M/s. Galaxy Buildwell (P) Ltd., New Delhi V. ITO, New Delhi

ITA 6645/DEL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7446 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 08-08-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 14-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC-I : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER ITA NO.6645/DEL/2015 ASSESSMENT YEAR : 2006-07 GALAXY BUILDWELL (P) LTD., 12, RING ROAD, LAJPAT NAGAR-IV, NEW DELHI. PAN: AACCG2541B VS. ITO, WARD 12(1), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PANKAJ GARG, ADVOCATE DEPARTMENT BY : SHRI ANIL KUMAR SHARMA, SR. DR DATE OF HEARING : 08.08.2016 DATE OF PRONOUNCEMENT : 08.08.2016 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER PASSED BY THE CIT(A) ON 15.10.2015 CONFIRMING PENAL TY OF RS.3,01,558/- IMPOSED BY THE AO U/S 271(1)(C) OF TH E INCOME-TAX ACT, 1961, IN RELATION TO THE ASSESSMENT YEAR 2006-07. ITA NO.6645/DEL/2015 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THA T ORIGINAL ASSESSMENT WAS MADE IN THIS CASE IN WHICH THE AO DISALLOWED EXPENS ES OF RS.8.95 LAC INCURRED BY THE ASSESSEE ON THE GROUND THAT THESE W ERE NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. WHEN THE MATTER WENT BEFORE THE LD. CIT(A), THE DISALLOWANCE WAS RE DUCED TO 50%. THERE IS NO MATERIAL TO INDICATE THAT ANY APPEAL WA S FILED AGAINST THE CIT(A)S ORDER, THEREBY REVERSING OR MODIFYING THE SAME. THEREAFTER, THE AO RESORTED TO THE RE-ASSESSMENT PROCEEDINGS BY ISS UING A NOTICE U/S 148 ON ACCOUNT OF SOME WRONG CARRY FORWARD OF LOSS. IN THE CONSEQUENTIAL ASSESSMENT, HE, AGAIN, DISALLOWED THE ENTIRE EXPENS ES OF RS.8.95 LAC AS WERE ORIGINALLY DISALLOWED. THE ASSESSEE APPEALED AGAINST THIS ORDER. THE LD. CIT(A), AGAIN, SUSTAINED DISALLOWANCE AT 50 %, THEREBY ALLOWING RELIEF FOR THE REMAINING 50%. THE AO IMPOSED PENAL TY WITH REFERENCE TO THE DISALLOWANCE OF EXPENSES AT RS.8.95 LAC. THE L D. CIT(A) UPHELD THE PENALTY IN THE IMPUGNED ORDER. THE ASSESSEE IS AGG RIEVED AGAINST SUCH CONFIRMATION OF PENALTY. ITA NO.6645/DEL/2015 3 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THAT THE ONLY BA SIS FOR THE IMPOSITION OF PENALTY IS DISALLOWANCE OF EXPENSES OF RS.8.95 LAC, WHICH WAS ALSO ORIGINALLY MADE BY THE AO, BUT THE SAME WAS REDUCE D BY THE LD. CIT(A) TO 50%. THUS, IT IS APPARENT THAT THE PENALTY HAS BEEN IMPOSED WITH REFERENCE TO THE DISALLOWANCE OF EXPENSES WHICH HAS BEEN PARTLY DELETED IN THE FIRST APPEAL. THERE IS HARDLY ANY NEED TO E MPHASIZE THAT THE PENALTY CAN BE IMPOSED WHEN THERE IS EITHER CONCEAL MENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY T HE ASSESSEE. THE MERE FACT OF DISALLOWANCE OF SOME EXPENSES DOES NOT PER SE JUSTIFY THE IMPOSITION OF PENALTY. THERE MAY BE SO MANY REASON S FOR MAKING DISALLOWANCE OF EXPENSES BUT THE PENALTY CANNOT AUT OMATICALLY FOLLOW. HERE IS A CASE IN WHICH THE AO DISALLOWED SOME EXPE NSES BY TREATING THEM AS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSE. IT IS NOT THE CASE OF THE AO THAT SUCH EXPENSES WERE B OGUS OR NON-GENUINE. SUCH TYPE OF DISALLOWANCES CANNOT JUSTIFY THE PENAL TY. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. (2010) 322 ITR 158 (SC) , HAS HELD THAT A MERE MAKING OF A CLAIM WHICH ITA NO.6645/DEL/2015 4 IS NOT SUSTAINABLE IN LAW, BY ITSELF WILL NOT ATTRA CT PENALTY U/S 271(1)(C). IT FURTHER OBSERVED THAT WHEN THE ASSESSEE FURNISHE D ALL THE PARTICULARS IN THE RETURN WHICH WERE NOT FOUND TO BE INACCURATE, I T WAS UPTO THE AUTHORITIES TO ACCEPT THE CLAIM OF THE ASSESSEE IN THE RETURN OR NOT, BUT, IT CANNOT BE A CASE FOR IMPOSITION OF PENALTY. THE IN STANT CASE IS GOVERNED BY THE RATIO OF THE APEX COURT VERDIT. UNDER SUCH CIRCUMSTANCES, I AM SATISFIED THAT THE AUTHORITIES BELOW WERE NOT JUSTI FIED IN IMPOSING AND CONFIRMING THE PENALTY U/S 271(1)(C). THE SAME IS DIRECTED TO BE DELETED. 4. IN THE RESULT, THE APPEAL FILED BY THE ASS ESSEE IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 08.08.2 016. SD/- [R.S. SYAL] ACCOUNTANT MEMBER DATED, 08 TH AUGUST, 2016. DK ITA NO.6645/DEL/2015 5 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.