Anuj Kumar Gupta, Delhi V. DCIT, Central Circle-8, New Delhi

ITA 1088/DEL/2023

AI Insights

The case involves three appeals filed by Anuj Kumar Gupta against the orders of the CIT(Appeals)-24, New Delhi, for the assessment years 2014-15 to 2016-17. The appeals were related to the penalties levied under section 271(1)(c) of the Income Tax Act, which were based on an ad hoc disallowance of expenses made during the assessment. The Tribunal considered previous decisions and the specific circumstances of the case, including a related case involving the assessee's brother, where similar penalties were deleted. The Tribunal concluded that the penalties were not warranted under the given circumstances.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113292 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-09-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 12-04-2023
• Other Referred Cases: CIT Vs. M.S. Bindra & Sons Pvt. Ltd., 336 ITR 125 (Del.), CIT Vs. MTNL ITA No.626/2011 (Del.) (HC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Accommodation entries
• Section: 271(1)(c)

Judgement Text

I.T.A. Nos. 1086 to 1088/Del/2023 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A” NEW DELHI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER आ .अ.स ं /.I.T.A Nos.1086 to 1088/Del/2023 /Assessment Years:2014-15 to 2016-17 Anuj Kumar Gupta C/o Anil Jain DD & Co., 611, Surya Kiran Building-19, K.G. Marg, New Delhi. ब म Vs. DCIT Central Circle-8, New Delhi. PAN No. AGJPG3975B अ Appellant /Respondent िनधा रतीक ओरसे /Assessee by Shri Raghav Sharma, CA राज वक ओरसे /Revenue by Shri Kanv Bali, Sr. DR स ु नवाईक तारीख/ Date of hearing: 18.09.2023 उ ोषणाक तारीख/Pronouncement on 25.09.2023 आदेश /O R D E R PER C.N. PRASAD, J.M. These three appeals are filed by the assessee against different orders of Ld.CIT(Appeals)-24, New Delhi for assessment years 2014-15 to 2016-17 in sustaining the penalty levied u/s 271(1)(c) of the Act. 2. Ld. Counsel for the assessee submits that penalty was levied on the ad hoc disallowance of expenses made while completing I.T.A. Nos. 1086 to 1088/Del/2023 2 the assessment. Ld. Counsel referring to para 8 of the assessment order submits that the Assessing Officer disallowed 25% of total expenses on ad hoc basis based on which the penalty was levied. Ld. Counsel submits that on identical circumstances in the case of the assessee brother Shri Ashok Kumar Gupta the Tribunal deleted the penalty on identical facts. The Ld. Counsel also placed reliance on the following decisions for the proposition that when an addition is made by way of ad hoc disallowance of expenses there cannot be any concealment of income or furnished by inaccurate particulars of such income and consequently no penalty u/s 271(1)(c) is attracted: - 1. CIT Vs. M.S. Bindra & Sons Pvt. Ltd., 336 ITR 125 (Del.); 2. CIT Vs. MTNL ITA No.626/2011 (Del.) (HC); 3. Ld. DR supported the orders of the authorities below. 4. Heard rival contentions, perused the orders of the authorities below. 5. We observed from the assessment order that there was a survey operation conducted in the case of Shri Ashok Kumar Gupta and Shri Anuj Kumar Gupta - the assessee and during post survey proceedings it was found that the assessee was engaged in providing accommodation entries for commission. The Assessing I.T.A. Nos. 1086 to 1088/Del/2023 3 Officer accepted the income received by the assessee by way of commission. However, he has disallowed 25% of the expenses claimed by the assessee stating that they are excessive and personal in nature. We observe that except stating that they are excessive and personal in nature the Assessing Officer has not given any reason as to why they are excessive and personal in nature. Based on these disallowances of ad hoc expenses the Assessing Officer levied penalty u/s 271(1)(c) of the Act. 6. We further observe that on identical facts in the case of Shri Ashok Kumar Gupta the Tribunal deleted the penalties observing as under: - “4. The common facts in all the appeals relates to the nature of business of the assessee which is providing of accommodation entries to the beneficiaries. 5. In his return of income the assessee has returned the commission received on providing the accommodation entries and has claimed expenditure from the gross receipts. While scrutinizing return of income the AO accepted the commission received on providing accommodation entries but disallowed 25% of the expenses claimed by the assessee for want of evidences. 6. Penalty proceedings were separately initiated for concealing particulars of income and penalty was accordingly levied being 100% of the tax on the income sought to be evaded by furnishing inaccurate particulars of income. I.T.A. Nos. 1086 to 1088/Del/2023 4 7. We have given a thoughtful consideration to the assessment order and also the order levying the penalty read with order of the first appellate authority to confirm the levy. 8. We are of the considered view that initially the AO has initiated the penalty proceedings for concealment of income and while levying the penalty the AO has levied it for furnishing the inaccurate particulars of income. This shows that the AO was not certain under which limb of section 271 (l)(c) of the Act the penalty was levied. 9. Secondly if the AO was of the opinion that the assessee is engaged in a clandestine business then he ought not to have allowed 75% of the expenses and instead should have disallowed the entire expenditure. The action of the AO shows that he was satisfied with the genuineness of 75% of the expenses and levied the penalty on the balance amount disallowed. 10. Considering the facts of the case in totality we are of the considered view that the captioned cases are not fit for levy of penalty u/s. 271 (l)(c) of the Act, therefore, the AO is directed to delete the impugned penalty.” 7. Facts being identical following the said decision. We delete the penalty levied u/s 271(1)(c) of the Act as it is not a fit case for levying penalty. 8. In the result, appeals of the assessee are allowed. Order pronounced in the open court on 25.09.2023 Sd/- Sd/- (PRADIP KUMAR KEDIA) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 25.09.2023 I.T.A. Nos. 1086 to 1088/Del/2023 5 *Kavita Arora, Sr. P.S. Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order Assistant Registrar, ITAT: Delhi Benches-Delhi