Shri Rajkumar Sethupathy, CHENNAI V. ACIT, CHENNAI

CO 67/CHNY/2011

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8326 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-03-2013
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 26-02-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 11-05-2011
• Court: TRIBUNAL
• Department Lawyers: V D GOPAL
• Assessee Lawyers: S DAS GUPTA SR
• Section: 2

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL D BENCH, CHENNAI. BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER I.T.A. NO. 664/MDS/2011 ASSESSMENT YEAR : 2007-08 & C.O. NO. 67/MDS/2011 [IN I.T.A. NO. 664/MDS/2011] THE ASSISTANT COMMISSIONER OF INCOME TAX, MEDIA CIRCLE II, CHENNAI. VS. SRI RAJKUMAR SETHUPATHY, NO. 239, GEE GEE SPRING, 8 TH FLOOR, LLOYDS ROAD, GOPALAPURAM, CHENNAI 600 086. [PAN: AAHPR0076Q] (APPELLANT) (RESPONDENT/ CROSS OBJECTOR) APPELLANT BY : SHRI S. DAS GUPTA, SR. AR RESPONDENT BY : SHRI V.D. GOPAL, ADVOCATE DATE OF HEARING : 26.02.2013 DATE OF PRONOUNCEMENT : 05.03.2013 ORDER PER S.S. GODARA, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE AND CROSS OBJECTIONS AT THE BEHEST OF THE ASSESSEE, EMANATE FROM THE ORDER OF THE COMMISSIONE R OF INCOME TAX (APPEALS) VI, CHENNAI DATED 03.01.2011 IN ITA NO.39 /10-11, FOR ASSESSMENT YEAR 2007-08; DELETING PENALTY IMPOSED BY THE ASSES SING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT 1961 [IN SH ORT THE ACT]. 2. THE SOLE GRIEVANCE OF THE REVENUE IN THE INSTAN T APPEAL IS THAT THE CIT(A) HAS WRONGLY DELETED THE PENALTY IMPOSED BY T HE ASSESSING OFFICER I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.664 664664 664/M/ /M/ /M/ /M/1 11 11 11 1 & && & C.O. C.O. C.O. C.O. NO. NO. NO. NO.67/M/11 67/M/11 67/M/11 67/M/11 2 UNDER SECTION 271(1)(C) OF THE ACT. THE DR REPRES ENTING THE REVENUE REITERATES THE PLEADINGS RAISED IN THE GROUNDS AND PRAYS FOR ACCEPTANCE OF THE APPEAL BY RESTORING THE PENALTY IMPOSED BY THE ASSESSING OFFICER. 3. OPPOSING THIS, THE ASSESSEE VEHEMENTLY CONTENDS THAT THE CIT(A) HAS RIGHTLY DELETED THE PENALTY. IN SUPPORT OF CIT(A)S ORDER AND REASONS CONTAINED THEREIN. HE SUBMITS THAT ON THE BASIS OF THE CROSS OBJECTIONS OF THE ASSESSEE, THE REASONING ADOPTED BY THE CIT(A) IS LI ABLE TO BE UPHELD. 4. FEW FACTS OF THE INSTANT CASE ARE SUMMARIZED AS UNDER: THE ASSESSEE IS AN INDIVIDUAL, WHO EARN INCOME F ROM SALARY, CAPITAL GAINS AND OTHER SOURCES. ON 13.11.2008, HE HAD RETURNED INCOME OF ` .30,80,852/- ALONG WITH AGRICULTURAL INCOME OF ` .1.75 LAKHS, WHICH WAS SUMMARILY PROCESSED. 