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TMI Blog2015 (8) TMI 840X X X X Extracts X X X X X X X X Extracts X X X X ..... le in law and on facts. Both the lower authorities failed to appreciate the fact that the Appellant neither furnished inaccurate particulars nor concealed any income. The penalty levied being without any merits and justification deserves to be quashed. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. 3. Briefly stated facts are that the case of the assessee was reopened and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as "the Act") was framed vide order dated 31/12/2008. While framing the assessment, the Assessing Officer (AO in short) made addition of Rs. 7,000/- by invoking the provisions of section 68 of the Act and addition of Rs. 15,698/- on account of disallowance of expenditure of job work, repairs & maintenance and further made addition of Rs. 49,834/- out of repairs & maintenance expenses treated as capital expenditure. The AO also initiated penalty proceedings u/s.271(1)(c) of the Act. Subsequently, the AO levied penalty of Rs. 24,000/- vide order dated 30/06/2009. Feeling aggrieved by the orders, assessee preferred an ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the addition and therefore it is clear that the appellant has admitted his guilt. Even before the undersigned the appellant has not made any submission regarding levy of penalty on this issue. Provisions of explanation 1 to section 271(1)(c) of the I. T. Act,1961 are clearly applicable to the case of the appellant. In view of these facts it is held that the AO was justified in levying penalty under section 271(1)(c) of the I. T. Act,1961 for concealment of income is and furnishing inaccurate particulars of income in respect of the amount of Rs. 7,000/- taxed under section 68 of the I. T. Act,1961. 3.2.(ii) In respect of expenditure of Rs. 15,698/- towards job charges and repairs etc. it is seen from the documents submitted by the appellant that payments in respect of these bills were made through cheque from Canara bank. Income in respect of credit entries in this bank has been offered by the appellant in the revised return and accepted by the AO. Therefore, there was no reason for not allowing the expenses recorded in the same bank account. The fact that the appellant has not disputed this addition cannot be the basis for levying the penalty. Penalty levied by the AO on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work to the disadvantage of the assessee. 20. The Court cannot overlook the fact that only a small percentage of the Income-tax Returns are picked up for scrutiny. If the assessee makes a claim which is not only incorrect in law but is also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bona fide, it would be difficult to say that he would still not be liable to penalty under section 271(1)(c) of the Act. If we take the view that a claim which is wholly untenable in law and has absolutely no foundation on which it could be made, the assessee would not be liable to imposition of penalty, even if he was not acting bona fide while making a claim of this nature, that would give a license to unscrupulous assessees to make wholly untenable and unsustainable claims without there being any basis for making them, in the hope that their return would not be picked up for scrutiny and they would be assessed on the basis of self-assessment under section 143(1) of the Act and even if their case is selected for scrutiny, they can get away merely by paying the tax, which in any case, was payable by them. The consequence would be that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making them, in the hope that their return would not be picked up for scrutiny and they would be assessed on the basis of self assessment under section 143(1) of the Act and even if their case is selected for scrutiny, they can get away merely by paying the tax, which in any case, was payable by them. The consequence would be that the persons who make claims of this nature, actuated by an intention to evade tax otherwise payable by them would get away without paying the tax legally payable by them, if their cases are not picked up for scrutiny. This would take away the deterrent effect, which these penalty provisions in the Act have, " We find that the assessee before us did not explain either to the Assessing Officer/Id. CIT(A) and even to us as to in what circumstances and on account of whose mistake, the amounts claimed as deductions in this case were not added back, while computing the income of the assessee company. We cannot ignore the fact that the assessee is a company which is having professional assistance in computation of its income, and its accounts are compulsorily subjected to audit. In the absence of any details/explanation from the assessee, we fail to appreciate h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the issue is being debatable, however the ld. CIT(A) has confirmed the penalty. He submitted that in view of the judgement of the Hon'ble Apex Court in the case of CIT vs. Reliance Petroproducts (P) Ltd.