ANJALI NEERAJ HARDIKAR ,PUNE V. PCIT (CENTRAL), MUMBAI-3, MUMBAI

ITA 2704/MUM/2024

AI Insights

The case involves Anjali Neeraj Hardikar, the assessee, who challenged the order passed under section 263 of the Income Tax Act by the National Faceless Appeal Centre, Delhi / CIT(A), for the assessment year 2011-12. The primary contention was regarding the penalty proceedings under section 271(1)(c) of the Act, which were initially kept in abeyance pending the outcome of appeals but were later revived. The Tribunal's decision focused on the appropriateness of the penalty imposition related to various disallowances made during the assessment, including professional and legal fees, and personal expenses, while the deduction under section 80GGC was separately contested.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126126 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Other Referred Cases: CIT Vs. Braj Bhushan Cold Storage, Shabbir T. Chass Vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LD. K.R. SUBHASH
• Assessee Lawyers: RAVI GANATRA
• Keywords: Set aside; Principle of natural justice; Wrong claim; Revision of order
• Section: 143(3); 142(1); 143(2); 263; 271(1)(c); 274

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No. 2704/Mum/2024 (Assessment Year: 2011-12) Anjali Neeraj Hardikar E/3, Vibhawari Apartments, Sahwas Society, Lane No.1, Karve Nagar – 411052. Vs. PCIT (Central) 1901, 19th Floor, Air India Bldg, Nariman Point, Maharashtra – 400021. PAN/GIR No. AAFPH0320K (Applicant) (Respondent) Assessee by Shri Ravi Ganatra Revenue by Ld.DR K.R. Subhash, CIT(DR) Date of Hearing 03.04.2025 Date of Pronouncement 24.04.2025 आदेश / ORDER PER SANDEEP GOSAIN, JM: The present appeal has been filed by the assessee challenging the impugned order 20.03.2024 passed u/s 263 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi / CIT(A), for the A.Y 2011- 12. 2. All the Grounds are interrelated and interconnected and relates to challenging the order passed u/s 263 of the Act. Therefore we have decided to take up all the grounds 2 ITA No. 2704/Mum/2024 Anjali Neeraj Hardikar, Mumbai together and to adjudicate the same through the present consolidated order. 3. As per the facts of the case, the assessee filed her return of income for the year under consideration declares total income. Later on the case was selected for scrutiny and assessment order was passed u/s 143(3) of the Act, whereby total income was determined after making following additions: a. Disallowance of deduction claimed u/s 80GGC b. Disallowance of Professional & Legal fee c. Disallowance of receipts from Toyota d. Disallowance of personal expenses. 4. On appeal Ld. CIT(A) uphold the addition made on the issue of personal expenses and deleted the additions made on account of disallowance of deduction claimed u/s 80GGC and disallowance professional and legal fee. 5. On further appeal by revenue, ITAT vide order dt. 06.04.2018 partly allowed the appeal and confirmed the additions made in the assessment order on account of disallowance of account of professional and legal fee and set aside the matter on issue of deduction claimed u/s 80GGC and directed the AO to decided it afresh,. Thereafter order u/s 143(3) r.w.s 254 of the Act was 3 ITA No. 2704/Mum/2024 Anjali Neeraj Hardikar, Mumbai passed by AO on 18.12.2019 assessing total income of the assessee. Further the penalty proceeding u/s 271(1)(c) of the Act initiated in respect of (1) Disallowance of professional and legal fee; (2) Receipts from Toyota & Lakozy (3) Personal expenses. Since the penalty u/s 271(1)(c) of the Act ought to have levied on account of Professional and legal fee, Receipt from Toyota & Lakozy Personal expenses, but the same remained to be levied in the penalty order u/s 271(1)(c) of the Act dated 15.03.2022. 6. Now according to the PCIT this order is ‘erroneous in so far as prejudiced to the interest of the revenue in view’ of provisions of Sec. 263 of the Act. 7. Whereas Ld. AR in this regard relied upon the submissions filed before Pr. CIT while replying to show cause notice: With reference to the above, it is humbly submitted that the assessee is an individual and is regularly assessed to tax vide PAN AAFPH0320K. For the assessment year under consideration, the assessee filed her retum of income on 22.03.2012 declaring a total income of Rs 1,04,19,660/- Subsequently, the case was selected for scrutiny under CASS and notices were issued to the assessee u/s 142(1). The assessment u/s 143(3) of the Act, was completed on 27.03.2014 determining the total income at Rs 3,39,70, 135/-, after making the following additions