Well Intertrade Pvt. Ltd., New Delhi V. ITO, New Delhi

CO 207/DEL/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3575 (ITAT-DELHI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 16-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C S AGGARWAL

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI H. S. SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 5874/DEL/2015 (ASSESSMENT YEAR: 2006 - 07 ) ITO, WARD - 27(3), CR BUILDING, IP ESTATE, NEW DELHI VS. WELL INTERTRADE PVT. LTD, NO. 5 - E, LOCAL SHOPPING CENTRE, MASJID MOTH, GREATER KAILASH - II, NEW DELHI PAN: AAACW0187F (APPELLANT) (RESPONDENT) CO NO. 207/DEL/2017 (IN ITA NO. 5874/DEL/2015 ) (ASSESSMENT YEAR: 2006 - 07) WELL INTERTRADE PVT. LTD, NO. 5 - E, LOCAL SHOPPING CENTRE, MASJID MOTH, GREATER KAILASH - II, NEW DELHI PAN: AAACW0187F VS. ITO, WARD - 27(3), CR BUILDING, IP ESTATE, NEW DELHI (APPELLANT) (RESPONDENT) REVENUE BY : SHRI CS AGGARWAL, SR. ADV ASSESSEE BY: SHRI RAJEEV KUMAR, SR. DR DATE OF HEARING 20/11 /2017 DATE OF PRONOUNCEMENT 1 6 / 0 2 / 2018 O R D E R PER PRASHANT MAHARISHI, A. M. 1. T HESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A) - 22, NEW DELHI DATED 17.08.2015 FOR THE ASSESSMENT YEAR 2006 - 07 WHERE IN PENALTY U/S 271(1) (C) OF THE ACT WAS PARTLY DELETED. THE ASSESSEE HAS FILED CROSS OBJECTION IN THIS APPEAL AGAINST THE ORDER WHERE PENALTY IS PARTLY SUS TAINED. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO. 5874/DEL/2015: - ITO VS. WELL INTERTRADE PVT. LTD, ITA NO. 5874/DEL/2015 CO NO. 207/DEL/2017 (ASSESSMENT YEAR: 2006 - 07 ) PAGE | 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT ( A) IS ERRONEOUS AND THE LD CIT ( A) HAS ERRED: - I. IN DELETING THE PENALTY U/S 271(1)(C) OF THE IT ACT ON THE ADDITION OF RS. 3937850/ - MADE BY AO ON ACCOUNT OF BANK CHARGES AND INTEREST. II. IN DELETING THE PENALTY U/S 271(1)(C) OF THE IT ACT ON THE ADDITION OF RS. 980103/ - MADE BY AO ON ACCOUNT OF PROPO RTIONATE EMPLOYEE COST. III) IN DELETING THE PENALTY U/S 271(1)(C) OF THE IT ACT ON THE ADDITIONS OF RS. 589433/ - MADE BY AO ON ACCOUNT OF TREATING TRAVELLING AND CONVENIENCE EXPENSES AS EXCESSIVE. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN CO: - 1. THAT THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE WHILE UPHOLDING THE LEVY OF PENALTY THAT NO VALID PROCEEDINGS HAVE BEEN INITIATED, THE PENALTY LEVIED WAS WITHOUT JURISDICTION. 2. THAT THE LD COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED BOTH IN FACTS AND IN LAW IN CONFIRMING THE PENALTY IN RESPECT OF THE TWO SUMS OF RS. 112479/ - AND RS. 221879/ - . 