DCIT, Panchkula V. M/s Himalayan Expressway Ltd., Pinjore

ITA 1187/CHANDI/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6983 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 15-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA KANTA
• Assessee Lawyers: A K GARG
• Section: 143(3); 14A; 27; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NOS1187 TO 1189/CHD/2016 ASSESSMENT YEAR: 2009-10 TO 2011-12 THE DCIT VS. M/S HIMALAYAN EXPRESSWAY LTD. PANCHKULA CIRCLE, KALKA SADAN, SHIMLA ROAD PANCHKULA PINJORE PAN NO. AABCH9338L (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. A.K. GARG REVENUE BY : MS. CHANDRAKANTA DATE OF HEARING : 28/06/2017 DATE OF PRONOUNCEMENT : 02/08/2017 ORDER PER B.R.R. KUMAR A.M. ALL THESE APPEALS HAVE BEEN FILED BY THE REVENUE AG AINST THE COMMON ORDER OF LD. CIT(A), PANCHKULA DT. 30/09/2016. AS T HE FACTS AND CIRCUMSTANCES AND POSITION OF LAW IN EACH OF THESE APPEALS CONTIN UES TO REMAIN THE SAME. ACCORDINGLY IN VIEW OF THE ABOVE REASON FOR THE SAK E OF CONVENIENCE A COMMON ORDER IS BEING PASSED IN THE ABOVE MENTIONED APPEALS. FOR READY REFERENCE THE FACTS RELATABLE TO ITA NO. 187/CHD/20 16 ARE BEING REFERRED TO IN GREATER DETAIL AT THE OUTSET: 2. ITA NO. 1187/CHD/2016 3. THE PRESENT APPEAL HAVE BEEN FILED BY THE REVENU E AGAINST THE ORDER OF LD. CIT(A), PANCHKULA DT. 30/09/2016 PERTAINING TO ASSESSMENT YEAR 2009-10 TO 2011-12 ON THE FOLLOWING GROUND: WHETHER ON THE FACT AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE AND CANCELLED T HE PENALTY U/S 271(1)(C) WHICH IS NOT CORRECT BECAUSE THE ASSESSEE HAS DELIB ERATELY FURNISHED THE INACCURATE PARTICULAR OF ITS INCOME TO EVADE PAYMEN T OF TAXES. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA VING BUSINESS OF DESIGN, ENGINEERING, CONSTRUCTION, OPERATION MAINTENANCE OF ROADS, FILED RETURN OF INCOME ON 27/09/2009 DECLARING INCOME OF RS. 1,76,0 6,556/-. THE RETURN OF INCOME WAS REVISED ON 29/03/2011 DECLARING NIL INCO ME. THE ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED VIDE ORDER UNDER SECTI ON 143(3) DATED 27.12.2011 AT RS. 1,76,06,560/- AFTER ADDITION ON ACCOUNT OF I NTEREST RECEIVED ON BANK 2 DEPOSITS / FDRS. THE ASSESSEE FILED AN APPEAL BEFOR E CIT(A), PANCHKULA AND THE CIT(A) DISMISSED THE APPEAL FOR THE A.Y. 2009-10. S UBSEQUENTLY, THE ASSESSEES APPEAL BEFORE THE HONBLE ITAT AGAINST THE ORDER OF CIT(A) WAS DISMISSED IN ITA NO. 690/CHD/2014 DATED 23/07/2015. THE PENALTY PROC EEDINGS U/S 271(1)(C) WAS ALSO INITIATED DURING THE COURSE OF ASSESSMENT PROC EEDINGS. 5. THE AO NOTED THAT SINCE THE AMOUNT OF RS. 1,76, 06,556/- HAS BEEN TREATED AS CONCEALMENT, PENALTY UNDER SECTION 271(1)(C) WAS LEVIED @ 100% OF THE TAX SOUGHT TO BE EVADED I.E; 59,84,470/-. 6. AGGRIEVED THE ASSESSEE WENT BEFORE THE LD. CIT( A). 7. THE LD. CIT(A) HAS DELETED THE PENALTY INVOKING THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCT PVT. LTD. [2010] 322 ITR 158 . 8. WHILE DELETING THE PENALTY CIT(A) HELD AS UNDER: IT IS APPARENT THAT THE PREOPERATIVE INTEREST INCOME W HICH WAS ADDED AS TAXABLE INCOME WAS DECLARED BY THE APPELLANT IN ITS AUDITED BOOKS OF ACCOUNT. THE FILING OF RETURN OF INCOME IS SUBSEQUENT TO SUC H AUDIT OF BOOKS OF ACCOUNT. THE APPELLANT HAD CLAIMED THE PREOPERATIVE INTEREST INC OME AS REDUCTION TO THE COST OF BORROWED FUND WHEREAS THE AO FOUND THAT THE INTE REST INCOME EARNED ON FDRS WERE TAXABLE AS PER PROVISIONS OF SECTION 56 OF THE ACT. THE AO WHILE IMPOSING PENALTY FOR FURNISHING INACCURATE PARTICULARS OF IN COME IS OF THE VIEW THAT NOT SHOWING THE INTEREST INCOME AS TAXABLE INCOME IS AN ATTEMPT TO REDUCE THE TAXABLE INCOME. 