Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (9) TMI 707 - ITAT DELHIPenalty levied u/s 271(1)(c) - addition made on account of stock written off - Held that:- As during the assessment proceedings the assessee filed letter of three different parties to whom impugned stock was shown and the same was rejected by them. Thereafter, the directors of the company took a conscious decision to write off stock considering the condition of the market and to save cost of storage etc. From the assessment order para (b) we note that the A.O has alleged that the ball pen could have been used by replacing the dried refills and HDPE bags could have been recycled but on this allegation we agree with the contention of the Ld. AR that the plastic body of ball pen has cracked and for recycling of bags the assessee is not a manufacturer but it is a simple trader who can’t recycle the absolute stock. On the issue of disallowance regarding other deprecation and expenses we note that in the impugned order the genuineness and incurrence of expenditure has not been doubted and this disallowances have been made on the allegation of non-existence at any business activity and disallowances on these counts have been made merely because not business activity was carried out during the A.Y by the assessee. However, the addition based on the said allegations have attained finality due to dismissal of appeal on account of non prosecution, but we may point out that the assessee being a private limited company, a legal entity, cannot be deprived from claiming the expenses incurred in running and maintaining the existence of a legal entity. On the basis of above, we are inclined to hold that there is no sustainable allegation by A.O in the penalty order that either the assessee has concealed particulars of its income or has furnished in accurate particulars of its income. As there is no finding the assessee had either concealed the particulars of its income or furnished particulars of income or furnished particulars of income penalty u/s 271(1)(c) of the Act cannot be held as sustainable and we dismiss the same - Decided in favour of assessee
|