3. THAT THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE: - (A) THAT RS. 221879/ - HAS BEEN DELETED ON APPEAL B Y THE ITAT. (B) THAT RS. 112479/ - REPRESENTED A SUM WHICH WAS ONLY AN ERROR IN COMPUTATION WHILE COMPUTING INCOME FROM HOUSE PROPERTY AND DID NOT REPRESENT EITHER CONCEALED INCOME OR EVEN IN RESPECT WHEREOF IT HAD FILED ANY INACCURATE PARTICULARS. 4. THE B RIEF FACTS SHOW THAT ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF CONSULTANCY AND REAL ESTATE. IT FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2006 07 ON 30/11/2006 AT RS NIL . SUBSEQUENTLY THE ASSESSMENT U/S 143 (3) OF THE ACT WAS P ASSED ON 24/12/2008 DETERMINING THE GROSS TOTAL INCOME OF RS. 8 075513 / - . 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS DECLARED THE RENTAL INCOME AND THERE WAS A DIFFERENCE OF INCOME FROM HOUSE RENT OF RS. 141935/ WHICH WAS ADDED BACK. CONSEQUENTLY THE PENALTY PROCEEDINGS UNDER SECTION 271 (1) (C ) WAS ALSO ISSUED FOR CONCEALMENT OF INCOME BY FURNISHING OF INACCURATE PARTICULARS THEREOF. FURTHER WITH RESPECT TO THE REAL ESTATE BUSINESS OF THE ASSESSEE THE EXPENSES WERE CLAIMED BY THE ASSESSEE IN RESPECT OF BAN K CHARGES AND INTEREST OF RS. 7 1125934 / - WHICH THE LD. ASSESSING OFFICER STATED THAT ASSESSEE DOES NOT ITO VS. WELL INTERTRADE PVT. LTD, ITA NO. 5874/DEL/2015 CO NO. 207/DEL/2017 (ASSESSMENT YEAR: 2006 - 07 ) PAGE | 3 HAVE ANY EVIDENCES THEREFORE THE ADDITION WAS MADE AND PENALTY PROCEEDINGS WERE ALSO INITIATED. 6. THE ORDER OF THE LD. ASSES SING OFFICER WAS CONTESTED BY THE ASSESSEE BEFORE THE LD. CIT (A) XXI, NEW DELHI. THE LD. CIT (A) PASSED AN ORDER DATED 31/3/2010 WHEREIN THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 7. THEREFORE, THE LD. ASSESSING OFFICER PROCEEDED WITH THE PENALTY PROCEED INGS FOR THE FOLLOWING ADDITIONS MADE AND CONFIRMED BY THE LD. CIT (A). A. DIFFERENCE IN HOUSE PROPERTY INCOME OF RS. 112 479/ - B. OUT OF INTEREST EXPENDITURE RS. 4159721/ - C. EMPLOYEES COST RS. 980103/ - D. OUT OF TRAVELLING EXPENSES RS. 5 89433/ E. DISALLOWANCE UNDER SECTION 14 A RS. 1 629/ 8. A SSESSEE REQUESTED THE LD. AO TO KEEP THE PENALTY PROCEEDINGS IN ABEYANCE TILL THE DISPOSAL OF APPEAL BY THE COORDINATE BENC H . H OWEVER THE LD. AO COMPLETED THE PENALTY PROCEEDINGS AND PASSED THE PENALTY ORDER UNDER SECTION 271 (1) (C) WAS LEVIED OF RS. 6 40852/ V IDE ORDER DATED 28/3/2012. 9. AGAINST THIS ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (A). HE VIDE ORDER DATED 17/8/2015 CONFIRMED THE PENALTY ON ADDITION OF RS. 112479/ ON ACCOUNT OF RENTAL INCOME. HE FURTHER CONFIRMED THE PENALTY ON DISALLOWANCE OF RS. 221879/ FOR THE INTEREST ON LATE PAYMENT OF PURCHASE OF AN ASSET WHICH WAS NOT BUSINESS ASSETS OF THE A PPELLANT. WITH RESPECT TO THE DISALLOWANCE OF EMPLOYEES COST AND TRAVELLING EXPENSES, HE DELETED THE PENALTY. THE REVENUE AGGRIEVED WITH THE ORDER OF THE LD. CIT (A) HAS PREFERRED AN APPEAL CONTESTING THE PENALTY DELETED