IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: E: NEW DELHI
BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER
AND SHRI B.C. MEENA, ACCOUNTANT MEMBER
ITA No. 441/Del/2005
Assessment Year 2001-02
Dy. Commissioner of Income Tax vs. M/s. Learning Universe Pvt. Ltd.
Circle 4(1), New Delhi. 59, Lower Ground Floor,
Mandakni NRI Colony, GK-IV,
Appellant by : Shri Rajiv Saxena, Advocate
Respondent by : Shri Keyur Patel, Sr. DR
PER I.C. SUDHIR, JUDICIAL MEMBER
The revenue has questioned first appellate order on the following
The Ld. CIT(A) erred in law and on facts in deleting penalty of Rs.
52,85,990/- imposed u/s 271(1)(c) by the AO without appreciating
(i) that assessee deliberately claimed these as expenses when these were
(ii) that such disclosure in the notes to account only prove that the assessee
intentionally claimed such expenses though not allowable
2. We have heard and considered arguments advanced by the parties in
view of orders of the authorities below, material available on record and the
decisions relied upon.
ITA No. 441/Del/2005
3. The facts in brief are that the assessee, a private Ltd. Company is
engaged in the business of web based education services. During the year it had
claimed an expenditure of Rs. 4,15,14,394/- on account of cost of WEB site
maintenance. Out of this expenditure the assessee had debited an amount of
Rs. 1,50,21,941/- in the profit and loss account. The balance of Rs.
2,64,92,553/- was capitalized and transferred to balance sheet under the head "
miscellaneous expenditure" in schedule 7, on which the assessee had claimed
depreciation @ 25%. In response to specific query as to why the amount of Rs.
1,50,21,841/- should not be capitalized, the assessee could not furnish any
satisfactory explanation therefore the amount of Rs. 1,31,44,111/- was added to
the income of the assessee after allowing depreciation of Rs. 18,77,730/-
allowable under the Act.
4. The assessee had claimed an expenditure of Rs. 13502409/- towards
payment made to FCB ULKA Advertising Ltd. Summons u/s 131 were issued to
the party to confirm the transaction. In reply, the party i.e. FCB ULKA Advertising
Ltd. confirmed that they have booked an income of Rs. 13281184/-. Therefore,
the difference of Rs. 2,21,225/- was added to the income of the assessee on
account of unexplained expenditure. The AO initiated penalty proceedings u/s
271(1)(c) of the Act and being not satisfied with the explanation of the assesee
has levied the penalty of Rs. 2,52,85,990/- u/ s271(1)(c) of the Act. The Ld.
CIT(A) has deleted the same against which the present appeal has been