5.4 FURTHER, A REFERENCE IS MADE TO EXPLANATION I T O SECTION 271(L)(CJ. THE EXPLANATION 1 PROVIDES WHERE IN RESPECT OF ANY FACT S MATERIAL TO THE COMPUTATION OF TOTAL INCOME, THE ADDITIONS ARE MADE BECAUSE THE PE RSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO P ROVIDE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SA ME AND MATERIAL TO THE COMPULATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN THE AMOUNT SO ADDED SHALL BE DEEMED TO BE INCOME IN RESPECT OF WH ICH PARTICULARS HAVE BEEN CONCEALED. SO, THE EXPLANATION 1 RAISES AN INITIAL PRESUMPTION THAT THE ADDITIONS REPRESENT CONCEALED INCOME OF THE ASSESSEE, HOWEVER , THE PRESUMPTION IS REBUTTABLE. THE INITIAL BURDEN OF DISCHARGING THE O NUS TO REBUT THE ABOVE PRESUMPTION IS ON THE ASSESSEE, I.E., THE ASSESSEE NEED TO EXPLAIN THAT THE EXPLANATION OFFERED BY HIM ABOUT A PARTICULAR EXPEN DITURE IS BONA FIDE AND ALL MATERIAL TO THE COMPUTATION OF HIS INCOME HAS BEEN DISCLOSED. FURTHER, FAILURE TO SUBSTANTIATE THE EXPLANATION IS NOT ENOUGH TO WARRA NT PENALTY. THE AO HAS TO ESTABLISH THAT THE EXPLANATION OFFERED WAS NOT SUBS TANTIATED. IN THE INSTANT CASE, THE ADDITION ON ACCOUNT OF INTEREST INCOME WAS MADE BUT THE ASSESSEE ESTABLISHED ITS CONDUCT THAT THE INTEREST INCOME WA S REDUCED FROM THE INTEREST COST ON THE BORROWED FUND LEADING TO REDUCTION IN T HE COST OF BORROWED FUND. THE APPELLANT ALSO EXPLAINED THAT IT' FOLLOWED THE ACCOUNTING PRINCIPLE AS- 16 TO ACCOUNT FOR SUCH INTEREST. THE EXPLANATION RE GARDING CLAIM OF REDUCTION OF INTEREST INCOME WAS ALSO PROVIDED WHICH WERE NOT AC CEPTED BY THE AO AND THE CLAIM WAS DISALLOWED. THIS SHOWS THE APPELLANT' S CONDUCT AND THE EXPLANATION IS CONSIDERABLE AS BONA FIDE. IT WAS TH E REJECTION OF APPELIANT'S CLAIM WHICH WAS DONE AS PER OPINION OF THE AO BASED ON JUDGMENT OF HON'BLE SUPREME COURT IN A CASE. SUCH ADDITION BY THE AO ON REJECTION OF APPELLANT'S EXPLANATION ON HAVING DIFFERENCE OF OPI NION WOULD NOT WARRANT FOR IMPOSITION OF PENALTY EITHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 5.5 FURTHER, A REFERENCE IS MADE TO THE JUDGMENT OF HON'BLE SUPREME COURT IN RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) WHEREIN TH E HON'BLE SUPREME COURT OBSERVED ASUNDER :- 3 '9) . WE ARE NOT CONCERNED IN THE PRESENT CASE WITH THE MENS REA. HOWEVER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A M ATTER \OF FACT, THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS. IN WEBSTER'S DICT IONARY, THE WORD 'INACCURATE' HAS BEEN DEFINED AS I- 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRANSCRIPT'. WE HAVE ALREADY SEEN THE MEANING OF THE WORD 'PARTI CULARS' IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY TH E ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH N OT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY U/S 27 1(L)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, -WHICH IS NOT SUSTAINABLE IN L AW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACC URATE PARTICULARS. 10) IT WAS TRIED TO BE SUGGESTED THAT SECTION 14A O F THE ACT SPECIFICALLY EXCLUDED THE DEDUCTION IN RESPECT TO THE EXPENDITUR E INCURRED BY THE ASSESSEE IN RELATION TO INCOME -WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. IT WAS FURTHER POINTED OUT THAT THE DIVIDENDS FROM THE SHARES DID NOT FORM THE PART OF THE TOTAL INCOME. IT WAS, THEREFOR E, REITERATED BEFORE US THAT THE ASSESSING OFFICER HAS CORRECTLY REACHED THE CON CLUSION THAT SINCE THE ASSESSEE HAD CLAIMED EXCESSIVE DEDUCTIONS KNOWING T HAT THEY ARE INCORRECT; IT AMOUNTED TO CONCEALMENT OF INCOME, IT WAS TRIED TO BE ARGUED THAT THE FLSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FOR MS; (I) AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) AN ITEM OF EXP ENDITURE MAY BE FALSELY (OR IN AN EXAGGERATED AMOUNT) CLAIMED, AND BOTH TYP ES ATTEMPT TO REDUCE THE TAXABLE INCOME AND, THEREFORE, BOTH TYPES AMOUNT TO CONCEALMENT OF PARTICULARS OF ONE'S INCOME AS WELL AS FURNISHING O F INACCURATE PARTICULARS OF INCOME. WE DOES NOT AGREE, AS THE ASSESSEE HAD FURN ISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS T HE CONCEALMENT OF INCOME ON ITS PART. IT WAS UPTO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY, BECAUSE THE ASSESSEE HAD CLA IMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENAL TY UNDER SECTION 27L(L)(C). IT WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CAS E OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 27J(L)(C ). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. ' 5.6 IN THE BACKDROP OF AFORESAID JUDGMENT, I FIND T HAT THE APPELLANT HAS FURNISHED ALL THE DETAILS OF ITS INCOME AS PER THE RETURN OF INCOME, WHICH DETAILS, IN THEMSELVES WERE NOT FOUND TO B E INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME. THE APPEL LANT'S CLAIM THAT PREOPERATIVE INTEREST WAS DEDUCTIBLE FROM THE INTER EST LIABILITY OF BORROWED FUND WHICH LED TO REDACTION IN THE COST OF BORROWED FUND WAS NOT ACCEPTED BY THE AO. MERELY, BECAUSE'THE APPELLANT HAD CLAIMED EXPENDITU RE WHICH WAS NOT ACCEPTED BY THE AO, THAT BY ITSELF WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. FURTHER, THE AO HAS IGNORED THE LAW IN RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) BY PLACING RELIANCE ON JUDGMENT OF HON'BLE SUPREME COURT IN MAK DATA PVT. LTD. (SUPRA). 9. IN VIEW OF THE FACT OF THE INSTANT CASE, WE ARE OF THE OPINION, BASED ON THE ABOVE DECISION THAT A MERE CLAIM OF THE ASSESSEE DI SCLOSED AS PER THE RETURN OF INCOME WHICH WAS NOT ACCEPTABLE TO REVENUE THAT BY ITSELF WOULD NOT ATTRACT PENALTY UNDER SECTION 271(1) (C) OF THE ACT, AND TH EREFORE THE AO IS NOT JUSTIFIED IN IMPOSING OF THE PENALTY OF RS. 59,84,470/- UNDER SECTION 271 (1)(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME. HENCE THE ORDER O F THE LD. CIT(A) IS HEREBY UPHELD AND THE PENALTY IS DELETED. 4 10. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. 11. SINCE THE ISSUES RAISED IN ITA NOS. 1188/CHD/2 016 & 1189/CHD/2016 ARE IDENTICAL TO ITA NO-1187/CHD/2016 FOR AY 2009-10 , THEREFORE FOLLOWING THE DECISION RENDERED THEREIN IS SQUARELY APPLICABLE T O THESE APPEALS ALSO. 12. IN THE RESULT ALL THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (B.R.R.KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 02/08/2017 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR