Peartree Enterprises Pvt. Ltd, Delhi V. DCIT, Circle-19(2), New Delhi

ITA 7225/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5220 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 04-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVANI BANSAL
• Keywords: Corroborative evidences; TDS
• Section: 271(1)(c); 40A(3); 251; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 7225/DEL/2017 : ASSTT. YEAR : 2014-15 PEARTREE ENTERPRISES PVT. LTD., C4/142, SAFDARJANG DEVELOPMENT AREA, NEW DELHI-110016 VS DCIT, CENTRAL-19(2), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AA CCP8759Q ASSESSEE BY : NONE REVENUE BY : MS. SHIVANI BANSAL, SR. DR DATE OF HEAR ING: 15 . 0 9 .20 2 1 DATE OF PRONOUNCEMENT: 22 .0 9 .20 2 1 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-7, NEW DELHI DATED 16.08.20 17. 2. THE AO LEVIED PENALTY U/S 271(1)(C) ON THE ADDITIONS/DISALLOWANCES VIZ. RS.11,479/- U/S 35D OF THE ACT, RS. 13,42,749/- FOR NON-DEDUCTION OF TDS ON ROYALTY AND BANK GUARANTEE COMMISSION OF RS. 2,14,850/- U/S 40(A)(IA ) OF THE ACT, RS.7,24,186/- OUT OF MACHINERY RUNNING MAINTEN ANCE EXPENSES, RS.1,35,087/- U/S 40(A)(3) OF THE ACT, IN TEREST ON TDS OF RS.2,157/-, RS. 19,343/- U/S 2(24)(X) READ W ITH SECTION 36(1)(V) OF THE ACT AND AGRICULTURAL EXPENSES OF RS .35,725/- MADE IN THE ASSESSMENT ORDER. ITA NO. 7225/DEL/2017 PEARTREE ENTERPRISES PVT. LTD. 2 3. THE ASSESSEE DID NOT FILE APPEAL AGAINST THE ORD ER. THE AO LEVIED THE PENALTY AS HE HELD THAT THE ASSESSEE DID NOT FURNISH ANY SUPPORTING EVIDENCE THAT IT HAD CORRECTLY COMPU TED THE TAXABLE INCOME AND HAD FURNISHED INACCURATE PARTICU LARS OF ITS INCOME WITH A VIEW TO AVOID IMPOSITION OF TAX DUE. 4. THE LD. CIT (A) HELD THAT THE DISALLOWANCE U/S 2 (24)(X) R.W.S. 36(1)(V), 40(A)(IA), INTEREST ON TDS, SECTIO N 40A(3) SHALL NOT ATTRACT THE RIGORS OF THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT AND DELETED THE PENALTY LEVIED UNDER THESE HEADS. 5. HOWEVER, THE LD. CIT (A) CONFIRMED THE PENALTY L EVIED U/S 271(1)(C) WITH REFERENCE TO QUANTUM ADDITION ARISIN G OUT OF DISALLOWANCE OF RS. 11,479/- INCURRED FOR INCREASE IN AUTHORIZED SHARE CAPITAL, DISALLOWANCE OF RS.7,24,186/- ON ACC OUNT OF UNVERIFIABLE EXPENSES OUT OF EXPENDITURE CLAIMED UN DER THE HEAD MACHINERY, RUNNING AND MAINTENANCE. 6. WHILE CONFIRMING THE PENALTY, THE LD. CIT (A) RE LIED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F K. P. MADHUSUDAN VS. CIT, 251 ITR 99 WHEREIN IT WAS HELD THAT THE ONUS IS ON THE ASSESSEE TO PROVE THAT HE HAS NOT CO NCEALED OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME. FUR THER, HE RELIED ON THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF UOI & OTHERS VS. DHARMENDRA TEXTILE PROCESSORS & OT