Case Number: ITA 5979/DEL/2019
Appellant: Vardaan Merchandising Pvt. Ltd., New Delhi
Respondent: ITO, Ward-26(1), New Delhi
Assessment Year: 2015-16
Order Type: Final Tribunal Order
Date of Order: 2022-01-19
Pronounced On: 2022-01-19
Introduction:
This case pertains to the appeal filed by Vardaan Merchandising Pvt. Ltd., challenging the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 2015-16. The penalty was imposed due to an alleged discrepancy in the value of imported goods, which was later attributed to an inadvertent mistake by the appellant’s part-time accountant.
Background and Grounds of Appeal:
The appellant, Vardaan Merchandising Pvt. Ltd., filed its return of income for AY 2015-16 on 30th September 2015, declaring a total income of Rs. 2,96,690/-. The case was selected for scrutiny, and the assessment was completed under Section 143(3) of the Income Tax Act, determining an additional income of Rs. 6,95,871/-. The discrepancy was attributed to a difference in the value of imported goods, as reported by the appellant and as per the information available on the Income Tax System (ITS).
During the assessment, the Assessing Officer initiated penalty proceedings under Section 271(1)(c) of the Act, which was later confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The penalty amounting to Rs. 2,20,000/- was levied on the grounds of furnishing inaccurate particulars or concealment of income.
The appellant contested the penalty, arguing that the discrepancy arose due to an inadvertent mistake by their part-time accountant. The mistake was claimed to be a technical error in applying the correct conversion rate of the US Dollar to Indian Rupees. The appellant further argued that the error was bona fide and was corrected as soon as it was discovered.
Tribunal’s Analysis and Decision:
The Income Tax Appellate Tribunal (ITAT) heard the appeal on 11th January 2022 and pronounced the order on 19th January 2022. The Tribunal observed that the explanation provided by the appellant regarding the technical error made by the accountant was not specifically rebutted by the authorities below. The Tribunal further noted that the authorities had not made the necessary inquiries to verify the appellant’s claim.
The ITAT emphasized that in the absence of a specific rebuttal and proper verification of the appellant’s explanation, the penalty imposed under Section 271(1)(c) could not be justified. The Tribunal found that the appellant’s explanation was plausible and should have been considered by the authorities.
Consequently, the Tribunal directed the deletion of the penalty, concluding that the authorities were not justified in imposing and confirming the penalty in the given circumstances.
Conclusion:
The ITAT’s decision to delete the penalty in the case of Vardaan Merchandising Pvt. Ltd. highlights the importance of considering the explanations provided by the assessee, especially when such explanations are plausible and have not been specifically rebutted. The decision underscores the principle that penalties should not be imposed without proper verification and consideration of the facts presented by the assessee.
Final Judgment:
The appeal filed by Vardaan Merchandising Pvt. Ltd., New Delhi, against the penalty imposed by the CIT(A) for AY 2015-16 is allowed. The penalty under Section 271(1)(c) is deleted.
Order Pronounced: 19th January 2022
Judge: Shri Kul Bharat, Judicial Member
Reference: INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH “SMC-2”, NEW DELHI
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