(supra), the ld. CIT(A) ought to have deleted the penalty. 6.2. On the contrary, ld. Sr. DR supported the orders of the authorities below. 7. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below as well as the judgement relied upon by the ld. Counsel for the assessee. There is no dispute with regard to the addition was made on account of the expenditure claimed as revenue expenditure by the assessee which was treated as capital expenditure by the AO. The assessee has not concealed any particulars of income or furnished inaccurate particulars of income. The only difference in treatment of the particular of the expenditure. Therefore, in our considered view, the authorities below were not justified in confirming the penalty. Hence, in view of the Hon'ble Apex Court rendered in the case of CIT vs. Reliance Petroproducts (P) Ltd., we direct the AO to delete the penalty. As a result, assessee's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bills 20.5.04 Hareshkumar B. Shah 197 12650 Copy of bills are enclosed. The payment for purchase was made by cash. 20.5.04 Sohil Paper Mart 117 9850 19.02.05 Hareshkumar B. Shah 3125 13500 02.02.05 Laxmi Enterprise - 711 Bill Missing 36711 Annexure-D - Administrative Expenses - Accounting charges 01.05.04 6200 He payment was made in cash for accounting work, voucher is missing. 07.11.04 3500 The payment was made cash for accounting work, voucher is missing. Printing & Stationery 17.09.04 V. G. Ptel 1625 2750 Copy of bills is enclosed. Paid by cash for office stationary. Repairs & Maintenance (Electrical) 15.04.04 Gopalbhai - 4500 Copy of vouchers is enclosed. Cash paid for electrical repair. 26.06.04 Gopalbhai - 5500C 15.10.04 Gopalbhai - 4500 21.03.05 Gopalbhai - 5500 3.1. The submission of the assessee has duly been taken into consideration, but the same is not found to be tenable. The assessee has failed to furnish any convincing reply except stating the reasons mentioned above. There is no merit in the case of the submission made by the assessee ad it is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(c) of the IT Act is hereby confirmed." 9.2. We find that the ld. CIT(A) has observed that bills cropped up when additional income was detected. It is not the case of the Revenue that bills furnished before the AO were not genuine as there is no finding by the AO that these bills/vouchers were not genuine and no inquiry has been made at the end of the AO. Therefore, we are of the view that this is not the case were penalty deserves to be sustained. We therefore accordingly direct the AO to delete the penalty. As a result, ground raised by the assessee is allowed and appeal of the assessee for AY 2005- 06 is allowed. 10. Now, we take up the assessee's appeal in ITA No.2574/Ahd/2011 for AY 2006-07. The assessee has raised the following ground(s) of appeal: 1. Ld. CIT(A) erred in law and on facts in confirming penalty levied by AO u/s.271(1)(c) of the Act on addition of unexplained credits/disallowance of certain expenditure and on difference in the amount of taxable income as per original return and revised return filed by the appellant that is wholly unsustainable in law and on facts. Both the lower authorities failed to appreciate the fact that the Appellant neither furnished i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel, Mr. Soparkar for the respondent. Learned counsel, Ms. Sheth has argued that the Tribunal had failed to see that the assessee had failed to deduct the IDS as per law which was also deposited late and on such disallowance as has been confirmed by both CIT (Appeals) and ITAT and therefore, the imposition of penalty by Assessing Officer was just and proper. Per contra, learned senior counsel submitted that none of the elements of Section 271(1)(c) get attracted in case of the respondent assessee. On due consideration of the submissions of both sides and on examining the orders of all the authorities, we find no reason to interfere in this appeal in as much as both the authorities namely C1T(A) and IT AT have rightly deleted the penalty observing that the disallowance was due to non-payment of TDS, which was at the most a technical default. There being nothing to indicate any concealment of the income or furnishing of inaccurate particulars of income by the assessee, the Assessing Officer was rightly not justified in levying the penalty. 4. This being a correct approach adopted by both the authorities concurrently, this tax appeal poses no question of law and the same requires ..... X X X X Extracts X X X X X X X X Extracts X X X X
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