HERS 306 ITR 277 WHEREIN IT WAS HELD THAT THE PENALTY IS A C IVIL LIABILITY AND MENS REA IS NOT REQUIRED TO BE ESTABLISHED BY THE REVENUE. SIMILARLY, ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. ATUL MOHAN BINDAL (2009) 317 ITR 1 WHEREIN IT WAS HELD THAT PENALTY U/S 271(1)(C) IS NEITHER CRIM INAL NOR QUASI CRIMINAL BUT A CIVIL LIABILITY, ALBEIT A STRICT LIA BILITY. SUCH LIABILITY ITA NO. 7225/DEL/2017 PEARTREE ENTERPRISES PVT. LTD. 3 BEING CIVIL IN NATURE, MENS REA IS NOT ESSENTIAL. EXPLANATION APPENDED TO SECTION 271(1)(C) INDICATES ELEMENT OF STRICT LIABILITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GI VING INACCURATE PARTICULARS WHILE FILING THE RETURN. 7. WE FIND THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ZOOM COMMUNICATION (P) LTD., 327 ITR 510 HE LD THAT, ............................... 19. IT IS TRUE THAT MERE SUBMITTING A CLAIM WHICH IS INCORRECT IN LAW WOULD NOT AMOUNT TO GIVING INACCURATE PARTIC ULARS OF THE INCOME OF THE ASSESSEE, BUT IT CANNOT BE DISPUTED T HAT THE CLAIM MADE BY THE ASSESSEE NEEDS TO BE BONAFIDE. IF THE C LAIM BESIDES BEING INCORRECT IN LAW IS MALAFIDE, EXPLANATION 1 T O SECTION 271(1) WOULD COME INTO PLAY AND WORK TO THE DISADVA NTAGE OF THE ASSESSEE. 8. IN THE INSTANT CASE, THE DISALLOWANCE ON EXPENSE S RELATING TO MACHINERY MAINTENANCE HAVE BEEN DISALLOWED OWIN G TO NON- PRODUCTION OF BILLS. THE DETAILS OF EXPENDITURE DAT E-WISE HAVE BEEN FURNISHED TO THE AO AND IT PERTAINS TO PURCHAS E OF SPARES & TYRES FOR THE MACHINERY. THE CLAIM CANNOT SAID TO B E MALAFIDE OR UNTENABLE AS THE PURCHASE OF TYRES AND SPARE PARTS ARE INTEGRAL TO THE WORKING OF THE MACHINERY. THE TYRES HAVE BEE N PURCHASED FROM AJIT TYRES PVT. LTD. AND NO INQUIRIES HAVE BEE N MADE BY THE ASSESSING OFFICER TO BRING ON RECORD THAT THE P URCHASES INDEED HAVE NOT BEEN ENTERED INTO. THE DISALLOWANCE IS MADE SOLELY ON THE BASIS OF NON-PRODUCTION OF BILLS. THE RE IS NO MATERIAL BROUGHT BY THE ASSESSING OFFICER. THE DECL ARED LOSS OF THE ASSESSEE AS PER THE RETURN WAS RS.42,28,25,590/ -. HENCE, KEEPING IN VIEW, THE ENTIRE FACTS AND SINCE THERE I S ABSENCE OF ITA NO. 7225/DEL/2017 PEARTREE ENTERPRISES PVT. LTD. 4 INVOCATION OF SPECIFIC LIMB OF PENALTY WHETHER CONC EALMENT OR FURNISHING THE INACCURATE PARTICULARS U/S 271(1)(C) SOUGHT TO BE LEVIED, EITHER IN THE ASSESSMENT ORDER (LAST PAGE O F AO), OR IN THE PENALTY ORDER (PARA 4.3 & 10), OR IN THE APPROV AL GRANTED BY THE ADDL. COMMISSIONER (PARA 14), WE HEREBY DIRECT THE PENALTY LEVIED BE OBLITERATED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/09/2021. SD/- SD/- (AMIT SHUKLA) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: 22/09/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR