VEERA APARTMENTS PVT. LTD., NEW DELHI V. ACIT, CIRCLE- 26(1), NEW DELHI

ITA 5583/DEL/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 4304 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 25-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 27; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F” DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No.5583/DEL/2019 Assessment Year 2011-12 Veera Apartments Pvt. Ltd., New Delhi. v. ACIT, Circle-26(1), New Delhi. TAN/PAN: AAACV0503A (Appellant) (Respondent) Appellant by: None Respondent by: Shri Anil Kumar Sharma, Sr. DR Date of hearing: 24 08 2022 Date of pronouncement: 22 09 2022 O R D E R PER PRADIP KUMAR KEDIA, A.M.: Th e cap tio n ed ap peal h as b een fil ed b y th e Assessee ag ain st th e o rd er o f th e Co mmiss io n er o f Inco me Tax (App eals)-IX, New Delh i [‘CIT(A)’ in sh o rt] d a ted 1 0 .0 5 .2 01 9 arisin g fro m th e p en alty o rd er d ate d 2 8 .0 9 .20 1 8 p assed b y th e Assessi n g Offi cer (AO) u nd er Sectio n 27 1 (1 )(c) o f th e In co me Tax Act, 1 96 1 (th e Act) co n cern in g AY 2 0 11 -12 . 2 . As p er i ts g ro u n ds o f ap p ea l, th e a s sessee h as ch al len g ed th e imp o si t io n o f p en alty o f Rs.6 ,7 7 ,0 0 0 /- un d er Section 271 (1 )(c) o f th e Act c la i min g th e ac tio n o f th e Rev en u e to b e arb itrary an d with o u t ju risd i ct io n . I.T.A. No.5583/Del/2019 2 3 . No n e ap p eared for th e assess ee an d acco rd in g ly th e ma tt er was p ro ceed ed ex -p arte. 4 . On p eru sal o f th e case reco rd s, it i s seen th at th e Assessin g Officer in th e q u an tu m p ro ceed in g s h as in ter alia mad e d isal lo wan ce o f Rs.2 5 ,9 8 ,5 6 9 /- to ward s b u sin ess p romo tio n ex p en ses wh ich was sca led d o wn b y th e CIT(A) to Rs .1 6 ,1 4 ,8 00 /-. Th e p en alty o n su ch d isal lo wan ce h as resu l ted in the i mp u g n ed p en alty u n d er Sectio n 2 7 1 (1)(c) o f th e Act. On p erusal o f th e assess men t o rd er i n th is reg ard , i t is o b serv ed th at th e Assessin g Officer d isa l lo wed th e ex p en ses o n th e g rou n d of lack o f d o cu men tat io n an d ex p en ses b eing p erson al in natu re. Th e Assessin g Offi cer th erea fter reco rd ed ‘satisfac tio n’ co n temp l at ed u n d er Sectio n 2 71 (1 B) o f th e Act th a t th e ass essee h as co n cealed / fu rn ish e d in accu rate p a rticu l ars o f its in co me . Pro ceed ed o n such v ag u e sati sfac tio n , th e Assess i n g Offi cer imp o sed p en alty u nd er Sectio n 2 7 1 (1 )(c) v id e ord er d ated 2 8 .0 9 .20 1 8 wh erein th e Asse ssin g Offic er a ll eg ed d efau l t fo r fu rn ish in g in accu rate p art icu lars o f in co me an d also fo r co n cealin g i ts in co me fo r ass ess men t y ear in q u estio n . T h e CIT(A) co n firm th e p en alt y o n th e g ro un d th at th e asses see h as fai led to d emo n strat e th a t t h e ex p en d itu re d eb ited was rea lly mean t fo r its b u sin ess p u rp o ses. 5 . In th is fac tu al b ack d ro p , we o b serv e th at i mp o sit i o n o f p en alty u n d er Sectio n 2 71 (1 )(c) is n ot ju st i fi ed for mo re th an o n e reaso n ; th e sa t isfact io n d rawn in th e co u rse o f th e assess men t ap p ears to b e v a g u e an d g en eral an d mo re i mp o rtan tly th e d isal lo wan ce h as been carried o u t o n th e b asis o f ju d g men t tak en b y Rev en u e o n g iv en facts . Th e ju d g men t