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Income Tax Appellate Tribunal, DELHI BENCH “SMC-1” NEW DELHI
Before: SHRI I.C. SUDHIR: HON’BLE
Date of hearing : 05.08.2015 Date of pronouncement: 02:11.2015 ORDER
The Revenue has questioned First Appellate Order on the sole ground that the Learned CIT(Appeals) has erred in deleting the penalty of Rs.4,16,372 by not appreciating the fact that the assessee had furnished inaccurate particulars of income within the meaning of sec. 271(1)(c) of the Income-tax Act, 1961. 2. Heard and considered the arguments advanced by the parties in view of orders of the authorities below, material available on record and the decisions relied upon.
In support of the ground, the learned Senior DR has basically placed reliance on the penalty order. The Learned AR on the other hand tried to justify the First Appellate Order with the submission that the action of the Learned CIT(Appeals) in deleting the penalty is fully supported by several decisions including the following:
i) CIT vs. reliance Petro-product (P) Ltd. – 322 ITR 158 (S.C); ii) CIT vs. Honeywell Dac India Ltd. – 292 ITR 168 (Del.); iii) CIT vs. Brahamputra Consortium Ltd. – 348 ITR 339; iv) CIT vs. Krishna Maruti Ltd. – 330 ITR 547 (Del.) & v ) Price Water House Coopers (P) Ltd. vs. CIT – 348 ITR 306 (S.C).
I find that against the returned income of Rs.68,270, the assessment under sec. 143(3) was framed at Rs.14,15,759. The assessee firm is engaged in the business of sale, purchase and development of real estate properties, investment and agricultural produce. During the assessment proceedings, the Assessing Officer noticed that the assessee was having income from sale of agricultural produce, interest received from the banks and others totaling to Rs.16,86,435. Against this income, the assessee claimed expenditure of Rs.14,79,260 under the head “administrative expenses, personnel, financial expenses and depreciation”. The Assessing Officer considered the above income as passive income and on the ground of earlier years assessments, he allowed only Rs.85,475 towards expenses on an estimate basis. The Assessing Officer has imposed penalty under sec. 271(1)(c) of the Act at Rs.4,16,372. The Learned CIT(Appeals) has deleted the same on the basis that there was claim of various expenses in the profit and loss account of which the Assessing Officer has allowed Rs.1 lac on estimate basis, hence, penalty cannot be levied. I find that the assessee had claimed certain expenses in the profit and loss account which were allowed by the Assessing Officer only to the extent of Rs.1 lac following identical disallowance made in the assessment year 2005-06, 2006-07, 2007-08 and 2008-09 for the reason that the Assessing Officer was of the view that since the assessee has earned only passive income like interest and dividend during the year, not much expenditure would have been involved for earning of such income.
Thus, it is very much clear that the disallowance was made on the basis of estimation and penalty has been levied without specific finding beyond doubt that there was concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assessee leading to the said disallowance. Being penal in nature, the provisions of sec. 271(1)(c) of the Act cannot be invoked in absence of positive evidence and finding beyond doubt that there was concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assessee. The decisions relied upon by the Learned AR support this view. I thus do not find reason to interfere with the First Appellate Order as the Learned CIT(Appeals) has rightly deleted the penalty in absence of the clear finding by the Assessing Officer that there was concealment of particulars of income for furnishing inaccurate particulars thereof on the part of the assessee towards the disallowance made by the Assessing Officer. The same is upheld. The ground is accordingly rejected.
In result, the appeal is dismissed. Order pronounced in the open court on 02.11.2015