ITA 1078/DEL/2022: Kamlesh Gupta vs DCIT – An Appeal Allowed for Assessment Year 2014-15

ITA 1078/DEL/2022: Kamlesh Gupta vs DCIT – An Appeal Allowed for Assessment Year 2014-15

In a significant verdict pronounced by the Income Tax Appellate Tribunal, Delhi Bench ‘D’, comprising Sh. Kul Bharat, Judicial Member, and Dr. B. R. R. Kumar, Accountant Member, the appeal filed by Kamlesh Gupta against the Deputy Commissioner of Income Tax (DCIT), Central Circle-1, New Delhi, pertaining to the assessment year 2014-15, was allowed. The case number ITA 1078/DEL/2022 has been a focal point of discussion amongst legal and taxation professionals due to its precedent-setting nature.

Background of the Case

The appeal was filed by Kamlesh Gupta, a resident of C-4, Maharani Bagh, Near Ashrak, New Delhi, challenging the order of the ld. CIT(A)-24, New Delhi dated 21.03.2022. The order concerned multiple assessment years from 2009-10 to 2015-16, but the focus of ITA No. 1078/DEL/2022 was specifically on the year 2014-15. Gupta’s representation was through Sh. Neeraj Jain, CA, and Sh. P. K. Mishra, CA, while the Revenue was represented by Sh. Sanjay Kumar, Sr. DR.

Grounds of Appeal

Gupta raised several grounds of appeal, criticizing the Commissioner of Income Tax (Appeals)’s decision as ‘bad in law and on the facts and in the circumstances of the case.’ He lamented the summary dismissal of his appeal without proper opportunity for being heard, alongside the overlooking of his written submissions and evidences. Further, the contention surrounded the jurisdictional overreach and the incorrect imposition of penalty under Section 271(1)(c) related to estimated undisclosed sales profits.

The Tribunal’s Decision

After reviewing the cases, submissions, and the legal precedents, the Tribunal found merit in Gupta’s appeal. Notably, it refuted the imposition of penalty under Section 271(1)(c), citing that additions made on an estimated rate of profit to turnover do not constitute concealment. The Tribunal drew upon various judgments, including the landmark ‘CIT vs. Aero Traders (P) Ltd’ and others, to emphasize that the assessment proceedings and the penalty proceedings are distinct and that mere non-appealing of an addition cannot be a ground for penalty.

Concluding the Appeal

The Tribunal concluded that under the given facts and circumstances, the penalty levied by the Assessing Officer was unjustifiable. Consequently, the appeals filed by Kamlesh Gupta for the assessment year 2014-15 were allowed. This judgment serves as a critical reference for cases involving estimation of sales and the imposition of penalty under Section 271(1)(c) of the Income Tax Act.

Significance of the Judgment

The outcome of ITA 1078/DEL/2022 symbolizes a significant victory for the taxpayer, reinforcing the principle that estimation cannot be equated with concealment. It offers clarity on the imposition of penalties under Section 271(1)(c), thereby aiding taxpayers in similar predicaments to better navigate their appeals against unjust penal actions.

This review of the ITA 1078/DEL/2022 case attempts to encapsulate the essence and implications of the judgment. For those seeking to gain an in-depth understanding of the legal rationale and its implications on future tax litigations, this analysis serves as a comprehensive guide.

ITA 1078/DEL/2022: Kamlesh Gupta vs DCIT – An Appeal Allowed for Assessment Year 2014-15