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24-05-2019, Neemrana Hotels, Section 271(1)(c), 274, 271, Tribunal Delhi

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2 months 3 weeks ago #9548 by amit
Section - 271(1)(c), 274, 271, 40(a)(ia)
Order Date - 24-05-2019
Favouring - Assessee
Court - Tribunal Delhi
Appellant - Neemrana Hotels Private Limited
Respondent - DCIT
Justice - G.D. AGRAWAL VP & SUDHANSHU SRIVASTAVA JM
Citation - 519Taxpundit306
Appeal No. - ITA No.4080/Del/2016
Asstt. Year - 2008-09

Order

PER : SUDHANSHU SRIVASTAVA, JM

This appeal has been preferred by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)-6, New Delhi {CIT (A)} for assessment year 2008-09 wherein vide order dated 1.2.2016, the Ld. Commissioner of Income Tax (A) has upheld the imposition of penalty of Rs. 8,95,256/- imposed u/s 271(1)( c) of the Income Tax Act, 1961 (hereinafter called 'the Act').

2.0 Brief facts of the case are that during the year under consideration, the assessee company was engaged in the business of running of hotels in various locations spread all over the country. The return of income was filed declaring an income of Rs. 4,28,30,390/-. The assessment was completed at an income of Rs. 5,76,72,750/- after making the following additions/disallowances:-

i) Addition on account of disallowance u/s 40(a)(ia) of the Act to the tune of Rs. 1,24,49,495/-

ii) Addition on account of short term capital gain to the tune of Rs. 23,92,871/-.

2.1 Penalty proceedings u/s 271(1)(c) were initiated in the assessment order itself. The assessee’s appeal before the Ld. Commissioner of Income Tax (A) was partly allowed wherein the disallowance u/s 40(a)(ia) of the Act was restricted to Rs. 21,60,000/- and the disallowance on account of short term capital gain was reduced from Rs. 23,92,871/- to Rs.4,73,881/-. Subsequently, on the assessee approaching the ITAT, the ITAT deleted the disallowance u/s 40(a)(ia) of the Act and also upheld the addition pertaining to short term capital gains as restricted by the Ld. CIT (A). Thus, the only addition which finally survived was of Rs. 4,73,881/- which pertained to addition on account of short term capital gain. Subsequently, penalty of Rs. 8,95,256/- was imposed u/s 271(1)(c) of the Act on the total addition of Rs. 26,33,881/- which included the disallowance of Rs. 21,60,000/- pertaining to disallowance u/s 40(a)(ia) of the Act. This penalty of Rs. 8,95,256/- was upheld by the Ld. Commissioner of Income Tax (A) and now the assessee is before the ITAT challenging the confirmation of penalty and has raised the following grounds of appeal:-

“1. That the notice issued u/s 271(1 )(c) and order passed under said section imposing penalty of Rs. 8,95,256/- are illegal, bad in law and without jurisdiction.

2. That no valid satisfaction was recorded before initiation of penalty as such the notice u/s 271(1 )(c) and penalty order passed under said section are without jurisdiction and liable to be quashed. The CIT (A) has grossly erred in upholding the same.

3. That in the absence of any specific charge, the levying of penalty U/s 271(1)(C) is illegal, bad in law and is liable to be quashed.

4. That the AO had no jurisdiction and authority to pass the impugned penalty order and hence the penalty order is illegal, bad in law and without jurisdiction.

5. That the A.O. and CIT(A) have erred in law and on facts in not appreciating that this is a straight forward case of disallowance of expenses and hence penalty provisions are not attracted .

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