BY THE LD. CIT (A) ON THE ADDITION OF RS. 3937850/ ON ACCOUNT OF BANK CHARGES AND INTEREST, ON THE ADDITION OF MADE BY THE AO ON ACCOUNT OF PROPORTIONATE EMPLOYEE COST, AND ON ADDITION OF RS. 5 89433/ MADE BY AO ON ACCOUNT OF TREATING TRAVELLING AND CONVEYANCE EXPENSES AS ITO VS. WELL INTERTRADE PVT. LTD, ITA NO. 5874/DEL/2015 CO NO. 207/DEL/2017 (ASSESSMENT YEAR: 2006 - 07 ) PAGE | 4 EXCESSIVE. ASSES SEE AGGRIEVED WITH THE CONFIRMATION OF PENALTY FILED CROSS OBJECTION. 10. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUBMITTED THAT THE ABOVE DISALLOWANCE HAS BEEN CONFIRMED BY THE LD. CIT (A) AND THEREFORE ON THESE DISALLOWANCES THE PENALTY IS CORRECTLY LEVIED BY THE LD. ASSESSING OFFICER HOWEVER THE LD. CIT (A HAS DELETED THE PENALTY WITHOUT ANY REASON. HE VEHEMENTLY SUPPORTED THE ORDERS OF THE LD. ASSESSING OFFICER. 11. IN RESPONSE TO THAT THE LD. AUTHORIZED REPRESENTATIVE VEHEMENTLY STATED THAT PENALTY LEV IED BY THE LD. ASSESSING OFFICER HAS CORRECTLY BEEN DELETED BY THE LD. FIRST APPELLATE AUTHORITY. HE FIRSTLY REFERRED TO THE PENALTY NOTICE DATED 24/12/2008 ISSUED BY THE LD. ASSESSING OFFICER WHERE HE HAS NOT MENTIONED WHETHER HE IS LEVYING PENALTY OR CON CEALMENT OF THE PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. HE SUBMITTED THAT THE LD. AO HAS NOT STRUCK OFF ANY OF THE TWIN CHARGES ARE MENTIONED THEREIN. THEREFORE, THE PENALTY IS INVALID. HE FURTHER REFERRED TO THE ASSES SMENT ORDER WHEREIN THE LD. ASSESSING OFFICER HAS ALSO NOT SPECIFIED THE CHARGES FOR WHICH THE PENALTY IS LEVIED. HE FURTHER STATED THAT IN EACH ADDITION THE LD. ASSESSING OFFICER HAS STATED THAT THERE IS A CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS WITHOUT SPECIFYING WHETHER THERE IS A CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. HE THEREFORE SUBMITTED THAT THE CHARGE IS VAGUE IN THE ASSESSMENT ORDER. HE FURTHER SUBMITTED THAT WITH RESPECT TO THE ADDITION OF RS. 112479/ THE LD. ASSESSING OFFICER HAS STATED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. WITH RESPECT TO THE OTHER DISALLOWANCES OUT OF EMPLOYEE COST AND TRAVELLING EXPENSES, HE STATED THAT THE PENALTY HAS BEEN LEVIED FOR FURNISHING OF INAC CURATE PARTICULARS ONLY. HE FURTHER REFERRED TO THAT WHEN THERE IS NO SPECIFIC CHARGE IN THE ASSESSMENT ORDER THEN LEVYING PENALTY ON THE ASSESSEE OF EITHER OF THE CHARGES IS NOT VALID. 