so o b tain ed is in th e I.T.A. No.5583/Del/2019 3 real m o f su b jec tiv ity to a g reat ex t en t. In th is b ack g ro u nd , th e ex p lan atio n o ffere d b y th e assessee can n o t b e wh o lly d iscard ed wh en tested o n th e p aramet ers o f b o na fid e o n th e tou ch sto n e of Sect io n 2 71 (1)(c) o f th e Act. It is trite th at i mp osi tio n o f p en alty is n o t ju s ti fied merely b ecau se it is la wfu l to d o so . It is n ecessary th at th ere mu s t b e co n ceal men t b y t h e assess ee o f th e p arti cu lars o f it s in co me o r fu rn ish in g o f in accu rat e p articu lars. Th e d isal lo wan ce o f c erta in ex p en d itu re o n ju d g men t/es ti ma ted b asis actu a lly in cu rred o n th e g rou n d s o f la ck o f co mmercial e x p ed ien cy is n ei th er co n cea l men t o f an y p art i cu lars o f in co me p er se n or fu rn ish in g o f in ac cu rate p art icu lars as su ch . Need less to say , to imp o se p en al ty , en tire ty o f circu mst a n ces mu st reaso n a b ly p o in t to th e co n clu sio n th at th e d isp u ted amo u n t rep resen ts in co me an d th e assesse e h as co n ceal ed th e p arti c u lars th ereo f o r fu rn ish ed in accu rat e p art icu l ars. 6 . Th e Assessin g Offi cer in th e in stan t ca se h as d isal lo wed a p o rtio n o f sales p ro mo tio n ex p en ses o n th e g ro und th at th e b u sin ess ex p ed ien cy o f su ch ex p en ses h as n o t b een pro v ed . A co n sp ectu s o f Ex p lan at io n -I o f Sect i o n 27 1 (1 )(c) mak es i t cl ear th at th e s ta tu te v is u aliz ed th e assess men t p ro ceed in g s an d p en alty p ro ceed in g s to b e wh o lly d ifferen t a n d in d ep en d en t o f each o th er. Wh ile th e Asses sin g Officer ma y b e ju sti fi ed i n makin g d isal lo wan ce in q u an tu m p ro ceed in g s o n th e b asis o f v ariety o f fac to rs, ev ery d is allo wan ce co u ld n o t au to ma t ica lly fal l wi th in mi sch ie f o f Sec t io n 2 7 1(1 )(c) o f th e Act. Wh i le a cla i m to ward s ex p en d itu re may n o t b e fo u nd accep t ab le in th e q u antu m p ro ceed in g s, su ch d isal lo wan ce can n o t ip so fa cto in v it e rig o rs b y way o f p en alty . T h e d isal lo wan ce o f ex p en se in th e i n stan t ca se h as b een a matter o f in feren ce an d t h u s th e claim of e x p en d itu re I.T.A. No.5583/Del/2019 4 to ward s sales p ro mo t io n may , a t b es t, b e t ak en as erro n eo u s clai m b y th e assessee. S u ch clai m mad e i n a b on a fid e man n er can n o t lead to i mp o sit io n o f p en alty alth o u g h su ch clai m ma y no t h av e b een fo u n d main t ai n ab le fo r th e p u rpo ses o f q u an tu m p ro ceed in g s. Mak in g in co rrect cla i m to ward s ex pen se is n o t at p ar with th e co n ceal men t o r in a ccu rate p art icu l ars o f in co me . Hav in g reg ard to th e fac ts n o ted ab o v e, po ssib le o ver-stat e men t o f ex p en ses by its el f is n o t su ffic i en t to al leg e ma la fid e. 7 . Co n seq u en tly , we rev erse th e act io n o f th e lo wer au th o ritie s an d d irect th e Assessin g Officer to d elete th e p en alt y imp o sed u n d er Sectio n 2 7 1 (1 )(c) in q u estio n . 8 . In th e resu l t, th e a p p eal o f th e asses s ee is a l lo wed ex -parte. Order pronounced in the open Court on 22/09/2022. Sd/- Sd/- [CHANDRA MOHAN GARG] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /09/2022 Prabhat