The case ITA No. 5296/DEL/2019 involves appellant Pushpanjali Hospitality Pvt. Ltd., a company based in New Delhi, challenging the Income Tax Officer, Ward-16(3), New Delhi for the assessment year 2009-10. The appeal was filed on June 10, 2019, against the order of the CIT(A)-7, New Delhi, dated April 23, 2019.
The appellant filed the appeal on the grounds that the Assessing Officer (AO) had wrongly invoked Section 41(1) of the Income Tax Act, 1961, and imposed a penalty under Section 271(1)(c) for writing back old outstanding credits amounting to Rs. 16,45,515. These credits were already reflected in the balance sheet and were taken into income in the subsequent financial year, 2010-11.
The tribunal hearing was held on August 24, 2022, with the order pronounced on August 31, 2022. The counsel for the appellant, Shri Alok Mathur, argued that the credits were old outstanding amounts which were written back because the creditors’ details or their whereabouts were unknown to the current management. The Department’s representative, Shri Anil Kumar Sharma, argued in favor of the penalty.
The tribunal, consisting of Judicial Member Shri C.M. Garg and Accountant Member Shri Pradip Kumar Kedia, decided to delete the penalty. They found that the credits had already been taken into income in the subsequent year, and there was no concealment or misrepresentation of income. The tribunal emphasized that merely because a claim is not accepted does not mean it constitutes inaccurate particulars of income.
This decision underscores the importance of accurately reflecting income and the limits of penal provisions under Section 271(1)(c). The case of Pushpanjali Hospitality Pvt. Ltd. demonstrates that penalties cannot be imposed merely because an AO disagrees with the treatment of certain credits if those credits have been transparently declared and accounted for in subsequent periods.
Deletion of Penalty: Pushpanjali Hospitality Pvt. Ltd. vs ITO Ward-16(3), New Delhi for A.Y. 2009-10
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