M/s. Super Films Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 1506/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3218 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 27-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 13-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAUSHLENDRA TIWARI
• Keywords: Business expenditure; Opportunity of being heard

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 1506/DEL/2014 (ASSESSMENT YEAR: 2006 - 07 ) SUPER FILMS PVT. LTD, SATYAM CINEMA BUILDINGS, RANJIT NAGAR, NEW DELHI PAN:AAACS1360C VS. DCIT, CIRCLE - 9(1), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ABHISHEK MATHUR, CA REVENUE BY: SHRI KAUSHLENDRA TIWARI, SR. DR DATE OF HEARING 18 /09/2017 DATE OF PRONOUNCEMENT 23 / 11 /2017 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - XII, NEW DELHI DATED 28.01.2014 FOR THE ASSESSMENT YEAR 2006 - 07. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS MUCH AS ON THE FACTS OF THE CASE BY SUSTAINING THE UNWARRANTED PENALTY OF RS. 342860/ - LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. THAT THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) WHILE UPHOLDING THE PENALTY U/S 271(1)(C) OF THE ACT HAS NOT APPRECIATED THAT THE DISALLOWANCE OF EXPENSES WERE PURELY MADE ON ADHOC AND ESTIMATED BASIS WHICH IS OUTSIDE THE AMBIT OF PENALTY PROCEED INGS U/S 271(1)(C) OF THE ACT. IT IS THEREFORE, KINDLY PRAYED THAT THE UNWARRANTED PENALTY OF RS. 342860/ - WRONGLY UPHELD BY THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) MAY KINDLY BE DELETED AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE APPEL LANT. 3. ASSESSEE IS AN PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF RUNNING AND MAINTAINING CINEPLEX. IT FILED ITS RETURN OF INCOME FOR RS. 5468 8/ - ON 27/11/2006. THE ASSESSMENT ORDER UNDER SECTION 143 (3) OF THE INCOME TAX ACT, 1961 WAS PASSED BY THE LD. ASSESSING OFFICER ON 22/12/2008. THE TOTAL INCOME WAS DETERMINED AT RS. 2052490/ . THE LD. ASSESSING OFFICER MADE CERTAIN DISALLOWANCES TO THE TOTAL INCOME OF THE ASSESSEE OF RS. 1505605/ . ON APPEAL BEFORE THE LD. CIT (A) SOME OF THE ADDITIONS WERE DELETED AND THE MATTER REACHED THE COORDINATE BENCH. THE COORDINATE BENCH HAS UPHELD THE DISALLOWANCE TO THE EXTENT OF RS. 1120443/ . THEREFORE, THE LD. ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS VIDE ISSUE PAGE | 2 OF THE PENALTY NOTICE DATED 1/10/2012. CONSEQUENTLY, THE LD. ASSESSING OFFICER AFTER CONSIDERING THE REPLY OF THE ASSESSEE HELD THAT THE ASSESSEE HAS CONCEALED INCOME BY FURNISHING INACCURATE PARTICULAR S OF TOTAL INCOME AND LEVIED THE PENALTY OF RS. 342860/ . 4. ASSESSEE AGGRIEVE D WITH THE ORDER OF THE LD. ASSESSING OFFICER PREFERRED AN APPEAL BEFORE THE LD. CIT (A) WHO CONFIRMED THE PENALTY HOLDING THAT ASSESSEE HAS FILED INCORRECT PARTICULARS OF INCOME TO THE EXTENT AND FURTHER THE AMOUNT CLAIMED ON BUSINESS PROMOTION EXPENSES H A S NOT BEEN SUBSTANTIATED BY SUPPORTING THE VOUCHERS, MEANING THEREBY CONCEALMENT OF INCOME BY FILING INACCURATE PARTICULAR S. 5. ON APPEAL BEFORE US THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE LD. ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS, HAS ISSUED PENALTY NOTICE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. HOWEVER, IN THE PENALTY ORDER, THE PENALTY IS LEVIED HOLDING THAT ASSESSEE HAS CONCEALED INCOME BY FURNISHING INACCURATE PARTICULARS. IT WAS FURTHER SUBMITTED THAT LD. CIT (A) HAS ALSO HELD THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS AND THEREBY CONCEALED THE INCOME. HE SUBMITTED THAT MERELY THE DISALLOWANCE HAS BEEN CONFIRMED BY THE APPELLATE AUTHORITIES WHICH DOES NOT ENTAIL THE LEVY OF PENALTY UNDER SECTION 271 (1) (C) OF THE IN COME TAX ACT . HE FURTHER SUBMITTED THE PLETHORA OF JUDGMENT ON THIS ISSUE. HE STATED THAT HE HAS RAISED AN ADDITIONAL GROUND OF APPEAL FOR THE TWIN CHARGES ON WHICH THE PENALTY HAS BEEN LEVIED BY THE LD. ASSESSING OFFICER. HOWEVER , HE SUBSTANTIATED THAT IT IS COVER ED IN THE 1 ST GROUND OF APPEAL ITSELF. 6. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES. IN TH E PRESENT CASE THE PENALTY HAS BEEN LEVIED FOR THE REASON THAT LEGAL AND PROFESSIONAL EXPENSES OF RS. 1052383/ - WHICH HAS BEEN INCURRED ON THE LITIGATION BETWEEN THE 2 DIRECTORS WHERE THE ASSESSEE IS ALSO A PARTY. FURTHERMORE, THE BUSINESS PROMOTION EXPENDI TURE OF RS. 6 8060 WAS ALSO DISALLOWED AS ASSESSEE FAILED TO PRODUCE THE NECESSARY VOUCHERS. THEREFORE, IN THE PRESENT CASE THE PENALTY HAS BEEN LEVIED FOR THE REASON OF DISALLOWANCE OF CERTAIN EXPENDITURE WHICH ARE CLAIMED BY THE ASSESSEE AS ALLOWABLE EXP ENDITURE. FOR THE EXPENDITURE ON THE LEGAL AND PROFESSIONAL FEES OF RS. 1052383/ , THE ASSESSEE SUBMITTED THAT THIS WAS PAID TO DEFEND THE SUIT FILED BY ONE OF THE EX - DIRECTOR OF THE COMPANY AGAINST THE ASSESSEE COMPANY AND 2 OTHER DIRECTORS OF THE COMPANY . COMPANY IN ORDER TO PROTECT SUCH INTEREST HAD TO DEFEND ITSELF AND ACCORDINGLY SOLICITORS WERE APPOINTED AND EXPENDITURE WAS CLAIMED AS BUSINESS EXPENDITURE. FURTHERMORE WITH RESPECT TO THE BUSINESS PROMOTION EXPENDITURE , MERELY BECAUSE THE ASSESSEE COUL D NOT PRODUCE THE SUPPORTING VOUCHERS FOR SOME OF THE EXPENDITURE , THEY WERE DISALLOWED. IN FACT MERE PAGE | 3 DISALLOWANCE OF AN EXPENDITURE DOES NOT PUT ASSESSEE INTO POSITION WHERE PENALTY UNDER SECTION 271 (1 ) (C) OF THE ACT CAN BE LEVIED. FURTHER, IN THE ASSESS MENT ORDER, THE LD. ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS STATING THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME , HOWEVER , IN THE PENALTY ORDER, THE LD. ASSESSING OFFICER HAS LEVIED THE PENALTY FOR CONCEALMENT OF INCOME RESULTIN G BY FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LD. CIT (A) HAS ALSO CONFIRMED THE ABOVE PENALTY FOR THIS REASONS. MERE DISALLOWANCE OF CERTAIN EXPENDITURE DOES NOT RESULT IN TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. FURTHERMORE , THE CHARG E MADE BY THE LD. ASSESSING OFFICER ON THE ASSESSEE WAS ON DIFFERENT FOOTING AND THE CHARGE CONFIRMED WAS ALSO ON THE DIFFERENT FOOTING. IN VIEW OF THIS WE DO NOT INCLINE TO UPHOLD THE VIEWS OF THE LOWER AUTHORITIES IN CONFIRMING THE LEVY OF PENALTY OF RS. 342860/ . IN THE RESULT PENALTY LEVIED BY THE LD. ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT (A) IS DIRECTED TO BE DELETED. IN THE RESULT GROUND NO. 1 AND 2 OF THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORD ER PRONOUNCED IN THE OPEN COURT ON 2 3 / 11 /2017. - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 3 / 11 /2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI