DCIT CEN CIR 10, MUMBAI vs. PRUDENTIAL LEASING LTD, MUMBAI

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ITA 7202/MUM/2013Status: DisposedITAT Mumbai23 November 2015AY 2009-103 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal affirmed the decision of the CIT(A) in deleting the penalty. It noted that the assessment order did not find the expenses to be bogus, and the disallowance was based on the lack of active business, not on evidence of fake expenses.

What were the facts?

The Revenue appealed against the deletion of penalty imposed under Section 271(1)(c) by the first appellate authority. The Assessing Officer had disallowed expenses on the grounds that the assessee was not carrying out active business and only earned exempt dividend income.

What were the issues?

Whether penalty under Section 271(1)(c) can be imposed when expenses are disallowed solely on the ground of not carrying out active business, without a finding that the expenses were bogus.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, MUMBAI BENCHES “C”, MUMBAI

Before: Shri Joginder Singh, & Shri Ashwani Taneja

For Respondent: Shri O.P. Meena-DR, Ms. Mrugakshi Joshi
Hearing: 23/11/2015

Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 23/10/2013 of the Ld. first Appellate Authority, Mumbai. The only ground raised by the Department pertains to deleting the penalty of Rs.9,05,267/- imposed u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter the Act) by placing

1.

2 M/s Prudential Leasing Limited Hon’ble Apex Court in Reliance Petro Products Ltd. 322 ITR 158 (SC).

2.

During hearing of this appeal, the ld. DR, Shri O.P. Meena, advanced arguments which are identical to the ground raised. On the other hand, Ms. Mrugakshi Joshi, ld. counsel for the assessee, defended the conclusion arrived at in the impugned order.

2.1. We have considered the rival submissions and perused the material available on record. We note that the addition was made by the ld. Assessing Officer on the ground that the expenses, incurred by the assessee, are not allowable, as no active business was carried out by the assessee and only income earned by the assessee was in the nature of dividend income which is exempt. However, we find that there is not finding in the assessment order that the claimed expenses are bogus. The assessee did not contest the quantum addition due to tax effect below monitory limit. The shops owned by the assessee company are likely to incur some expenses for earning income. No specific finding has been recorded in the assessment order nor any evidence was brought on record suggesting that the claimed expenses were bogus and merely disallowance was made on the pleat that no active business is carried out by the assessee. Without going in to much deliberation and in the light of uncontroverted finding in the impugned order, following the decision from Hon’ble Apex Court in Reliance Petro Products,

3 M/s Prudential Leasing Limited we affirm the stand of the ld. Commissioner of Income Tax (Appeals). The appeal of the Revenue, is, therefore dismissed.

Finally, the appeal of the Revenue is dismissed.

This Order was pronounced in the open court in the presence of ld. representatives from both sides at the conclusion of the hearing on 16/11/2015.

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