12. WITH RESPECT TO THE PENALTY CONFIRMED BY THE LD. CIT (A), ON THE MERIT S OF THE CASE, HE SUBMITTED HIS RETURN SUBMISSION THAT A SUM OF RS. 112479/ IS EFFECTIVELY DEBITED IN THE PROFIT AND LOSS ACCOUNT BUT HAS IT BEEN ITO VS. WELL INTERTRADE PVT. LTD, ITA NO. 5874/DEL/2015 CO NO. 207/DEL/2017 (ASSESSMENT YEAR: 2006 - 07 ) PAGE | 5 CLAIMED AS DEDUCTION SINCE IN THE COMP U TATION OF INCOME THE SAID AMOUNT HAS NOT BEEN EXCLUDED. IT WAS FURTHER STATED BY HIM THAT THE ASSES SEE HAS DECLARED A SUM OF RS. 8854960/ AS INCOME FROM PROPERTY AND DID NOT CLAIM DEDUCTION OF THE AMOUNT OF SINKING FUND OF RUPEES 112479/ SINCE INCOME FROM PROPERTY WAS DECLARED AT RS. 8854960 AND NOT AT RS. 8713025/ . HE T HEREFORE SUBMITTED THAT THE LD. CIT (A HOWEVER WHILE DECIDING THE APPEAL INSTEAD OF DELETING RS. 1 41935/ DECLARED INCOME FROM THE PROPERTY DELETED ONLY RS. 29456/ WHICH REPRESENTED THE DIFFERENCE BETWEEN THE AMOUNT OF PARKING INCOME AS WELL AS THE AMOUNT OF SINKING FUND. IN OTHER WORDS ACCORDING TO HIM THE LD. CIT APPEAL HAS CONFIRMED THE ADDITION OF RS. 112 479/ WHICH HAD NOT EVEN BEEN CLAIMED BY THE ASSESSEE. THEREFORE, HIS SUBMISSION WAS THAT WHEN THE ASSESSEE HAS NOT CLAIMED A PARTICULAR DEDUCTION THE RE CANNOT BE ANY DISALLOWANCE AND CONSEQUENTLY THERE CANNOT BE ANY PENALTY FOR FURNISHING OF INACCURATE PARTICULARS ON THAT SUM. WITH RESPECT TO THE ADDITION OF RS. 2 2 1879/ HE SUBMITTED THAT ON THE ABOVE SUM THE PENALTY HAS BEEN SUSTAINED BY THE LD. CIT ( A) HOWEVER THE TRIBUNAL HAS DELETED THE ABOVE ADDITION AND THEREFORE THE PENALTY ON THAT SOME CANNOT SUSTAIN. IN THE NUTSHELL HIS ARGUMENT WAS THAT THE SECOND SUMS ON WHICH THE PENALTY HAS BEEN LEVIED OF RS. 2 2 1879 AND RS. 1 41935/ , THE FIRST AMOUNT HAS AL READY BEEN DELETED BY THE COORDINATE BENCH AS WELL AS THE SECOND AMOUNT HAS NEVER BEEN CLAIMED BY THE ASSESSEE A S A DEDUCTION. HE THEREFORE REFERRED TO THE COMPUTATION OF THE TOTAL INCOME AND SUBMITTED THE PENALTY CANNOT BE LEVIED ON THE ABOVE SUM. 13. WITH RE SPECT TO THE ADDITIONS ON WHICH THE PENALTY HAS BEEN LEVIED BUT DELETED BY THE LD. CIT (A) HE SUBMITTED THAT INTEREST DISALLOWANCE HAS BEEN MADE BY THE LD. CIT (A) HOWEVER INSTEAD OF USING THE ABOVE FUND BORROWED 5 THE ASSESSEE FROM HDFC BANK FOR STARTING THE NEW BUSINESS WAS USED BY THE ASSESSEE FOR ITS REAL ESTATE BUSINESS IN WORKING CAPITAL. HE FURTHER STATED THAT THE LD. CIT (A) HAS GIVEN A CLEAR CUT FINDING THAT THE REALIST ESTATE BUSINESS WAS NOT STARTED AND MOST OF THE LAND PURCHASE WAS HELD AS AGRIC ULTURAL LAND BY THE APPELLANT DURING THE RELEVANT ITO VS. WELL INTERTRADE PVT. LTD, ITA NO. 5874/DEL/2015 CO NO. 207/DEL/2017 (ASSESSMENT YEAR: 2006 - 07 ) PAGE | 6 PREVIOUS YEAR THEREFORE THE INTEREST WAS DISALLOWED OF RS. 2 686143/ . HE THEREFORE SUBMITTED THAT THE MERELY BECAUSE THE EXPENDITURE HAS BEEN DISALLOWED OR THE EXPRESSION HAS NOT BEEN ACCEPTED AND FOUND CO RRECT IN THE EYES OF THE LAW BY ITSELF CANNOT LEAD TO IMPOSITION OF PENALTY. WITH RESPECT TO THE DISALLOWANCE OF EMPLOYEES COST AND TRAVELLING IS HE SUBMITTED THAT THE ABOUT DISALLOWANCES BEEN MADE AS THE LOWER AUTHORITIES ON ESTIMATE BASIS 14. WE HAVE CAREFUL LY CONSIDERED THE