5. IN THE COURSE OF SCRUTINY, THE ASSESSING OFFI CER PUT THE ASSESSEE TO FILE EVIDENCE QUA INTEREST AMOUNT OF ` .64,42,038/- AND ALSO THAT OF ` .14,98,872/- OF EXPENDITURE CLAIMED REGARDING CAPIT AL GAINS RELATING TO HOUSE PROPERTY IN QUESTION. THE ASSESSING OFFICER S OUGHT DETAILS FROM THE ASSESSEE RE UTILIZATION OF THE INTEREST FOR HOUSE P ROPERTY WHICH HE COULD NOT PROVE I.E. THE NEXUS OF INTEREST PAYMENT MADE TO TH E BORROWERS WITH THE CONSTRUCTION OF HOUSE. THEREFORE, THE ASSESSING OFF ICER MADE DISALLOWANCE OF ` .19,91,733/- AFTER RECONCILING THE DETAILS OF INTER EST CREDITOR-WISE AS CLAIMED BY THE ASSESSEE. SIMILARLY, QUA EXPENDITURE PERTAINING TO CAPITAL G AINS UNDER THE HEAD I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.664 664664 664/M/ /M/ /M/ /M/1 11 11 11 1 & && & C.O. C.O. C.O. C.O. NO. NO. NO. NO.67/M/11 67/M/11 67/M/11 67/M/11 3 INTEREST, DEMOLITION, SECURITY, LEVELING CHARGES, T HE ASSESSEE FAILED TO SUBSTANTIATE BY WAY OF COGENT MATERIAL. THEREFORE, IN THE ASSESSMENT ORDER DATED 30.12.2009, THE ASSESSING OFFICER ONLY ACCEPT ED DEMOLITION AND LEVELING CHARGES OF ` . 3.90 LAKHS AND DISALLOWED/ADDED BALANCE AMOUNT OF ` .11,08,872/- IN ASSESSEES TOTAL INCOME AND ISSUED A PENALTY NOTICE UNDER SECTION 271(1)(C) OF THE ACT. 6. IN THE PENALTY PROCEEDINGS, THE ASSESSEE DENIED TO HAVE EITHER CONCEALED ANY INCOME AND REFUTED THE ALLEGATION OF FURNISHING INACCURATE PARTICULARS OF INCOME. BUT THE SAID ASSERTIONS ON T HE PART OF THE ASSESSEE COULD NOT CONVINCE THE ASSESSING OFFICER. THEREFORE , IN THE PENALTY ORDER DATED 21.06.2010, HE HELD THAT THE ASSESSEE HAD CLA IMED EXCESS INTEREST AMOUNT AS EXPENDITURE IN THE COURSE OF ASSESSMENT P ROCEEDINGS WITHOUT ANY EVIDENCE DID NOT DISPUTE THE ADDITION MADE THEREIN. HE ALSO OBSERVED THAT ASSESSEE HAD FURNISHED INACCURATE PARTICULARS WHICH COULD ONLY BE NOTICED IN SCRUTINY. SO, HE IMPOSED PENALTY @ 100% TO THE TU NE OF ` .9,05,964/-. 7. THE ASSESSEE CARRIED THE MATTER IN APPEAL. VIDE ORDER UNDER CHALLENGE, THE CIT(A) HAS PLACED CASE LAW [2000] 32 2 ITR 158 (SC) CIT V. RELIANCE PETROPRODUCTS P. LTD. AND HELD THAT MERE NON ACCEPTANCE OF ASSESSEES CLAIM OF EXPENDITURE DOES NOT ATTRACT PE NALTY AS THE SAME ITSELF IS NEITHER CONCEALMENT OF INCOME NOR A CASE OF FURNISH ING OF INACCURATE PARTICULARS. IN THIS BACKGROUND OF THE FACTS, THE REVENUE IS IN APPEAL. BY WAY OF I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.664 664664 664/M/ /M/ /M/ /M/1 11 11 11 1 & && & C.O. C.O. C.O. C.O. NO. NO. NO. NO.67/M/11 67/M/11 67/M/11 67/M/11 4 CROSS OBJECTIONS, THE ASSESSEE SUPPORTS THE FINDING S OF THE CIT(A). 