Sanwar Mal Pansari, Delhi vs Assessee

Appellant by : Smt. Lalitha Krishnamurthy, CA. Respondent by : Shri B.R.R. Kumar, Sr.DR.

Date of hearing : 25.02.2015 Date of pronouncement : 04.03.2015

ORDER

PER G.C. GUPTA, GUPTA, VP :

These two appeals by the assessee for the AY 2003-04 and 2004- 05 are directed against the order of learned CIT(A)-II, New Delhi dated 17th October, 2012. These are being disposed of with this consolidated order.

ITA No.133/Del/2013 - (AY 2003- 2003-04) :-

:-

2. The only issue in this appeal of the assessee is regarding the validity of penalty imposed under Section 271(1)(c) of the Income-tax Act, 1961 amounting to `55,158/-.

3. The learned counsel for the assessee submitted that there was a search and seizure operation under Section 132 of the Act against the assessee on 7th October, 2004 and, after discussion, the assessee 2 ITA Nos.133 & 134/Del/2013

surrendered an amount of `9 lakhs during search operation to cover the so-called discrepancies. However, from the details submitted by the assessee at the time of search itself, the Assessing Officer has made certain disallowances on which penalty for concealment of income has been levied under Section 271(1)(c) of the Act. She submitted that the items of expenses disallowed by the Assessing Officer were already with the Investigation Wing of the Department and the amount of expenses was debited to the capital account of the assessee and no expenditure was incurred outside the capital account of the assessee. She submitted that the disallowances were out of the details of net income and expenditure as reproduced by the CIT(A) in its appellate order.

4. Learned DR has opposed the submissions of the learned counsel for the assessee. He referred to the relevant portion of the assessment order and the appellate order passed by the CIT(A) in support of the case of the Revenue. He relied on the decision of Hon'ble Supreme Court in the case of Mak Data P.Ltd. Vs. CIT - [2013] 358 ITR 593 (SC).

5. We have considered the submissions of both the sides and perused the order of the Assessing Officer and the CIT(A). We find that the dalali income was estimated by the Assessing Officer at `15.85 lakhs which was reduced to `1.25 lakhs by the CIT(A). The penalty was imposed on this amount of income from dalali business and on `4,025/-

on account of capital expenditure and `46,000/- on account of disallowance under Section 37(1) of the Act. We find that penalty under Section 271(1)(c) was imposed on these items of disallowances. The dalali income has been assessed on the basis of estimate only and the assessee got substantial relief in its quantum appeal before the CIT(A) in the matter of estimation of its dalali income. The disallowance of `4,025/- on account of capital expenditure is a petty 3 ITA Nos.133 & 134/Del/2013

disallowance. The additions made may be justified in the facts of the case but do not justify the imposition of penalty under Section 271(1)(c) of the Act. It is a case where all material facts were disclosed by the assessee. Merely because there was an honest difference of opinion between the assessee and the Department regarding certain disallowances made, it does not follow that the assessee should be made liable for imposition of penalty for concealment of income or filing of inaccurate particulars of income. In this view of the matter, we are of the view that it was not a fit case for imposition of penalty, which is accordingly cancelled, and the grounds of appeal of the assessee are allowed.

ITA No.134 No.134/Del/2013 - (AY 2004 2004-05)

05) :-

:-

6. The only issue in this appeal of the assessee is regarding the imposition of penalty of `89,955/- imposed under Section 271(1)(c) of the Act.

7. The learned counsel for the assessee submitted that it is a case where the addition was made on account of dalali income by way of estimate only and certain items of expenses were disallowed. The disallowed items of expenditure were part of the details of income/expenditure of the assessee which were available with the Investigation Wing of the Department. The deduction of expenditure claimed by the assessee was debited to the capital account of the assessee. She submitted that it is a case of difference of opinion with regard to allowability of certain amount of expenses claimed by the assessee.

8. Learned DR has opposed the submissions of the learned counsel for the assessee. He submitted that the assessee's conduct was not bona fide and the amounts claimed as deduction were not supported 4 ITA Nos.133 & 134/Del/2013

by any evidence whatsoever. He referred to the relevant portion of the appellate order of learned CIT(A) in support of the case of the Revenue.

He also relied on the decision of Hon'ble Supreme Court in the case of Mak Data P.Ltd. Vs. CIT - [2013] 358 ITR 593 (SC).

9. We have considered the rival submissions and have perused the order of the Assessing Officer and the CIT(A). We find that the Assessing Officer made addition of `6,73,163/- relating to dalali business by way of estimate. The assessee was subjected to search and seizure operation under Section 132 of the Act on 7th October, 2004. In quantum appeal, the assessee got substantial relief and the CIT(A) sustained the addition to the extent of `1,99,900/- on account of dalali business. On this amount, the Assessing Officer has imposed penalty under Section 271(1)(c) of the Act. In this case, the dalali payments of `1,59,900/- and out of pocket expenses `40,000/- were disallowed by the CIT(A). We find that the penalty was imposed at the rate of 150% on this amount of dalali business. The assessee has filed return of income for the relevant year declaring income of `3,53,430/- which includes the amount of `2,00,000/- surrendered during the course of search operation. The disallowances sustained by the CIT(A) in the quantum appeal of the assessee at `1,99,900/- were out of the details available with the Investigation Wing of the Department and the relevant details have been filed in compilation before the Tribunal. It is a case of honest difference of opinion between the assessee and the Revenue regarding allowability of certain deductions of expenses claimed by the assessee. The amount of expenses has been claimed to have been debited to the capital account of the assessee and this plea of the assessee could not be controverted by the Revenue. The disallowances sustained by the appellate authorities in this case may be justified in the facts and circumstances of the case but they do not justify the imposition of penalty under Section 271(1)(c) of the Act.

5 ITA Nos.133 & 134/Del/2013 The assessee could not substantiate its claim of deduction of certain amounts by filing any documentary evidence in support of its claim but, that, by itself, would not justify the imposition of penalty under Section 271(1)(c) of the Act. In this view of the matter, we are of the view that it is not a fit case for imposition of penalty under Section 271(1)(c) of the Act and, accordingly, the penalty imposed is cancelled and ground of appeal of the assessee are allowed.

10. In the result, both the appeals of the assessee are allowed.

Decision pronounced in the open Court on 4th March, 2015.

Sd/- Sd/- (T.S. KAPOOR) KAPOOR) (G.C. (G.C. GUPTA) GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT

VK.

Copy forwarded to: -

1. Appellant : Shri Sanwar Mal Pansari, 2638/8, L.H. Chambers, Naya Bazar, Delhi - 110 006.

2. Respondent : Assistant Commissioner of Income Tax, Central Circle-

Circle-17, New Delhi.

3. CIT

4. CIT(A)

5. DR, ITAT

Assistant Registrar