RIVAL CONTENTION AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. FIRSTLY ON THE ISSUE OF SHOW CAUSE NOTICE NOT SPECIFYING ANY CHARGES OUT OF TWIN CHARGES, THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF CIT V. SSA'S EMERALD MEADOWS [2016] 73 TAXMANN.COM 241 (KAR.) AGAINST WHICH HON SC HAS DISMISSED SLP [2016] 73 TAXMANN.COM 248 (SC) / [ 2016] 242 TAXMAN 180 (SC). HENCE, APPEAL OF THE REVENUE DESERVES DISMISSAL O THIS POINT ONLY AND CO OF THE ASSESSEE DESERVES TO BE ALLOWED. 15. ON THE MERITS ALSO, O N THE FIRST SUM ON WHICH THE PENALTY HAS BEEN LEVIED OF RS. 221879/ THE ADDITION HAS ALREADY BEEN DELETED BY THE COORDINATE B ENCH AS SUBMITTED BY THE ASSESSEE AND FOR WHICH THE COPY OF THE ORDER OF THE COORDINATE BENCH IS PLACED AT PAGE NO. 103 OF THE PAPER BOOK. THEREFORE, AS THE ADDITION ITSELF HAS BEEN DELETED THERE CANNOT BE ANY QUESTION OF LEVY OF PENALTY ON THE SAME. 16. ON TH E SECOND ISSUE OF THE SUM OF RS. 112 479 / - IT IS ALSO DELETED BY THE LD CIT (A). EVEN OTHERWISE, IT IS SINKING FUND ADJUSTMENTS AND NO PARTICULARS ARE FURNISHED INACCURATELY. AS SUCH NO PARTICULARS ARE FURNISHED ACCURATELY BY THE ASSESSEE. THE DETAILED AC COUNTING ENTRY SHOWN BY THE LD AR ALSO SHOWS THAT WHOLE ISSUE IS MISUNDERSTOOD BY THE LOWER AUTHORITIES. 17. HENCE, WE REVERSE THE FINDING OF THE LD CIT (A) AS FAR AS THE PENALTY IS CONFIRMED BY HIM. CONSEQUENTLY WE ALLOW THE CO OF THE ASSESSEE. 18. ON THE ISSUES OF DISALLOWANCE OF EXPENSES ETC , IT CANNOT BE SAID THAT ASSESSEE HAS FURNISHED ANY INACCURATE PARTICULARS. EVEN OTHERWISE, MERE DISALLOWANCE DOES NOT AUTOMATICALLY RESULT IN PENALTY. FURTHER AS HELD BY ITO VS. WELL INTERTRADE PVT. LTD, ITA NO. 5874/DEL/2015 CO NO. 207/DEL/2017 (ASSESSMENT YEAR: 2006 - 07 ) PAGE | 7 HONOURABLE SUPREME COURT IN [2010] 189 TAXM AN 322 (SC) / [ 2010] 322 ITR 158 (SC) / [ 2010] 230 CTR 320 (SC) CIT V RELIANCE PETRO PRODUCTS LIMITED AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACC URATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE RE VENUE, THAT, BY ITSELF, WOULD NOT ATTRACT THE PENALTY UNDER SECTION 271(1 ) ( C ). IF THE CONTENTION OF THE REVENUE WAS ACCEPTED, THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE WAS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WOULD IN VITE PENALTY UNDER SECTION 271(1)( C ). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. IN VIEW OF THIS, WE DO NOT INCLINE TO REVERSE THE FINDING OF THE LD CIT (A) FOR DELETING THE PENALTY ON CERTAIN ADDITIONS/ DISALLOWANCE. 19. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED AND CO OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 6 / 0 2 / 2018 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 6 / 02 / 2018 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI