M/S Model Echoes Pvt. Ltd., Kanpur vs Assessee

This appeal is preferred by the assessee against the order of the ld. CIT(A) confirming the penalty levied under section 271(1)(c) of the Income-tax Act, 1961 (hereinafter called in short "the Act") at Rs.3.70 lakhs.

2. During the course of hearing, the ld. counsel for the assessee has invited our attention to the fact that the assessee has booked the expenses under the head export promotion at Rs.5,04,400/- on 31.3.2003. But the same was disallowed by the Assessing Officer on the ground that the trade fare was conducted in the next financial year, therefore, these expenses cannot be debited in the impugned assessment year. He accordingly made addition and levied penalty under section 271(1)(c) of the Act at Rs.3.70 lakhs. The ld. CIT(A) has disposed of the appeal ex-parte and confirmed the penalty. The ld. counsel for the assessee has submitted that there is :-2-:

no concealment of facts, as the assessee has debited this expenditure to the profit and loss account for the impugned assessment year, as it was incurred on 31.3.2003, but the same was disallowed by the Assessing Officer only for the simple reason that the trade fare was undertaken in the same financial year and made addition of the same in this year with the submission that the same may be allowed in the next year. Since the assessee has furnished the correct facts before the Assessing Officer, there was neither concealment of facts nor furnishing of inaccurate particulars to attract levy of penalty under section 271(1)(c) of the Act.

3. The ld. D.R., on the other hand, has placed reliance upon the order of the ld. CIT(A).

4. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that the assessee has a valid reason for debiting this expenditure in the impugned financial year on the ground that it was incurred on 31.3.2003 though it may not be allowed in this year, as the trade fare was undertaken in the next financial year for which the Assessing Officer has made addition, but the penalty under section 271(1)(c) of the Act for the same is not leviable. We, therefore, find no merit in the penalty and we accordingly delete the same after setting aside the order of the ld. CIT(A).

5. In the result, appeal of the assessee is allowed.

Order was pronounced in the open court on the date mentioned on the captioned page.

Sd/- Sd/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER

DATED:5th June, 2015 JJ:2904 :-3-:

Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR Assistant Registrar