Profile India, 20/6, Mathura Road, Faridabad. Vs. ACIT, Central Circle-1, Faridabad.
September, 10th 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : D : NEW DELHI
BEFORE SHRI R.S. SYAL, AM AND SHRI A.T. VARKEY, JM
Assessment Year : 2007-08
Profile India, Vs. ACIT,
20/6, Mathura Road, Central Circle-1,
PAN : AABFV5239R
Assessee By : Shri Vinay Bhatia, CA
Department By : Dr. B.R.R. Kumar, Sr.DR
PER R.S. SYAL, AM:
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.
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
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.
4. In the result, the appeal is allowed.
The order pronounced in the open court on 09.09.2014.
[A.T. VARKEY] [R.S. SYAL]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated, 09th September, 2014.
Copy forwarded to:
4. CIT (A)
5. DR, ITAT
AR, ITAT, NEW DELHI.