Valaka Engineering Pvt. Ltd. Vs ACIT (ITAT Delhi)
Penalty u/s 271(1)(c) Deleted—Credits Treated as Unexplained Were Actually Interest Income Already Declared; Additional Evidence Accepted
The Assessee appealed against the order of CIT(A)-27, New Delhi, confirming penalty of ₹1,76,037 u/s 271(1)(c) relating to alleged unexplained credits of ₹5,69,700 in its bank account. The appeal before ITAT was delayed by 412 days, as the Assessee had initially filed the appeal before ITAT Kolkata under the bona fide belief that its jurisdiction was Kolkata. Upon realising that both assessment and penalty orders were passed by ACIT, Central Circle-20, New Delhi, the Assessee refiled before the Delhi Bench. The Tribunal found the explanation reasonable and condoned the delay.
During the original assessment, the AO treated five bank credits from companies such as Wonder Rexin Pvt Ltd, Wonder Décor Pvt Ltd, Solaris Developers Pvt Ltd etc., aggregating to ₹5,69,700, as unexplained u/s 68, since the Assessee could not furnish an explanation at that time. CIT(A) upheld both the addition and the penalty, holding that the Assessee failed to explain the nature and source of the credits.
Before the Tribunal, the Assessee filed additional evidence, including Form 26AS, Form 16A, and a detailed interest-income statement, demonstrating that the very same amounts related to interest receipts on old deposits, fully disclosed in the accounts and the return. The total interest income from six parties was ₹10,83,000, with TDS of ₹1,08,300, and net receipts of ₹9,74,700—within which the questioned sum of ₹5,69,700 stood fully reconciled.
The Tribunal admitted the additional evidence, noting the smallness of the penalty amount and the conclusive nature of the documentation. It held that the impugned credits were not unexplained cash credits at all, but regular interest income already included in the books, and therefore penalty u/s 271(1)(c) could not survive. The Revenue could not controvert the factual reconciliation.
Accordingly, the ITAT deleted the penalty in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by Assessee is arising out of the order of Ld. Commissioner of Income Tax (Appeals)-27, New Delhi in Appeal No. CIT(A), Delhi-27 vide order dated 22.02.2024. Assessment was framed by ACIT, Central Circle-16 New Delhi, for the AY 2012-13 u/s 147 read with Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as, the ‘Act’), vide his order dated 28.12.2019. The penalty under challenge was levied by ACIT, Central Circle-20, New Delhi u/s 271(1)(c) of the Act, vide his order dated 15.03.2022.
