The Income Tax Appellate Tribunal ( ITAT ), Delhi Bench deleted the penalty as incorrect deduction does not amount to furnishing inaccurate particulars under Section 271(1)(c) of the Income Tax Act, 1961.
In the instant case the Tribunal has disposed the cross appeal filed by the assesse and the revenue. The assessee-Bistro Hospitality Pvt. Ltd filed an appeal before Income Tax Appellate Tribunal (ITAT) challenging the order of Commissioner of Income Tax Appeals [CIT(A)]. In the instant case the Assessing Officer made three additions by disallowing service tax, addition on account of rejection of consumption of foods & beverages claimed and by disallowance on account of certain expenses. The Commissioner of Income Tax CIT(A) confirmed the order of Assessing Officer except reduction of 10% of disallowance from 20% and deletion of penalty imposed under Section 271(1)(c) of Income Tax Act 1961.
On revenue’s appeal, questioning the deletion of penalty of Rs. 7,26,800/- imposed under Section 271(1)(c) of the Income Tax Act which was imposed in affirmation of the addition on account of disallowance for furnishing inaccurate particulars of income. Jitendra Chand, who appeared on behalf of revenue also held that the assessee had not explained the purchase to the satisfaction of the A.O.
The Tribunal bench of Shamim Yahiya (Accountant Member) and Narendhar Kumar Choudhari (Judicial Member) held that the impugned order was not only based on logical reasoning but also based on the peculiar facts of the case. The tribunal also held that the disallowance on rejection of consumption claims and capital expenses respectively for furnishing inaccurate particulars which resulted in imposition of penalty could not be justified under Section 271(1)(c) of the Income Tax Act.
The bench dismissed both the appeal and upheld the deletion made by the CIT(A).
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