1 ITA No. 7794/Del/2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `SMC', NEW DELHI
BEFORE SH. R.K PANDA, ACCOUNTANT MEMBER
ITA No.7794/Del/2018
Assessment Year: 2007-08
V. K. Kapoor & Associates ITO
Pvt. Ltd. Vs Ward-26(1)
17, Netaji Subhash Marg, C.R. Building,
Darya Ganj, New Delhi
New Delhi, PIN: 110002
PAN: AABCV1222F
(APPELLANT) (RESPONDENT)
Appellant by Shri N. S. Bhatnagar, Adv &
Sh. N. C. Jain, Adv
Respondent by Sh. S. L. Anuragi, Sr. DR
Date of hearing: 06/05/2019
Date of Pronouncement: 20/05/2019
ORDER
PER R.K. PANDA, AM:
1. This appeal filed by the assessee is directed against the
order dated 12th October, 2018 of the CIT(A)-9, New Delhi for
Assessment Year 2007-08.
2 ITA No. 7794/Del/2018
2. Levy of penalty of Rs. 2,70,000/- u/s 271(1)(c) of the
Income Tax Act by the A.O which has been upheld by the CIT(A)
is the only issue raised by the assessee in the grounds of appeal.
3. Facts of the case, in brief, are that the assessee is a
Private Limited Company and filed its return of income on 29th
October, 2007 declaring total income of Rs.1,62,300/- which
was processed u/s 143(1). Subsequently, the case of the
assessee was reopened by issue of notice u/s 147 and the
assessment was completed u/s 147/143 (3) on a total income of
Rs.15,76,510/-, after making addition of Rs.10,75,539/- on
account of deductions claimed u/s 24(b) and amount of Rs.
1,60,104/- for undisclosed amount of income from other
sources. The assessee preferred appeal before the Ld.CIT(A)
who sustained an addition of Rs.3,63,584/- out of the above
additions. Thereafter, the assessee filed application u/s 154 and
finally the income was recomputed at Rs. 8,62,157/-.
Subsequently, the A.O initiated penalty proceedings and levied
penalty of Rs. 2,70,000/- u/s 271(1)(c) of the Income Tax Act,
1961.
4. In appeal, the Ld.CIT (A) upheld the action of the A.O by
observing as under:-
"3.2 I have perused the grounds of appeal, the submissions of
the appellant and the order of the AO. The brief facts of the case are
that the AO, during the assessment proceedings, had completed the
assessment of the appellant at Rs 15,86,400, as against the returned
income of Rs 5,00,970, filed by the appellant, thereby making an
3 ITA No. 7794/Del/2018
addition of Rs 10,79,820 in the hands of the appellant. Against the
order of the AO, the assessee went to the appellate authority.
Thereafter, the CIT(A) 13, vide his order dt 08.11.2016 had restricted
the amount of addition and had recomputed the income of the
appellant at Rs 8,62,157/-. The AO, on such additions, levied a
penalty of Rs 2,70,000, under the provisions of Sec 271(1)(c) of the
Act.
3.4. The AO u/s 271(1)(c) computed tax payable on the total
assessed income and levied penalty of Rs. 2,70,000/- thereupon.
However, the AO has levied penalty on assessed income without
reducing the amount of returned income there from and thus, the
penalty is wrongly computed. As evident from the rectification order
dated 28/07/2017 the addition of Rs. 3,63,384/- has been sustained
by the CIT(A)-13, Delhi only on which penalty u/s 271(1)(c) of the Act
can be levied. Thus, the AO is directed to re-compute the amount of
penalty @ 100% of tax sought to be evaded on the stated amount of
Rs. 3,63,384/- as against the assessed income of Rs. 8,62,157/-.
3.5 Before me, the appellant has submitted that no penalty can
be levied on the addition, since the addition sustained by the CIT(A)-
13, Delhi is on estimate basis. The appellant claimed that the AO has
erred in computing the amount of disallowance in the hands of the
appellant.
3.6 On considering the submissions of the appellant, I do not
find any merit in it. The CIT(A), vide order dt 08,11,2016, had very
well concluded that the allowable interest, under the provisions of Sec
24(b) is Rs 217663 as against the claim of the appellant at Rs
581047. This means that the appellant had intentionally jacked up
the deduction, to lower its taxes, thereby leading to concealment of
income by the appellant. The concealment of income is very much
apparent from the assessment order and the appellate order. Thus
this intentional reduction in the taxable income of the appellant,
which has been upheld by the appellate authority as well,
4 ITA No. 7794/Del/2018
tantamount to concealment of income and thus, making it eligible for
penalty u/s 271(1)(c). Thus, the grounds raised by the appellant are
dismissed and the penalty is upheld.
