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2020 (8) TMI 814
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....A) confirming the penalty of Rs. 3,78,030/- levied by the AO u/s 271(1)(c) of the Act. 4. Facts of the case, in brief, are that the AO, in the order passed u/s 147/143(3) dated 10th October, 2013, made an addition of Rs. 13,23,400/- by invoking the provisions of section 50C of the IT Act. In appeal, the ld.CIT(A) confirmed the addition of Rs. 13,23,400/- made by the AO. Subsequently, the AO initiated penalty proceedings u/s 271(1)(c) and levied penalty of Rs. 3,78,030/- being 100% of tax sought to be evaded. In appeal, the ld.CIT(A) confirmed the penalty so levied. 5. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal. 6. The ld. Counsel for the assessee, at the outset, referring to the copy of the notice issued u/s 274 r.w. section 271(1)(c) of the Act dated 30th October, 2012, copy of which is placed at page 78 of the paper book, submitted that the inappropriate words in the said notice has not been struck off and, therefore, it is not known as to under which limb of section 271(1)(c), the AO has initiated the penalty proceedings. Referring to the decision of the Hon'ble Karnataka High Court in the case of CIT v. Manjunatha Cotton And ....
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....2020 ITAT DELHI 5. DCIT v. M/S TELESONIC NETWORK LTD. ITA No. 2554/Del/2017 ITAT DELHI 6. M/S GLOBAL EMERGING MARKETS INDIA LTD. v. ITO ITA No.3099/Del/2019 Dated: 30 June 2020 ITAT DELHI 7. DCIT v. METRO TYRES PVT. LTD. ITA No. 2874/DEL/2016 ITAT DELHI Dated: 24 June 2020 8. SRIKANT SHAH v. ITO ITA No. 6585/DEL/2018 Dated: 08 May 2020 ITAT DELHI 9. M/S ABR AUTO Pvt. LTD. v. ACIT I.T.A. No. 6236/DEL/2015 ITAT DELHI 10. M/S ACB INDIA LTD. v. ACIT ITA No. 1409/Del/2015 ITAT DELHI 11. HINDON FORGE (P) LTD., C/O MALIK AND CO. v. DCIT 2020 (5) TMI 383 ITAT DELHI 7. Referring to the following decisions, he submitted that mere disallowance of the claim could not be the sole basis for levying penalty u/s 271(1)(c):- 1. CIT v. Reliance Petroproducts Pvt. Ltd 322 ITR 158 SUPREME COURT 11. Shervani Hospitalities Ltd. v. CIT I.T.A. 804 of 2011 DELHI HIGH COURT 2. CIT v. M/S Dharampal Premchand Ltd. 329 ITR 572 DELHI HIGH COURT 3. CIT v. SOCIETEX ITA 1190/2011 DELHI HIGH COURT 4. KARAN RAGHAV EXPORTS PVT LTD. v. CIT ITA 1152/2011 DELHI HIGH COURT 8. So far as the merit of the case is concern....
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.... Hon'ble Calcutta High Court in the case of CIT vs. Madan Theatres Ltd., (supra), Relying on various other decisions placed on the paper book, the ld. Counsel submitted that although the addition has been sustained in the quantum proceedings before the CIT(A), however, penalty is not leviable on account of difference in valuation by the stamp valuation authority. He also relied on the following decisions:- 1. Shri Ashwani Jaipaty v. DCIT ITA.No.276/Del./2018, ITAT Delhi 2. DCIT v. Trans Freight Containers Ltd., ITA no.2337/Mum./2016 ITAT Mumbai 3. BHAVYA ANANT UDESHI v. ITO 43 ITR (Trib) 487 ITAT HYDERABAD 4. ITO v. LATED SHRI DHAN SINGH BHATI THROUGH LEGAL HEIR MS. NEHA BHATI ITA No.40/JP/2014 ITAT JAIPUR 5. SHRI C. BASKER & SHRI C. VIJAYA KUMAR, v. ACIT ITA No.997 & 998/Mds/2012 ITAT CHENNAI 6. SHRI CHIMANLAL MANILAL PATEL v. ACIT ITA No.508/Ahd/2010 ITAT AHMEDABAD 7. ITO vs. Ajay Sharma, ITA No.995/Del/2016 9.1 He accordingly submitted that both legally and factually the penalty levied by the AO and upheld by the CIT(A) is not maintainable. 10. The ld. DR, on the other hand, heavily relied on the order of the C....
