2024 (4) TMI 838

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....sessing officer i.e. ITO Ward 6 (2) (3), Mumbai on 26/6/2019 levying penalty under section 271(1)(c) of the income tax act, 1961 (the act) of Rs. 877,980 is dismissed. 02. The assessee is aggrieved with the same and has preferred an appeal against confirmation of that penalty. 03. Grounds in ITA No. 1145/MUM/2024 are as under :- "A. On the facts and circumstances of the case, Commissioner of Income-Tax Appeals (the CIT Appeals) erred in confirming the penalty of Rs. 8,77,980/- u/s 271(1)(c) of the Income tax Act 1961,. B. The CIT Appeals erred in levying penalty ignoring the below explanations given by the Appellant. i. CIT appeals made adhoc additions @50% of expenses of Rs. 56,66,854/- resulting in additio....

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....arned assessing officer noted that assessee has claimed salary expenses to the tune of Rs. 3,189,921, repairs and maintenance expenditure of Rs. 68,386, sundry expenses of Rs. 455,836/- and travelling expenses and transportation expenditure totaling to Rs. 5,666,854. The assessee was asked to furnish the details of these expenses and justify the claim. The assessee merely filed the month wise details of the expenses however no supporting documents were filed to substantiate the claim therefore the learned assessing officer passed an assessment order disallowing 50% of Rs. 5,666,854/- under section 37 (1) of the act. It was further noted that during the year the assessee has received a sum of Rs. 7934/- on account of income in respect of uni....

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.... he dismissed the appeal. On the merit also he found that the facts and circumstances stated by the assessing officer are correct and accordingly on the merits also he upheld the levy of the penalty. 09. Assessee being aggrieved with the same is in appeal before us. The learned authorized representative submitted only the case law compilation consisting of four judicial precedents stating that penalty should not have been levied on the assessee on disallowance made on ad hoc basis and further it has been made purely on the basis of non-furnishing of the complete details with respect to the supporting evidences. It was submitted that assessee has furnished the details of expenditure month wise format. The learned assessing officer did not....

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.... Assessee did not make any representation before the learned CIT - A. Therefore the penalty is upheld. Thus the action of the lower authorities in confirming the penalty cannot be found fault with. 011. We have carefully considered the rival contention and perused the orders of the lower authorities. We find that during the course of the reassessment proceedings where the notice under section 148 of the income tax act was issued the assessee filed its return of income. The assessee did not file its original return of income. When the reassessment proceedings culminated into an assessment order, the addition was made with respect to the reasons for which reassessment proceedings were initiated and further the learned assessing officer ask....

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....ason being that the learned CIT - A did not find any infirmity in the order of the learned AO. No doubt the assessee has submitted before us many judicial precedents wherein where there is an ad hoc disallowance of the expenditure; it is held that penalty cannot be levied. Though this cannot be a universal principle. We find that had the case is that the assessee is unable to substantiate the amount of expenditure; the learned assessing officer should have disallowed 100 % percent of such expenditure by giving a sufficient reason. By disallowing 50% and allowing 50% of that expenditure, the learned assessing officer is also not clear whether the assessee has concealed income or has furnished inaccurate particulars of income. In the assessme....