8. WE HAVE HEARD REVENUE AS WELL AS ASSESSEE AND A LSO PERUSED THE ASSESSMENT ORDER, PENALTY ORDER, CIT(A)S ORDER AND CROSS OBJECTIONS. THE ONLY DISPUTE BETWEEN THE PARTIES IS THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAD SOUGHT FOR DETAILS FROM T HE ASSESSEE QUA HIS CLAIM OF INTEREST OF ` .64,42,038/- AND ` .14,98,872/- RELATING TO HOUSE PROPERTY AND CAPITAL GAINS. IN THE ABSENCE OF ANY SUBSTANTIATION ON HIS PART, THE SAME WERE DISALLOWED/RESTRICTED TO OF ` .19,91,733/- AND ` .11,08,872/- RESPECTIVELY. AS PER REVENUE, THE ABOVE SAID DISALLOWANCE/ADDITIO N UNDER BOTH HEADS IS SUFFICIENT TO ATTRACT THE PENALTY PROVISION I.E. SE CTION 271(1)(C) OF THE ACT. PER ASSESSEE, THE MERE FACT THAT DISALLOWANCES WERE MADE IS NOT A GROUND IPSO FACTO TO IMPOSE PENALTY. IN OUR CONSIDERED VIE W, THE CIT(A) HAS RIGHTLY HELD THAT JUST BECAUSE THE ASSESSING OFFICER HAD MA DE ADDITIONS IN ASSESSEES INCOME DOES NOT LEAD TO PENALTY AUTOMATI CALLY. WE ALSO AGREE TO THE SAME REASONING AS IN THE PENALTY PROCEEDINGS, W HAT IS REQUIRED IS A POSITIVE FINDINGS THAT THE ASSESSEE HAD EITHER CONC EALED THE INCOME OR SUBMITTED INACCURATE PARTICULARS IN THE COURSE OF A SSESSMENT PROCEEDINGS. IN THIS CASE, APART FROM THE FACT THAT THE ADDITIONS H AVE BEEN MADE IN ASSESSEES CASE, NO SUCH FINDINGS BASED ON RECORD A RE FORTHCOMING. RATHER, PRESENT IS A CASE WHERE THE ASSESSEE COULD NOT RECO NCILE ITS CLAIM OF INTEREST PAYMENT MADE BORROWER-WISE WHICH CULMINATED IN DISA LLOWANCE/ADDITION MADE BY THE ASSESSING OFFICER IN PART (SUPRA). WE A LSO AWARE OF THE CASE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.664 664664 664/M/ /M/ /M/ /M/1 11 11 11 1 & && & C.O. C.O. C.O. C.O. NO. NO. NO. NO.67/M/11 67/M/11 67/M/11 67/M/11 5 LAW OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) THA T MERE ADDITION OF INTEREST AMOUNT DOES NOT LEAD TO PENALTY AS IT HAS BEEN CORR ECTLY INTERPRETED BY THE CIT(A). THEREFORE, WE OBSERVE THAT THE CIT(A) HAS R IGHTLY DELETED THE PENALTY. 9. COMING TO THE CROSS OBJECTIONS FILED BY THE ASS ESSEE. WE FIND THAT THE ASSESSEES ONLY PLEA IS THAT THE CIT(A) HAS RIGHTLY DELETED THE PENALTY. ONCE WE HAVE UPHOLD THE FINDINGS UNDER CHALLENGE IN REVE NUES APPEAL, THE CROSS OBJECTIONS CARRY ACADEMIC SIGNIFICANCE ONLY. 10. AS SEQUEL TO OUR ABOVE DISCUSSION, THE INSTANT APPEAL STANDS DISMISSED AND CROSS OBJECTIONS DISMISSED AS INFRUCT UOUS. ORDER PRONOUNCED ON TUESDAY, THE 5 TH OF MARCH, 2013 AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (S.S. GODARA) JUDICIAL MEMBER CHENNAI, DATED, THE 05.03.2013 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.