Case Number: ITA 1684/DEL/2020
Appellant: Central News Agency Pvt Ltd, New Delhi
Respondent: DCIT Circle-5(2), New Delhi
Assessment Year: 2016-17
Result: Appeal allowed
Case Filed on: 2020-10-13
Order Type: Final Tribunal Order
Date of Order: 2022-08-25
Pronounced on: 2022-08-25
This case involves Central News Agency Pvt Ltd, New Delhi, challenging the disallowance of personal expenses for the assessment year 2016-17. The appeal was filed against the order of the Commissioner of Income Tax (Appeals)-2, New Delhi, which confirmed the disallowance of expenses by the Assessing Officer.
The primary issue in this case was the disallowance of Rs. 1,68,263 on account of personal expenses of the directors. The Assessing Officer disallowed these expenses, adding them back to the income of the company, leading to a revised loss computation.
The appellant, represented by Sh. Ranjan Chopra, Authorized Representative, argued that the disallowance was a result of a bona fide and inadvertent error while making the computation of income. The appellant contended that the personal expenses were already disallowed to a significant extent in the original computation and that the remaining amount was an oversight.
The respondent, represented by Sh. R. S. Yadav, Senior Departmental Representative, upheld the disallowance, stating that the expenses were personal in nature and should not be allowed as business expenses.
The tribunal, comprising Shri Chandra Mohan Garg, Judicial Member, and Shri Anadee Nath Misshra, Accountant Member, noted the following:
The tribunal observed that the appellant had already disallowed a part of the expenses as personal expenses in its original computation of income. The error in not disallowing the additional Rs. 1,68,263 was due to an inadvertent mistake. The tribunal referred to the case of Price Waterhouse Coopers (P.) Ltd. vs. CIT, where the Supreme Court held that a bona fide and inadvertent error does not amount to furnishing inaccurate particulars of income or concealment of income.
The tribunal also noted that the appellant had filed a revised computation of income during the assessment proceedings, offering the amount for disallowance as soon as the error was discovered. This indicated that there was no intention to conceal income or furnish inaccurate particulars.
The tribunal allowed the appeal filed by Central News Agency Pvt Ltd, directing the cancellation of the penalty of Rs. 51,993 levied by the Assessing Officer under section 271(1)(c) of the Income Tax Act. The tribunal found that the error was a bona fide mistake and did not warrant the imposition of penalty.
The order was pronounced in the open court on 25th August 2022, bringing clarity on the treatment of personal expenses and the imposition of penalties for inadvertent errors in the computation of income for the assessment year 2016-17.
Order:
The appeal filed by Central News Agency Pvt Ltd is allowed, and the penalty of Rs. 51,993 levied by the Assessing Officer is cancelled.
Author: Accountant Member, Shri Anadee Nath Misshra
Date: 25.08.2022
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