M/s. J.R. Enterprises, Delhi V. DCIT, New Delhi

ITA 3042/DEL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4741 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2005-2006
• Appeal Filed On: 15-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAMES SINGSON
• Keywords: Additional evidence

Judgement Text

ITA NO. 3042/DEL/2015 ASSESSMENT YEAR 2005-06 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 3042/DEL/2015 AY: 20 05-06 J.R. ENTERPRISES, VS DCIT, C/O D.B. JAIN & CO., CENTRAL CIRCLE 5, SHAKAHAR BLDG., NEW DELHI. 1, ANSARI ROAD, DARYAGANJ, DELHI-110002 (PAN: ADQPG3144E) (APPELLANT) (RESPON DENT) ASSESSEE BY : SHRI SHAILESH GUPTA, CA DEPARTMENT BY : SHRI JAMES SINGSON, SR. DR DATE OF HEARING: 22.10.2018 DATE OF PRONOUNCEMENT: 29.10.2018 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER DATED 27.02.2015 PASSED BY THE LD. CIT (APPEA LS)-24, NEW DELHI FOR A.Y. 2005-06 WHEREIN VIDE THE IMPUGNED OR DER, THE LD. COMMISSIONER OF INCOME TAX (A) HAS UPHELD THE LEVY OF PENALTY AMOUNTING TO RS. 2,67,390/- IMPOSED U/S 271(1)(C) O F THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED 'THE ACT'). ITA NO. 3042/DEL/2015 ASSESSMENT YEAR 2005-06 2 2.0 BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED DECLARING AN INCOME OF RS. 6,08,810/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSER VED THAT THE ASSESSEE HAD CLAIMED EXPENSES OF RS. 13,50,273/- A GAINST INCOME FROM HIRE CHARGES AND MAINTENANCE CHARGES RE CEIVED BY THE ASSESSEE WITH RESPECT TO ITS BUSINESS OF MAINTA INING THE PROPERTY D-1/37, VASANT VIHAR, NEW DELHI. THE ASSE SSING OFFICER PROCEEDED TO ADD THE ENTIRE AMOUNT OF EXPENDITURE O F RS. 13,50,273/-. ON APPEAL, THE LD. COMMISSIONER OF IN COME TAX (A) PARTLY ALLOWED THE ASSESSEES APPEAL BY ALLOWING 30 % AS ALLOWABLE EXPENDITURE AND THUS ALLOWED AN AMOUNT OF RS. 5,40, 000/- AND RESTRICTED THE DISALLOWANCE TO RS. 8,10,273/-. SUB SEQUENTLY, PENALTY PROCEEDINGS CULMINATED IN IMPOSITION OF PEN ALTY OF RS. 2,67,390/- WHICH WAS UPHELD BY THE LD. COMMISSIONER OF INCOME TAX(A) ON APPEAL. 2.1 NOW, THE ASSESSEE IS BEFORE THE ITAT CHALLENGIN G THE UPHOLDING OF PENALTY BY THE LD. COMMISSIONER OF INC OME TAX (A). 3.0 THE LD. AR SUBMITTED THAT THE ASSESSEE HAS BEEN MAINTAINING REGULAR BOOKS OF ACCOUNTS WITH RESPECT TO THE HIRE CHARGES AND MAINTENANCE CHARGES BUT THE LD. COMMISS IONER OF INCOME TAX (A) HAD REJECTED THE ASSESSEES PLEA FOR ADMITTING ITA NO. 3042/DEL/2015 ASSESSMENT YEAR 2005-06 3 ADDITIONAL EVIDENCE AS WELL AS EXAMINING THE BOOKS OF ACCOUNTS. IT WAS ALSO SUBMITTED THAT EVEN THE LD. COMMISSIONE R OF INCOME TAX (A) HAD PARTIALLY SUSTAINED THE DISALLOWANCE ON AN AD HOC BASIS WITHOUT ASSIGNING ANY COGENT REASON FOR SUSTA INING A PART OF THE DISALLOWANCE. THE LD. AR FURTHER SUBMITTED THAT IT IS SETTLED LAW THAT PENALTY U/S 271(1)(C) OF THE ACT C OULD NOT BE SUSTAINED IN CASE OF AD HOC /ESTIMATED DISALLOWANCES. 4.0 IN RESPONSE, THE LD. SR. DR PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW AND VEHEMENTLY ARGUED THAT PE NALTY HAD BEEN RIGHTLY IMPOSED AND, THEREFORE DESERVED TO BE UPHELD. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ONLY QUESTION FOR OUR CONSIDERATION IS WHETHER PENALTY U/S 271(1)(C) IS S USTAINABLE WITH RESPECT TO DISALLOWANCE WHICH HAS BEEN PARTIALLY DE LETED BY THE LD. COMMISSIONER OF INCOME TAX(A) ON AD HOC /ESTIMATED BASIS. IT IS UNDISPUTED IN THE PRESENT APPEAL THAT THE QUANTI FICATION OF THE ALLEGED CONCEALMENT/INACCURATE PARTICULARS IS ONLY AN ESTIMATE AND IT IS SETTLED LAW THAT PENALTY IS NOT ATTRACTED ON ESTIMATED ADDITIONS. THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. AERO TRADERS PVT. LTD., REPORTED IN 322 ITR 316 (DE L), HAS HELD THAT NO PENALTY U/S 271(1)(C) CAN BE IMPOSED WHEN I NCOME IS ITA NO. 3042/DEL/2015 ASSESSMENT YEAR 2005-06 4 DETERMINED ON ESTIMATE BASIS. SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF HARIGOPAL SINGH VS. CIT REPORTED IN 258 ITR 85 (P&H) AND THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SUBHASH T RADING COMPANY REPORTED IN 221 ITR 110 (GUJ). IN VIEW OF T HE FOREGOING PRECEDENTS INCLUDING THE ONE FROM THE HONBLE JURIS DICTIONAL HIGH COURT, IT IS APPARENT THAT WHEN THE BEDROCK OF INSTANT PENALTY IS ESTIMATED DISALLOWANCE, THE SAME CANNOT BE SUSTAINED. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT (APPEALS) AND DIRECT THE AO TO DELETE THE PENALTY. 6.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH OCTOBER, 2018. SD/- SD/- (R.K. PANDA) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 29 TH OCTOBER , 2018 GS COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ITA NO. 3042/DEL/2015 ASSESSMENT YEAR 2005-06 5 ASSTT. REGISTRAR DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 1