowance which is on lower side would not entail Tribunal to interfere in the ld. CIT(A)’s order, hence, this issue is decided against the assessee. Meanwhile the Assessing Officer levied penalty u/s.271(1) (c) of the Act vide order dated 24.02.2012 on the reason that the assessee has furnished inaccurate particulars of income and made wrong claim towards marketing expenses and dealers commission and failed to produce any evidence towards the same.
Against this, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals).
On appeal, the Commissioner of Income Tax (Appeals) observed that it is an undisputed facts of the case are that the assessee had made the claim of dealers commission and marketing expenses of �5,16,650/- and �2,98,450/- respectively against business I.T.A.No.301/Mds/2015 :- 4 -: income, however, the assessee has not furnished any details of these expenses before the Commissioner of Income Tax (Appeals) nor before the Assessing Officer. It was observed by Commissioner of Income Tax (Appeals) that the aforesaid additions to the income of the assessee, is apparent from the penalty order under appeal, what upheld both by the then Commissioner of Income Tax (Appeals) and the Tribunal. From the facts on records, it is apparent that the assessee had made a wrong claim of the aforesaid expenditure which could not be proven to have been incurred. The aforesaid wrong claim of expenditure resulted in furnishing of inaccurate particulars of income of the assessee resulting in concealment of income. The assessee had not brought any material or evidence or record even during the course of penalty proceedings before the Assessing Officer with regard to incurring of the aforesaid expenses. Before the Commissioner of Income Tax (Appeals) also the assessee has not brought any material or evidence on record to show that the claim of the assessee was a genuine claim. In view of these facts of the case, the Commissioner of Income Tax (Appeals) upheld the penalty levied by the Assessing Officer. Against this, the assessee is in appeal before us.
I.T.A.No.301/Mds/2015 :- 5 -:
We have heard both the sides and perused the material on record. In this case, consequent to search /survey action in the case of M/s. Rajarathinam Constructions P. Ltd, the documents relating to the purchase of property by assessee was found and it came to know that M/s. Rajarathinam Constructions P. Ltd purchased land located at Perumbakkam village for �6,75,000/- from assessee. However, the assessee had not admitted long term capital gains in respect of sale of property even after issuance of notice u/s.148 of the Act. The assessee made a wrong claim towards dealers commission at �5,16,650/- and marketing expenses of �2,98,450/- respectively for which no new evidence was produced. This quantum addition was subject matter of appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) allowed the expenditure at �7,00,000/-. However, the findings on this addition was confirmed by Commissioner of Income Tax (Appeals) in its entirety. Admittedly, the assessee was not able to substantiate the claim made by her.
However, the Assessing Officer while computing the penalty considered entire disallowance of �8,15,000/- though at this stage addition was sustained was only �2,15,000/-. To that extent the assessee shall get relief. In other words, in view of the failure on the part of the assessee to substantiate the expenditure of �2,15,000/- I.T.A.No.301/Mds/2015 :- 6 -: towards dealers commission and marketing expenses penalty to be levied u/s.271(1) (c) of the Act as there is no bonafide explanation from the assessee to this effect and there is furnishing of inaccurate particulars of income. Accordingly, we direct the Assessing Officer to recompute the penalty u/s.271(1)(c) of the Act towards the additions sustained at �2,15,000/- only.
In the result, the appeal of the assessee in ITA
No.301/Mds/2015 is partly allowed .
Order pronounced on Friday, the 20th day of November, 2015, at Chennai.