GULSHAN INTERNATIONAL PVT. LTD., NEW DELHI V. ACIT, CIRCLE- 10(2), NEW DELHI

ITA 5345/DEL/2017

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2815 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 17-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 27; 12; 72

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C” DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No.5345/DEL/2017 Assessment Year 2011-12 Gulshan International Pvt. Ltd., C-2/47, Phase-II, Ashok Vihar, New Delhi. v. ACIT, Circle-10(2), New Delhi. TAN/PAN: AABCG1201H (Appellant) (Respondent) Appellant by: Shri A.T. Panda, Adv. Respondent by: Shri Yogesh Nayyar, Sr.DR Date of hearing: 21 04 2022 Date of pronouncement: 09 05 2022 O R D E R PER PRADIP KUMAR KEDIA, A.M.: Th e cap tio n ed ap peal h as b een filed at th e in s tan ce o f th e assesse e ag ain st t h e o rd er o f th e Co mmiss io n er o f Inco me Tax (Ap p eals)-XXXVI, New Delh i (‘ CIT(A)’ in sh ort) d ated 0 2 .0 6 .20 1 7 arisin g fro m th e assess men t o rd er d ated 3 1 .0 3 .20 11 p assed b y th e Ass essin g Officer (A O) u n d er Sectio n 2 7 1 (1 )(c) o f th e In co me Tax Ac t, 1 9 6 1 (th e Act) c o n cern in g AY 2011 -1 2 . 2 . As p er th e g ro u nds o f ap p eal, th e assessee h as ch al le n g ed th e i mp o sit io n o f p en alty o f Rs.4 ,6 8 ,0 3 5 /- u nd er Sectio n 2 7 1 (1 )(c) o f th e Act o n addit io n s o f Rs.1 0 ,6 4 ,3 9 4 /- to ward s advertis emen t ex p en ses an d d isallo wan ce o f d ep recia tio n o f Rs .3 ,40 ,5 0 1 /- on Mo to rcy cle p u rch a sed b y th e ass esse e . 3 . We h av e h eard th e riv al su b miss i o n s o n th e issu e. Th e I.T.A. No.5345/Del/2017 2 p en alty h as b e en i mp o sed o n two co u n ts. 4 . In resp ect o f p en alty o n ad d itio n in resp ect o f d isa l lo wan ce to ward s ad v ertise men t ex p en ses, i t i s th e cas e o f th e a ssessee th at th e assesse e h as i n cu rred to tal ex p en d itu re o f Rs.13 ,8 0 ,2 6 2 /- on p rin tin g o f d iari e s an d calen d ars. Ou t o f to ta l ex pe n d itu re o f Rs.1 3 8 0 26 2 /-, th e Assessin g Officer ap p ly in g th e ratio o f 1 0 :2 an d d isal lo wed Rs.1 0 , 6 4 ,3 94 /- fo r th e reaso n th at th e pap ers were p u rch ased in Feb ru ary /March an d h en ce en tire ex p en di tu re can n o t b e allo wed . It is fu rth er th e case o f th e assess ee th at th e p ro po rtio n ate d isal lo wan ce with refer en ce to n u mb er o f mo n th s o f u til iza t io n itse l f i s i mp ro p er an d the rev en u e ex p en d itu re co u ld n o t h av e b een app o rtio n ed and d eferred h av in g reg ard to the ju d g men t in th e ca se o f th e Ta p a ria To o ls Ltd . vs JCIT (2 0 1 5 ) 3 72 ITR 6 05 (S C). It is emp h at ica l ly su b mit ted o n b ehal f o f th e assesse e th at in v iew o f th e p ro po rtio n ate all o wan ce o f ex p en d itu re fo r 2 mo n th s o u t o f 1 2 mo n th s p erio d , th e g en u in en ess o f th e cla i m to ward s ad v ertise men t e x p en ses is n o t in d o ub t p er se. It is th u s th e c ase o f th e as sesse e th a t wh en all th e fact s are av ail ab le o n reco rd o f th e Rev en u e, n o alleg a tio n to wards ‘fu rn ish in g o f in accu rate p art icu l ars o f in co me’ for th e p u rpo ses o f Sec tio n 2 7 1 (1)(c) is ten ab le in th e l ig h t o f th e d eci sio n o f th e Ho n ’b le Su p reme Co u rt in th e c ase o f CIT vs . R el ia n ce Pe tro Pro d u cts Pvt . L td . a s rep o rted in (2 0 1 0 ) 3 2 2 ITR 1 58 (S C). 