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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC-I’ NEW DELHI
Before: SMT DIVA SINGH:
आदेश /O R D E R
The present appeal has been filed by the assessee assailing the correctness of the order dated 29.08.2014 of CIT(A)-XXXIII, New Delhi pertaining to asstt. Year 2005-06, confirming the penalty of Rs. 26,070/- imposed u/s 271(1)(c).
Both the parties have been heard. The Ld. AR, inviting attention to page 4 of the impugned order, submitted that the AO, in the course of the assessment proceedings in the case of the assessee, held that since payment of Rs. 3,55,406/- was made in contravention of provisions of section 40A(3)
Rs. 20,000/-, as a result of this, addition of Rs. 71,080/- was made u/s 40A(3), as 20% of the said amount was added. As a result of this addition, penalty u/s 271(1)(c) was imposed. This action was challenged in appeal before the CIT(A), before whom, as per record, it is found to have been pleaded that at best it would have been about two instances of consignments wherein payment in excess of Rs. 20,000/- would have been made. Accordingly, it was pleaded that simply because the addition was confirmed in appeal, penalty cannot be automatically attracted.
Since the assessee did not succeed before the CIT(A), the present appeal has been filed.
Reiterating the arguments advanced before the tax authorities, the ld. authorized representative relying upon the decision of the Apex Court in the case of Reliance Petro Products (2010) 322 ITR 158 (SC), submitted that in the facts of the present case, complete facts were made available and it is not a case of non- disclosure of material facts or concealment but it is only as a result of about two instances where the payment was in excess. Thus, since the assessee was not habitually violating section 40A(3) of the Act and this was at best relatable only to two consignments, the penalty proceedings should have been quashed by the CIT(A), as these arguments have not been rebutted or controverted.
Ld. Sr. DR submitted that though the claim is consistently made that there would be about two consignments where the payment was in excess of Rs. 20,000/-, the fact remains that violation is not disputed. The argument, that looking at the smallness of the amount, where the genuineness of the expenditure has not been doubted, it was the submission is not a cogent or relevant argument. Thus, the impugned order was heavily relied upon.
Having heard the rival submissions and perusing the material on record, I am of the view that in the peculiar facts and circumstances of the case, looking at the judicial precedent citation of the Apex Court, the explanation offered by the assessee deserves to be accepted. The assessee has consistently pleaded that the violation was only in regard to two consignments and there is nothing on record to show that the assessee is habitually and knowingly violating the provisions of section 40A(3). Simply because the addition has been made, in the overall factual background of the case and considering the legal position as laid down by the Apex Court in the case of Reliance Petro Products (supra), the impugned order is directed to be set aside and the penalty order is directed to be quashed. The said order was pronounced on the date of hearing itself in the open court.
In the result, the appeal of the assessee is allowed. The order is pronounced in the open court on 18th of November, 2015.