to the returned income: Disallowance of Rs. 10,50,000/- u/s 80GGC 4 ITA No. 2704/Mum/2024 Anjali Neeraj Hardikar, Mumbai Professional and Legal expenses of Rs. 2,10,30,000/- Rs. 1,000/-on account of undisclosed income being receipt from Toyota Lakozy Pvt. Ltd: iv. Personal expenses on account of travelling expenses and conference expenses of Rs. 14,69,475/- 3. The assessee being aggrieved by the impugned order passed by the Assessing officer filed an appeal against the order passed by the assessing office u/s 143(3) before Ld. Commissioner of Income Tax (Appeals) w.r.t following alleged additions: i. Disallowance of Rs. 10,50,000/- u/s 80GGC ii. Professional and Legal expenses of Rs. 2,10,30,000/- iii. Personal expenses on account of travelling expenses and conference expenses of Rs. 14,69,475/- Therefore, the penalty proceedings-initiated u/s 274 r.w.s 271(1)(c) on 27.03 2014, were kept in abeyance, until disposal of appeal. 4. In the impugned order issued on 23.11.2015, the Ld. Commissioner of Income Tax (Appeals) annulled the inclusion made by the Assessing Officer concerning the disallowance under Section 80GGC, totalling Rs. 10,50,000/-, as well as the professional and legal expenses amounting to Rs. 2,10,30,000/-. However, the Ld. Commissioner of Income Tax (Appeals) sustained the addition of Rs. 14,69,475/- made by the Assessing Officer for personal expenses. 5 Thereafter, the Department filed an appeal against the Ld. Commissioner of Income Tax (Appeals) order, before Hon'ble Income Tax Appellate Tribunal Pune, challenging the additions deleted by Ld. Commissioner of Income Tax (Appeals). The Hon'ble Income Tax Appellate Tribunal, Pune vide order bearing number 173/PUN/2016 dated 06.04.2018 allowed the revenue's appeal and confirmed the addition made by the 5 ITA No. 2704/Mum/2024 Anjali Neeraj Hardikar, Mumbai assessing officer on account of professional and legal fees amounting to Rs 2,10,30,000/-. 6. Further. The Hon'ble Income Tax Appellate Tribunal set aside and restored the matter of deduction u/s 80GGC back to the assessing officer and directed the assessing officer to decide on the issue after examining the documents on record and after affording an opportunity of hearing to the assessee. Subsequently, notices pursuant to sections 143(2) and 142(1) of the Act were issued to the assessee, which were duly complied to by the assessee. The Assessing Officer passed on order u/s 143(3) rw.s 254 dated 18.12.2019, disallowing the deduction of Rs. 10,50,000/- u/s 80GGC and in alternate u/s 37, consequently appending the said sum to the assessable income of the assessee. 7. In the said order dated 18.12.2019, the penalty penalty p proceeding kept in abeyance were revived by virtue of provisions of section 275 of the Incorne Tax Act, 1961. The extract from the order is cited below: \"10. Further, penalty proceedings u/s 271(1)(c) of the IT Act initiated dated 27/03/2014 which was kept in abeyance till the disposal of the appeal by Hon'ble Tribunal by the then AO, is being revived by virtue of provisions of section 275 of the IT Act, 1961. Accordingly, penalty proceedings u/s 271(1)(c) is taken afresh with respect to additions viz. 1) Professional & Legal Fees 2) Receipt from Toyota Lakozy Pvt. Ltd. 3) Personal expenses separately for each issue for furnishing inaccurate particulars of income.\" 8. Accordingly, on 18.12.2019, a show cause notice was served upon the assessee affording an opportunity to furnish an explanation regarding the potential imposition of penalty u/s 271(1)(c) of the Act. Following the initiation of the Faceless Penalty Scheme on 12.01 2021, the penalty proceedings reinitiated on 18.12.2019 were transferred to the National Faceless Assessment Centre (NaFAC). Subsequently, a new show cause notice was issued to the assessee on 01.01.2022. 6 ITA No. 2704/Mum/2024 Anjali Neeraj Hardikar, Mumbai 9. The assessee responded to the aforementioned notice with submissions dated 26.05.2021 and 17.01.2022 vide e- acknowledgement number 939274291170122. 10. In the submissions presented by the assessee before the Ld Assessing Officer, comprehensive information and explanations have been provided concerning all the points of additions (i.e Disallowance of Rs. 10,50,000/- u/s 80GGC, Professional and Legal expenses of Rs. 2,10,30,000/- and Personal expenses on account of travelling expenses and conference expenses of Rs. 14,69,475/-), thereby delineating reasons as to why a penalty is not to be imposed. Additionally, the submissions clarified that the case does not pertain to a scenario, wherein, the assessee concealed particulars of income or furnished inaccurate particulars of income. The copy of the said submission is place at pg no 63 to 90 of the paperbook for your honour's ready reference. 