4 .1 In cou n ter, it is t h e case o f th e Rev en u e th at th e cla im o f ad v ertise men t ex p en ses s mack s o f b o g u s ex p en ses as e x p lain ed b y th e Assess in g Offi cer in th e q u an tu m p ro ceed in g s. 4 .2 We fin d ju sti fi ca tio n in th e p lea o f th e assessee fo r in ap p licab il ity o f Sect io n 2 7 1 (1)(c) in th e fa cts of th e c ase. I.T.A. No.5345/Del/2017 3 Hav in g d istrib u ted th e en tire ex p en ses in p rop o rtion of 2 mo n th s o u t o f 1 2 mo n ths o n eq u itab le b asis , th e ex p lan a t ion o f th e assesse e to ward s g en u in en ess o f incu rrin g exp en ses g ets rath er v in d icated . Wh at rema in s n o w is w h eth er mere d is al lo wan ce on acco u n t o f u n u ti l iz ed ex p en ses wo u ld in v it e p en al ty u n d er Sec tio n 2 7 1 (1 )(c) o r no t. 4 .3 Need less to say , th e Assess in g Officer u n d er Sectio n 2 7 1 (1 )(c) is v este d with th e statu to ry d iscretio n in th e mat ter o f imp o si t io n o f p en alty . Th e co n cep t o f d iscre tio n imp o rt s a d u ty to b e fa ir, can d id an d n o t arb itrary . It is tri te th at ev ery ad d itio n o r d isal lo wan ce wo u ld no t in v ite p en alt y merely b ecau se i t is law fu l to d o so . Th e p rop o rtio n ate al lo wan ce o f ad v ertis eme n t ex p en ses o f rev en u e n atu re q u a th e p erio d o f u se, in i tse lf, is q u ite d eb atab le. Un d er t h e circu mst an ces, th ere d o es n o t ap p ear to b e an y ju sti fi ab le rea so n to imp o se p en alty , al leg in g d efa u lt b y way o f fu rn ish in g o f in accu rate p art icu lar s o f in co me. 4 .4 We th u s set as id e th e o rd er o f th e L d . CIT(A) an d d irect th e Assessin g Offi cer t o d elet e p en al ty o n th is co u n t. 5 . Th e o th er issu e relat es to i mp o sitio n o f p en al t y on d isal lo wan ce o f cl ai m o f d ep recia t io n o n Mo to rcy le o n th e g ro u nd th at th e Mo to rcy cl e is reg is tered in t h e n ame o f the Dir ecto r. It is th e case o f th e a ss essee th at a l th o u gh th e v eh icl e was re g istered in th e n ame o f th e Directo r, th e p ay men t to ward s pu rchase was in cu rred b y th e assesse e co mp an y , an d th ere fo re, b en efic ia l o wn ersh ip co n tin ues to rema in with th e co mp an y . It was fu rth er p o in ted o u t th at p erq u isite to th e ex ten t o f R s.2 1 ,6 0 0 /- u nd er th e p ro v isio n s o f Sect i o n 1 7 (2 ) o f th e Ac t h as also b een ad d ed to th e remu n erat io n o f t h e Directo r o n ac co u n t o f e le men t o f p erso n al I.T.A. No.5345/Del/2017 4 u se. In th is b ack d ro p , we fin d wh o leso me mer it in th e p lea o f th e assesse e th a t mere d isal lo wan ce o f d ep recia tio n in q u es tio n wo u ld n o t lead to i mp o sit io n o f o n erou s p enalty u n d er Sectio n 2 7 1(1 )(c) o f th e Ac t, mo re p articu l arly wh ere th e q u an tu m d i sal lo wan ce o f d ep reciat io n it sel f is h ig h ly d eb at ab le in v iew o f th e u n d isp u ted fac ts o f b en efic ial o wn ersh ip b y th e assesse e-co mp an y . Th e o rd er o f th e CIT(A) co nfir min g p en alty o n th is sco re is acco rd in g ly set asid e an d th e p en alty i mp o sed b y t h e Assessin g Officer o n th is sco re stan d s can ce l led . 6 . In th e resu l t, th e a p p eal o f th e asses s ee is a l lo wed . Order pronounced in the open Court on 09/05/2022. Sd/- Sd/- [CHANDRA MOHAN GARG] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 09/05/2022 Prabhat