M/s Century Twenty One Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 4385/DEL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6756 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 20-10-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 10-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Assessee Lawyers: V K GARG
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC-II : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER ITA NO.4385/DEL/2016 ASSESSMENT YEAR : 2003-04 CENTURY TWENTY ONE PVT. LTD., FIRST FLOOR, A-2, ANAND NIKETAN, NEW DELHI. PAN: AAACC4200H VS. DCIT, CIRCLE 5(2), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.K. GARG, ADVOCATE DEPARTMENT BY : SHRI F.R. MEENA, SR. DR DATE OF HEARING : 26.10.2016 DATE OF PRONOUNCEMENT : 27.10.2016 ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R PASSED BY THE CIT (A) ON 31.5.2016, CONFIRMING PENALTY OF RS.144, 633/- IMPOSED BY THE ASSESSING OFFICER (AO) U/S 271(1)(C) OF THE INC OME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT) IN RELATION TO THE ASSESSMENT YEAR 2003-04. ITA NO.4385 /DEL/2016 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED RETURN CLAIMING DEDUCTION FOR BUSINESS EXPENSES AND MUNICI PAL TAXES. THE AO DID NOT ALLOW THESE DEDUCTIONS. IN THE FIRST ROUND OF THE PROCEEDINGS BEFORE THE TRIBUNAL, THE MATTER WAS RESTORED TO THE FILE OF AO FOR EXAMINING THE ASSESSEES CLAIM. IN THE SECOND ROUN D, CERTAIN DEDUCTIONS WERE ALLOWED, BUT, SOME DISALLOWANCES WERE STILL SU STAINED. THE TRIBUNAL, AGAIN, RESTORED THE MATTER TO THE AO FOR A FRESH DECISION GIVING CERTAIN DIRECTIONS. IN THE THIRD ROUND, THE ASSESS EE AGREED TO CERTAIN DISALLOWANCES OF EXPENSES TO BUY PEACE SPECIFICALLY SUBJECT TO NO PENALTY. THE ASSESSMENT WAS FINALIZED ACCORDINGLY. THEREAFTER, THE AO IMPOSED PENALTY OF RS.1,44,633/- IN RESPECT OF SUCH DISALLOWANCES, WHICH CAME TO BE AFFIRMED BY THE LD. CIT(A). 3. I HAVE HEARD THE RIVAL SUBMISSIONS THE PERUSED T HE RELEVANT MATERIAL ON RECORD. IT IS NOTICED THAT THE ASSESSEE IS ENGA GED IN THE REGULAR BUSINESS, WHICH IS APPARENT FROM A COPY OF THE ASSE SSEES TRADING ACCOUNT AVAILABLE ON PAGE 3 OF THE PAPER BOOK. FRO M SUCH TRADING ACCOUNT, IT CAN BE SEEN THAT THE ASSESSEE EFFECTED SALES TO THE TUNE OF ITA NO.4385 /DEL/2016 3 RS.86,267/- WITH THE CORRESPONDING FIGURE OF THE P RECEDING YEARS SALES AT RS.83,912/-. THE ASSESSEE CLAIMED CERTAIN EXPE NSES WHICH HAVE BEEN DISALLOWED AND CONSTITUTED THE BEDROCK FOR THE IMPO SITION OF THE EXTANT PENALTY. IT HAS BEEN NOTICED ABOVE THAT THREE ROUN DS OF ASSESSMENT TOOK PLACE BEFORE THE AO. SOME OF THE EXPENSES CLAIMED BY THE ASSESSEE WERE ALLOWED BY THE AO IN THE SECOND ROUND AND JUST TO SETTLE THE DISPUTE, THE ASSESSEE AGREED TO SURRENDER SOME OF T HE EXPENSES FOR INSUFFICIENCY OF PROFITS, SUBJECT TO THE CONDITION OF NO PENALTY. NOTWITHSTANDING THAT, THE AO HAS IMPOSED PENALTY IN RESPECT OF DISALLOWANCE OF SUCH EXPENSES. I FAIL TO APPRECIAT E THE VIEW POINT OF THE AO AND THE LD. CIT(A) IN IMPOSING AND CONFIRMING PE NALTY IN RESPECT OF DISALLOWANCE OF CERTAIN EXPENSES WITHOUT DISPROVING THE GENUINENESS OF EXPENSES. THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158 (SC) HAS HELD THAT SIMPLY FOR THE REASON THAT THE AO DID NOT FIND THE CLAIM O F THE ASSESSEE TO BE SUSTAINABLE IN LAW UP TO A CERTAIN EXTENT, CANNOT J USTIFY PENALTY U/S 271(1)(C), MORE SO, WHEN PARTICULARS FURNISHED BY T HE ASSESSEE WERE NOT FOUND TO BE INACCURATE. THE FACTS OF THE INSTANT C ASE AS TESTED ON THE ITA NO.4385 /DEL/2016 4 RATIO DECIDENDI OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE ABOVE JUDGMENT, DO NOT WARRANT ANY PENALTY ON SUCH ADDITIONS. RESPECTFULLY FOLLOWING THE PRECEDENT, I ORDER FOR T HE DELETION OF PENALTY. 4. IN THE RESULT, THE APPEAL IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 27.10.20 16. SD/- [R.S. SYAL] ACCOUNTANT MEMBER DATED, 27 TH OCTOBER, 2016. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.