1. The Ld. Assessing Officer, after due application of mind on the nature of all the 4 disallowances as above, chose to levy penalty only on one of the issues, thereby holding that regarding remaining 3 issues, there is no case of furnishing of inaccurate particulars of income. Now, if the Ld. Principal Chief Commissioner of Income Tax has prima facie conveyed an opinion that is different from that of the Ld. AO, the same does not give powers to the Ld. PCIT under section 263 to substitute his opinion in place of opinion of the Assessing Officer, particularly, when, no error has been committed on facts and in law, by the Ld. AO.\" 8. After having gone through the facts of the case, we noticed that penalty proceeds u/s 271(1)(c) of the Act were taken afresh with respect to additions on account of (1) Professional and Legal fee; (2) Receipts from Toyota & Lakozy P Ltd., (3) Personal expenses, for furnishing 7 ITA No. 2704/Mum/2024 Anjali Neeraj Hardikar, Mumbai inaccurate particulars of income and also making wrong claim of deduction u/s 80GGC. 9. But penalty was levied only on account of deduction claimed u/s 80GGC and no justification was given by the AO for not levying penalty in respect of other issues. 10. Although before us Ld. AR relied upon the order of ITAT in ITA No. 3759/Mum/2023 wherein penalty u/s 80GGC was deleted. 10. Be that as it may, the order of coordinate Bench is not relevant with regard to non levy of penalty with regard to other three issues as in the said order, discussion is only with regard to the claim of wrong deduction u/s 80GGC of the Act only. 11. We notice that while passing the initial order u/s 143(3) of the Act dated 27.03.2014. It has been categorically held by AO that penalty proceedings are separately initiated for concealment of particulars of income and furnishing inaccurate particulars of income in respect of claim of deduction u/s 80GGC, claim of deduction on professional and legal fee expenses, receipts from Toyota & Lakozy P. Ltd and with regard to personal expenses. Even while passing the order u/s 143(3) r.w.s 254 dated 18.12.2019 it was specifically that penalty 8 ITA No. 2704/Mum/2024 Anjali Neeraj Hardikar, Mumbai proceedings u/s 271(1)(c) of the IT Act initiated dated 27/03/2014 which were kept in abeyance till the disposal of the appeal by Hon'ble Tribunal by the then AO was revived by virtue of provisions of section 275 of the IT Act, 1961. Accordingly, penalty proceedings u/s 271(1)(c) were taken afresh with respect to additions viz. Professional & Legal Fees 2) Receipt from Toyota Lakozy Pvt. Ltd.) Personal expenses separately for each issue for furnishing inaccurate particulars of income.” 13. However even before us, there is no justification for not levying the penalty in respect of three issues. It is worth mentioning here that the Hon’ble High Court of Allahabad in the case of CIT Vs. Braj Bhushan Cold Storage, [2005] 275 ITR 360 and Hon’ble Hyderabad Bench ‘B’ in the case of Shabbir T. Chass Vs. ACIT, [2010] 4 ITR 297 (Trib,) had held that even dropping of penalty proceedings u/s 271(1)(c) of the Act is erroneous and prejudicial to the interest of the revenue. Therefore, considering these facts, we found that Ld. Pr. CIT was rightly satisfied that the penalty order dated 15.03.2022 is erroneous in so far as it is prejudicial to the interest of revenue. Therefore, while exercising of powers u/s 263 of the Act rightly directed the AO to re-examine the penalty order dated 15.03.2022 and modify the same, if necessary, 9 ITA No. 2704/Mum/2024 Anjali Neeraj Hardikar, Mumbai after following the principles of natural justice. We see no reasons to interfere in to the lawful orders passed by Ld. Pr. CIT. Hence we uphold the same by dismissing the appeal of the assessee. 14. In the result, the appeal filed by the assessee stands dismissed. Order pronounced in the open court on 24.04.2025. Sd/- Sd/- (PRABHASH SHANKAR) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 24/04/2025 KRK, PS आदेश की \bितिलिप अ\u000eेिषत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. \u000eथ / The Respondent. 3. संबंिधत आयकर आयु\u0019 / The CIT(A) 4. आयकर आयु\u0019(अपील) / Concerned CIT 5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, मु\u0003बई / DR, ITAT, Mumbai 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, स\u000eािपत ित //True Copy// 1. उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपीलीय अिधकरण, मु\u0003बई मु\u0003बई मु\u0003बई मु\u0003बई / ITAT, Mumbai "