5. Aggrieved of such order of the CIT (A), the assessee is in
appeal before the Tribunal.
6. The Ld. Counsel for the assessee drew the attention of
the Bench to Pages 26 to 28 of the paper book and submitted
that full details were given by the assessee and nothing was
hidden from the Department. The details of interest was
declared in the audit report. Referring to the decision of the
Hon'ble Supreme Court in the case of Reliance Petro Products
Ltd. reported in 322 ITR 324, he submitted that penalty in the
instant case is not levaible merely on account of certain
disallowance. Further, the interest expenses were disallowed on
estimate basis. Since, there is no finding in the instant case
that any details supplied by the assessee in the return of income
is incorrect or false, therefore, no penalty is leviable. He
accordingly submitted that penalty in the instant case was not
sustainable.
7. The Ld. DR relied upon the order of the CIT(A) and A.O.
8. I have heard the rival arguments made by both the sides
and considered the various decisions relied by the Ld. Counsel
for the assessee. It is the submission of the Ld. Counsel for the
assessee that full particulars were given and there was no
5 ITA No. 7794/Del/2018
concealment of any particulars of income and disallowance of
interest u/s 24(b) is mainly on account of estimated
disallowance.
9. I find some force in the arguments of the Ld. Counsel for
the assessee. As per the return of income and as per the
assessment order, there is no difference in the rent receipt and
the municipals tax paid but only difference is on account of
interest. The expenses u/s 24(a)/ 24(b) as per the return of
income is Rs. 10,43,827/- whereas as per the Assessment Order
such amount is Rs. 6,80,443/-. Even the interest u/s 24(a) as
per the return of income and as per the Assessment Order is
same. The only difference is in the interest calculated as per
Section 24(b) which as per the return of income is Rs.5,81,047/-
where as per the Assessment Order the same is 2,46,662/-.A
perusal of the details of the interest reflected in the audit report
at Rs.5,81,047/- as under:-
List of Interest paid Interest TDS paid
1. Sh. Rajesh Kapoor 45577 4649
2. Sh. Dinesh Kapoor 54717 5582
3. Ms. Prabha Kapoor 88650 9043
4. Ms. Mukti Kapoor 123690 12617
5. Mr. Vinod Kumar Khanna 109953 11216
6. M/s Shiva Petroleum India Ltd. 158460 3559
6 ITA No. 7794/Del/2018
Total- 581047 46666
10. From the above, it is clear that all particulars were
given and there is no concealment as such which in my opinion
warrants levy of penalty/s 271(1)(c). The Hon'ble Supreme
Court in the case of Reliance Petro Products Pvt. Ltd. reported in
322 ITR 158 has held that a mere making of a claim which is
not sustainable in law cannot by itself will amount to furnishing
inaccurate particulars regarding the income of the assessee.
Such a claim made in the return cannot amount to furnishing
inaccurate particulars. Further, when the assessee has declared
income of Rs.5,00,971/- and the A.O completed the assessment
on a at total income at Rs. 8,62,157/-, I fail to understand as to
how and why the penalty has been levied by the A.O on the
assessed income at Rs. 8,62,157/- instead of the difference of
Rs.3,63,584/- being excess interest claimed as per u/s 24(b) of
the Income Tax Act. This shows that the A.O has not applied his
mind. Although, the CIT(A) has considered the same and
sustained penalty on Rs. 36,33,584/-, however, the same in my
opinion is not justified.
11. In view of the above discussion and considering the fact
that full particulars were given and nothing was hidden from
the Department and the disallowance of interest of
Rs.3,63,584/- was on estimated basis, therefore, I am of the
considered opinion that it is not a fit cast for levy of penalty u/s
271(1)(c) of the Income Tax Act. Therefore, I set aside the order
7 ITA No. 7794/Del/2018
of the CIT(A) and direct the A.O to cancel the penalty. The
grounds raised by the assessee are accordingly allowed.
12. In result, the appeal filed by the assessee is allowed.
The decision was pronounced in the open court at the time of
hearing itself i.e., on 20.05.2019.
Sd/-
(R.K PANDA)
ACCOUNTANT MEMBER
R.N*
Date:- 20.05.2019
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
Date of dictation 08.05.2019
Date on which the typed draft is placed before the 08.05.2019
dictating Member
Date on which the approved draft comes to the
Sr.PS/PS
Date on which the fair order is placed before the
Dictating Member for Pronouncement
Date on which the fair order comes back to the Sr. 20.05.2019
PS/ PS
Date on which the final order is uploaded on the 20.05.2019
website of ITAT
Date on which the file goes to the Bench Clerk 21.05.2019
Date on which file goes to the Head Clerk.
The date on which file goes to the Assistant Registrar
for signature on the order
Date of dispatch of the Order
8 ITA No. 7794/Del/2018
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