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Income Tax Appellate Tribunal, DELHI BENCH “SMC-2”, NEW DELHI
Before: SHRI H.S. SIDHU
Date of Hearing: 05 Date of Hearing: 05-11-201 2015 Date of Hearing: Date of Hearing: 05 05 201 201 Date of Order : 16-11-201 Date of Order : 2015 Date of Order : Date of Order : 201 201
ORDER ORDER ORDER ORDER
This appeal by the Assessee is directed against the order of the Ld.
Commissioner of Income Tax (Appeals)-VI, New Delhi dated 29.10.2014 pertaining to assessment year 2007-08 on the following grounds:-
1. That the Ld. CIT(A) erred in law in arbitrarily and against the judicial
pronouncement, in upholding the imposing of penalty u/s. 271(1)(c) levied at Rs. 90,950/- and rejecting the appeal.
2. That the Ld. CIT(A) erred in law in wrongly referring the judgments in the order which have no application to the case under appeal.
3. That the Ld. CIT(A) erred in ignoring the submission that the additions
made in the assessment order were purely on the basis of presumptions and assumptions and without bringing any material in the record to establish that there was concealment, suppression or misstating the facts.
4. That the Ld. CIT(A) erred in ignoring the submissions that the case is directly covered by the judgment of the Apex Court in the case of CIT vs.
Reliance Petro Products (P) Ltd. 322 Page 158. She further erred not even differentiating the facts in the judgment quoted with the case under appeal.
5. That the levy of penalty u/s. 271(1)(c) of I.T. Act, 1961 at Rs. 90,950/-
was against facts and circumstances of the case and deserves to be quashed.
The brief facts of the case are that a survey u/s. 133A was carried out at the business premises of the assessee on 22.11.2006. Accordingly, the assessment proceedings u/s. 143(3) was completed by the AO on 16.11.2009 at an income of Rs. 22,59,080/-. Being aggrieved by the order of the AO, Assessee preferred an appeal before the Ld. CIT(A), who vide impugned order 7.1.2013 had held that 2 overall turnover comes to Rs. 40,29,228/-. Applying the GP rate of 19.44% to the overall turnover of Rs. 40,29,228/-, the gross profit of the assessee comes to Rs. 7,83,282/-. The assessee had already disclosed Rs. 4,81,986/- as gross profit in its trading result filed with the return. Thus, the difference of Rs. 3,01,296/- was added to the gross profit of the assessee. Thereafter, the AO initiated penalty proceedings, on difference of Rs. 3,01,296/-, u/s. 271(1)(c) of the I.T. Act, by issuing notices dated 12.12.2013. Accordingly, the AO levied a penalty ou/s.
271(1)(c) amounting to Rs. 90,950/- on the said concealed income.
Against the above Penalty Order dated 24.1.2014 passed by the Assessing Officer, assessee again appealed before the Ld. First Appellate Authority, who vide impugned order dated 29.10.2014 dismissed the appeal of the assessee.
Against the above order of the Ld. CIT(A) dated 29.10.2014, assessee is in appeal before the Tribunal.
Ld. Counsel of the assessee contended that additions made in the assessmen torder were purely on the basis of presumptions and assumptions and without bringing any material in the record to establish that there was concealment, suppression or misstating the facts. He further stated that the present case of the assessee is squarely covered by the decision of the Apex Court in the case of CIT vs. Reliance Petro Products (P) Ltd. 322 ITR 158, hence, he requested that penalty amounting to Rs. 90,950/- made u/s. 271(1)(c) of the I.T. Act, 1961 may be quashed.
Ld. Departmental Representative controverted the arguments advanced by the Ld. Counsel of the assessee and he relied upon the order of Ld. CIT(A).
I have heard both the counsel and perused the orders passed by the Revenue authorities alongwith the case law relied upon by the Ld. Counsel of the assessee.
7.1 I find that section 271(1)(c) postulates imposition of penalty for furnishing of inaccurate particulars and concealment of income. On the facts and circumstances of this case the assessee’s conduct cannot be said to be contumacious so as to warrant levy of penalty.
7.2 In this regard, I find that Hon’ble Apex Court decision in the case of CIT vs. CIT vs. CIT vs. CIT vs. Reliance Petro Products Ltd. in Reliance Petro Products Ltd. in Reliance Petro Products Ltd. in Reliance Petro Products Ltd. in Civil Appeal No. 2463 of 2010 Civil Appeal No. 2463 of 2010 Civil Appeal No. 2463 of 2010 is squarely Civil Appeal No. 2463 of 2010 applicable in the present case of the assessee wherein it was held as under:-
"A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under s. 271(1)(c). If we accept the contention of the Revenue then in case of every Return where the claim made is not accepted by AO for any reason, the assessee will invite penalty under s. 271 (1)(c). That is clearly not the intendment of the legislature."
In the background of the aforesaid discussions and precedent, I find that the levy of penalty in this case is not justified. Accordingly, I set aside the orders of the authorities below and delete the levy of penalty in dispute.
In the result, the appeal filed by the Assessee stands allowed.
Order pronounced in the open court on 16/11/2015.