Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

M. SJ. R. Sharma Versus ITO Co. Ward 4 (1) , New Delhi

2016 (9) TMI 707 - ITAT DELHI

Penalty 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cannot be held as sustainable and we dismiss the same - Decided in favour of assessee - I.T.A .No. 2123 /Del/2007 - Dated:- 5-8-2016 - SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER, AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For The Appellant : Sh. Ajay Wadhwa, Adv For The Respondent : Ms. Anima Barnwal, Sr. DR ORDER PER CHANDRA MOHAN GARG, JM This appeal by the assessee has been filed against the order of the ld. CIT(A) 19/12/2006 passed in First Appellate 16/2006-07 for Assessment Year 2001-02. 2. The s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as claimed and return was filed at NIL income. The Ld. Counsel also pointed out that after making additions the income reached to ₹ 5,70,535/- which was further reduced to ₹ 4,26,373/- when the rectification application filed by the assessee u/s 154 of the Act was allowed by the A.O. 4. The Ld. Counsel pointed out that in the first para of penalty order the A.O incorrectly noted that return was filed at returned loss of ₹ 28,76,930/-. The Ld. Counsel also pointed out however th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he penalty to the tune of assessed income after making additions and thus the A.O passed penalty order without application of mind and by ignoring the relevant provisions of the Act. The Ld. Counsel reiterating the written synopsis dated 9/6/2016 contented that addition in quantum has resulted from difference in opinion where the bonafide claim of the assessee was not found sustainable due to adoption of adverse opinion by the authorities below, since, penalty was not leviable on the assessee. 6 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cious decision in the interest of company to write off the stock as there was no point of keeping the absolute stock and spending money on storage of such stock. The Ld. Counsel also contended, regarding claim of depreciation and other expenses, that the incurrence and genuineness of the expenditure has not been doubted by the A.O and the same was disallowed on account of no business activity allegation which is not acceptable. The Ld. Counsel also contended that merely because no business activ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

utation of income penalty u/s 271(1)(c) of the Act cannot be validly levied. 7. The Ld. Counsel also submitted that additions on which penalty has been imposed, has been made because at difference of opinion and hence is no finding alleging that the claims of the assessee is not genuine or bogus end hence, penalty on debatable issue cannot be imposed. To support above contentions reliance has been placed on the following decisions/orders: (i) CIT Vs. Bacardi Martini India Ltd 288 ITR 288 ITR 585 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on filed by the Revenue i.e M.A No.528/Del/2008 the Tribunal related the order by following the ratio of the subsequent decision of Hon'ble Supreme Court in the case of CIT Vs. Gold Coin Foods Pvt. Ltd 172 Taxman 38 (S.) wherein it was held that the operation of Explanation 4 to Section 271(1)(c) of the Act being clarificatory, will have retrospective effect. The Ld. DR also pointed out that in view of subsequent division of Apex Court the penalty order has to be sustained. 9. The Ld. Counse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

entions of the assessee on merits of the additions and consequent penalty was not considered by the Tribunal in the related order hence, the same may be considered in this second round of proceedings which clearly demonstrate that penalty on all three courts is not levaible u/s 271(1)(c) of the Act. 10. On careful consideration of above rival submission, at the outset, from the earlier order of the Tribunal we note that the appeal of the assessee was allowed only by following the preposition lai .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

entions and explanation of the assessee on merits and all three additions which were basis for imposing penalty on the assessee. 11. Therefore, in view of above, we decline to accept contention of the Ld. DR that penalty should be upheld by only following preposition laid down by Hon ble Apex Court in the case of Gold Coin (Supra) as certainly penalty cannot be deleted on the legal ground i.e. prospective effect of Explanation 4 to Section 27(1)(c) of the Act but other submission, contentions an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on prosecution without any adjudication on merits. In this backdrop when we analyze the firs addition made on account of stock written off then we note that 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 par .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nuineness 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version