Saboo Brothers Ltd, Mumbai vs Assessee

M/s Saboo Brothers Limited, बनाम/ Asstt.Commissioner of Income Tax th 209, Niranjan, 99-Marine Drive, -4(3), 6 Floor, Vs. Mumbai. Aayakar Bhavan, M.K.Road, Mumbai-400020 (अपीलाथ /Appellant) .. ( यथ / Respondent) थायी ले ख ा सं . /जीआइआर सं . /P AN/GIRNo.: AAACS6148L

अपीलाथ ओर से / Appellant by : Shri Vipul B Joshi and Nishit Gandhi यथ क ओर से/Respondent by Shri Neil Philip

सन ु वाई क तार ख / Date of Hearing : 18.12.2014 घोषणा क तार ख /Date of Pronouncement : 14.1.2015.

आदे श / O R D E R

Per B.R.BASKARAN, Accountant Member:

The assessee has filed this appeal challenging the order dated 13-09- 2011 passed by Ld CIT(A)-9, Mumbai confirming the penalty levied u/s 271(1)(c) of the Act to the extent of Rs.3,45,000/-.

2. We heard the parties and perused the record. The facts relating to the issue under consideration are that the assessee had claimed deduction u/s 80G of the Act to the extent of Rs.7.50 lakhs in its return of income in respect of donation of Rs.15.00 lakhs given to M/s Shrimati Godawari Devi Saraf Charitable Trust. In the computation of income, the assessee had also disallowed the donation amount of Rs.15.00 lakhs. In the reassessment proceedings, the AO noticed that the receipt issued by the above said Trust was incomplete. Further the AO noticed that the assessee has shown a sum of Rs.15,000/- only as ITA No.7920/M/2011 2

Charity & Donation' in the Profit and Loss account. Accordingly the AO treated the amount of Rs.15.00 lakhs as Deemed Income/Unexplained Expenditure u/s 69C of the Act and assessed the same. The AO also did not allow deduction u/s 80G of the Act claimed by the assessee. The AO levied penalty of Rs.7,00,000/- on the above said addition on the ground that the assessee has filed inaccurate particulars of income.

3. In the quantum appeal, the Ld CIT(A) restricted the addition to Rs.7.50 lakhs, since the net addition was Rs.7.50 lakhs only (Rs.15.00 lakhs added less 80G deduction of Rs.7.50 lakhs). The Tribunal also confirmed the order of Ld CIT(A) passed in the quantum appeal proceeding. In the appeal filed by the assessee against the penalty order, the Ld CIT(A) held that the penalty should have been levied on Rs.7.50 lakhs only, i.e., the amount that was sustained by Ld CIT(A) and Tribunal. Accordingly the Ld CIT(A) sutaineded the penalty to the extent of Rs.3,45,000/- and deleted the balance amount. Still aggrieved, the assessee has filed this appeal before us.

4. The undisputed fact remains that, as per the books of account, the assessee has not paid the amount of Rs.15.00 lakhs as shown in the receipt. During the course of assessment proceeding, the assessee has submitted that it has paid a sum of Rs.3.00 lakhs only by way of cheque and the same has been shown as Advance in the books of account. The assessee has further submitted that the disallowance of Rs.15.00 lakhs made by the assessee was wrong, which contention is also correct. A disallowance could be made only if the same had been claimed as deduction. The assessee has claimed deduction u/s 80G to the extent of Rs.7.50 lakhs. The net effect of the same was that the assessee has, in fact, offered a sum of Rs.7.50 lakhs as its income over and above the amount disclosed in the profit and loss account.

5. The AO has made the addition of Rs.15.00 lakhs on the basis that the assessee has given the donation referred above. However, it is seen that the assessing officer did not make any enquiry with the Trust to find out as to whether the assessee has given the donation or not, even though the assessee has denied the said payment. In this connection, the following observation made ITA No.7920/M/2011 3

by the Tribunal in the order dated 05-09-2008 passed in the quantum assessment proceedings in ITA No.2743/M/06 are relevant:-

"We find that there is no evidence or material brought on record to suggest that the assessee has given a donation of Rs. 15 lakhs to the Trust".

This finding of the Tribunal, in fact, shows that the impugned addition of Rs.15.00 lakhs made by the assessing officer is not supported by any material.

6. It is a well settled proposition of law that the additions made in the assessment proceedings would not automatically lead to the levy of penalty u/s 271(1)(c) of the Act. In the penalty proceedings, the assessing officer is required to examine the matter afresh and in this connection, the findings arrived at by him during the course of assessment proceedings can be taken as a guiding factor. In the instant case, the Tribunal has noticed that the addition is not supported by any material. The claims of the assessee that it did not pay the donation of Rs.15.00 lakhs and the donation receipt was wrongly issued were not controverted. On the contrary, due to the mistake the assessee itself was constrained to offer a sum of Rs.7.50 lakhs over and above the amount disclosed in the Profit and Loss account. Under these set of facts, we are of the view that there was no case for levying penalty u/s 271(1)(c) of the Act. Accordingly, we set aside the order of Ld CIT(A) and direct the assessing officer to delete the penalty.

7. In the result, the appeal filed by the assessee is allowed.

The above order was pronounced in the open court on 14th Jan,2015.

घोषणा खल ु े यायालय म दनांकः 14th Jan,2015 को क गई ।

` मुंबई Mumbai: 14th Jan,2015.

व. न.स./ SRL , Sr. PS

आदे श क त ल प अ े षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant ITA No.7920/M/2011 4

2. यथ / The Respondent.

3. आयकर आयु त(अपील) / The CIT(A)- concerned

4. आयकर आयु त / CIT concerned

5. वभागीय त न ध, आयकर अपील य अ धकरण, मंब ु ई/ DR, ITAT, Mumbai concerned

6. गाड फाईल / Guard file.

आदे शानुसार/ BY ORDER, true copy सहायक पंजीकार (Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई /ITAT, Mumbai