ITAT fines CIT & AO on account of improper action against the assessee

Last updated: 23 June 2014

Court :
ITAT Mumbai

Brief :
Assessee company engaged in the business of developing, buildingandimplementing hydroelectric projects on built, own and operate basis declared Nil income for the previous year ended on 31.03.2007.During the course of scrutiny proceedings the AO disallowed certain claimsmade by the assesse.AO also noticed thatunder the head “Capital Work-in-Progress” the assessee showed gross expenditure of `12,76, 655/- on account of professional fees paid. Assesseefurnished names of the parties, amount paid and proof of TDS.In order to invoke section 69C it has to be shown that the assessee had not explained the source of such expenditure or part thereof. In this case there wasneither dispute regarding source of expenditure nor the dispute that the assessee incurred expenditure. It is not thecase of the Revenue that the assessee claimed it as business expenditure. Itwas only added to the “capital work-in-progress”.It was held that the ITO and CIT who authorised the ITO to prefer an appeal did not apply their mind in the correct perspective and in a very lack lustre and routine manner filed the appeal which, resulted in wastage of time of the court which would be highlighted at appropriate places.

Citation :
Income Tax Officer – Appellant – Versus - M/s. Growel Energy Co. Ltd – Respondent