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Profile India, 20/6, Mathura Road, Faridabad. Vs. ACIT, Central Circle-1, Faridabad.
September, 10th 2014
             DELHI BENCHES : D : NEW DELHI


                       ITA No.5121/Del/2013
                     Assessment Year : 2007-08

Profile India,                   Vs.   ACIT,
20/6, Mathura Road,                    Central Circle-1,
Faridabad.                             Faridabad.


  (Appellant)                             (Respondent)

           Assessee By       :    Shri Vinay Bhatia, CA
           Department By     :    Dr. B.R.R. Kumar, Sr.DR



    This appeal by the assessee is directed against the order

passed by the CIT (A) on 26.06.2013 upholding the penalty of `

20,028/- imposed by the AO u/s 271(1)(c) of the Income-tax Act,

1961 (hereinafter also called `the Act') in relation to the

assessment year 2007-08.
                                                   ITA No.5121/Del/2013

2.   Briefly stated, the facts of the case are that during the

course of search and seizure operation conducted at the business

premises of the assessee, two undated bills were found towards

labour charges for ` 29,000/- and ` 30,500/- which did not contain

the name of the parties in whose favour these were issued. The

first bill of ` 29,000/- was bearing the name of `SS Auto

Engineering Works' printed on its top as the        seller/service

provider and the other bill had the name of `Super Auto Powers'.

During the course of assessment proceedings, the assessee was

asked to explain the above bills and get them verified from the

books of account.    As per the AO, there was no explanation

furnished by the assessee, which resulted into an addition of `

59,500/- towards `Claim of bogus expenses'. On the basis of such

addition, the AO initiated penalty proceedings. The assessee also

specifically stated during the course of penalty proceedings that

these bills did not belong to it as these are never entered in its

books of account and, hence, not claimed as expenditure.          Not

convinced with the assessee's submissions, the AO imposed a

penalty amounting to ` 20,028/-, which came to be upheld in the

first appeal.

                                                      ITA No.5121/Del/2013

3.   After considering the rival submissions and perusing the

relevant material on record, it is seen that the very foundation for

the instant penalty is the addition of ` 59,500/- in respect of the

two bills found from the assessee's premises at the time of

search, which were undated and did not contain the name of the

party to whom these were to be issued. The assessee specifically

stated before the AO that these bills were not recorded in its

books of account and no deduction was ever claimed on this

count.   Notwithstanding the fact     that the assesee offered this

amount as income, we fail to appreciate as to how there can be

any question of imposing penalty in the absence of there being

any deduction claimed and found to be inappropriate.           The AO

has made out a case of `claim of bogus expenses', whereas the

fact is that the assessee did not,      at all,   claim deduction in

respect of such expense. The very foundation for imposition of

penalty, in our considered opinion, is lacking inasmuch as the

addition has been made by treating the amount as bogus

expense, which in fact, was never claimed by the assessee. We,

therefore, order for the deletion of the penalty.

                                                         ITA No.5121/Del/2013

4.        In the result, the appeal is allowed.

          The order pronounced in the open court on 09.09.2014.

               S                                         Sd/-

       [A.T. VARKEY]                                  [R.S. SYAL]
     JUDICIAL MEMBER                              ACCOUNTANT MEMBER

Dated, 09th September, 2014.


Copy forwarded to:

     1.   Appellant
     2.   Respondent
     3.   CIT
     4.   CIT (A)
     5.   DR, ITAT

                                                   AR, ITAT, NEW DELHI.

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