SHIV KUMAR & SONS (HUF),RAJPURA vs. ITO, RAJPURA

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ITA 288/CHANDI/2014Status: DisposedITAT Chandigarh06 April 2018AY 2006-072 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that a disallowance made on an estimation basis does not automatically attract penalty provisions. Since the Assessing Officer did not find any concealment of income or furnishing of inaccurate particulars, the penalty was not justified.

What were the facts?

The assessee claimed commission expenses, and the Assessing Officer disallowed a portion of it on an estimation basis. The assessee had deducted TDS on the entire commission payment.

What were the issues?

Whether penalty under Section 271(1)(c) can be levied solely based on a disallowance made on estimation without proving concealment or inaccurate particulars.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DIVISION BENCH, ‘B’ CHANDIGARH

Before: SHRI SANJAY GARG & DR. B.R.R. KUMAR

Hearing: 06.04.2018Pronounced: 06.04.2018

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the assessee against

the order dated 28.01.2014 of the Commissioner of Income Tax

[hereinafter referred to as CIT(A)]-Patiala agitating the levy of

penalty u/s 271(1)(c) of the Act.

2.

We have heard the rival submissions and have also gone

through the records. We find that the Assessing officer in this case

has levied penalty in respect of ¼ of the expenses claimed as

commission payment by the assessee. The Ld. Counsel for the

assessee has taken us through the assessment records whereby he has shown that in fact the assessee has agreed to 1/4th of the aforesaid

disallowance on notional basis, however, it is a fact which comes out

ITA No.288/Chd/2014- Shiv Kumar & Sons (HUF),Chandigarh 2

from the file that Assessing officer did not find that assessee has furnished inaccurate particulars of income or has concealed its income. It is also a fact on the file that the assessee had deducted TDS and deposited it in the government treasury on the entire payment. It is settled law that each and every disallowance made by the Assessing officer does not ipso facto attract penalty provisions. The disallowance of commission has been made by the Assessing officer on estimation basis.

3.

In view of this, we do not find any justification on the part of the lower authorities so far as the levy of penalty u/s 271(1)(c) of the Act is concerned, therefore, the penalty levied by the lower authorities ordered to be deleted.

4.

In the result, the appeal of the assessee stands allowed.

Order pronounced in the Open Court.

Sd/- Sd/- (B.R.R.KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 06.04.2018 Rkk Copy to: • The Appellant • The Respondent • The CIT • The CIT(A) • The DR

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