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....are being initiated will not satisfy the requirement. The direction to initiate proceedings should be clear and not be ambiguous. It is well settled law that fiscal statutes are to be construed strictly and more so the deeming provisions by way of legal fiction are to be construed more strictly. They have to be interpreted only for the said issue for which it has deemed and the manner in which the deeming has been contemplated to be restricted in the manner sought to be deemed. As the words used in the legal fiction or the deeming provisions of Section 271(1B) is Direction, it is imperative that the assessment order contains adirection. Use of the phrases like (a) penalty proceedings are being initiated separately and (b) penalty proceedings under Section 271(1)(c) are initiated separately, do not comply with the meaning of the word direction as contemplated even in the amended provisions of law. The direction should be clear and without any ambiguity. The word 'direction' has been interpreted by the decision of the Apex Court in the case of RAJENDRANATH reported in 120 ITR pg.14, where it has been held that in any event whatever else it may amount to, on its very terms the observa....
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....he company to explain as to why the whole amount of expenses of Rs. 18,36,725/- should not be disallowed. The assessee submitted the following reply which has been extracted by the AO in the body of the assessment order:- "Late Mr. Raman Kumra was the sales Director of the company and the cancer decease was detected during financial year 2011-12. The Board of Director of the company has decided that best medical treatment should be given to him and all the medical expenses to be borne by the company by making direct payment to the hospital etc. and copy of the resolution of the board of director if required can be submitted. The Board of Directors of the company knew that if he could not survive the sale of the company will be effected drastically and due to that reasons the assessee company has decided to borne all the medical expenses of Late Mr. Raman Kumra. We are giving below the sales of the company for the financial year 2011 -12, 2012-13 and 2013-14, which proves why the company intend to save the life ---- sales director:- Financial year sales 2011-12 Rs. 6.76 Crores 2012-13 Rs. 3.26 Crores 2013-14 Rs. 2.46 Crores It is very clear ....
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....decisions and doubting the business expediency for the incurrence of such expenditure, the ld.CIT(A) rejected the claim of the assessee and upheld the disallowance made by the AO. 17. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal. 18. The ld. Counsel for the assessee strongly challenged the orders of the AO and the CIT(A). He submitted that Mr. Raman Kumra was the Director of the assessee company who was looking after the sales operation of the assessee company. During his tenure the sales of the assessee company had gone up. However, after the death of Shri Raman Kumra, the sales of the assessee have drastically dropped from Rs. 6.67 crores to Rs. 2.46 crores, i.e., 57% decline in sales in F.Y. 2013-14 as compared to F.Y. 2011-12. Therefore, it cannot be said that Late Shri Raman Kumra was not involved in sales operation. The ld. Counsel for the assessee submitted that the various decisions relied on by the CIT(A) are not applicable to the facts of the present case and are distinguishable. He filed a brief synopsis distinguishing the various decisions relied on by the ld. CIT(A) and submitted that those cases are factually different f....
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....T(A). He submitted that the ld.CIT(A), relying on various decisions, has observed that the expenditure incurred by the assessee is not an allowable expenditure and, therefore, the same being in confirmity with the various decisions relied on by him should be upheld. 20. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find, the assessee, in the instant case, has debited an amount of Rs. 19,73,792/- as medical expenses in the Profit & Loss Account out of which the AO disallowed an amount of Rs. 18,36,725/- being medical expenses pertained to expenses incurred for the treatment of Late Shri Raman Kumra, non-executive director of the assessee company. While doing so, the AO noted that the assessee should have entered the perquisite in the hands of Shri Raman Kumra, the non-executive director which was not done in the instant case. Further, the income-tax return of Shri Raman Kumra has not been filed by his legal heir. We find, the ld.CIT(A), in his ex parte order, upheld the action of the AO by relying on var....