Sh. Sanwar Mal Pansari, Delhi V. ACIT, New Delhi

ITA 134/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86893 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 25-02-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 07-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Assessee Lawyers: LALITHA KRISHNAMURTHY
• Keywords: Search and seizure; Difference of opinion; Capital expenditure
• Section: 132; 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH G GG G : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA, VICE , VICE , VICE , VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SHRI SHRI SHRI SHRI T.S. KAPOOR T.S. KAPOOR T.S. KAPOOR T.S. KAPOOR, , , , ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NOS SS S. .. .133/DEL/2013 & 134/DEL/2013 133/DEL/2013 & 134/DEL/2013 133/DEL/2013 & 134/DEL/2013 133/DEL/2013 & 134/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEARS SS S : : : : 2003 2003 2003 2003- -- -04 & 2004 04 & 2004 04 & 2004 04 & 2004- -- -05 0505 05 SHRI SANWAR MAL PANSARI, SHRI SANWAR MAL PANSARI, SHRI SANWAR MAL PANSARI, SHRI SANWAR MAL PANSARI, 2638/8, 2638/8, 2638/8, 2638/8, L.H. CHAMBERS, L.H. CHAMBERS, L.H. CHAMBERS, L.H. CHAMBERS, NAYA BAZAR, NAYA BAZAR, NAYA BAZAR, NAYA BAZAR, DELHI DELHI DELHI DELHI 110 006. 110 006. 110 006. 110 006. PAN : AGXPP6505E. PAN : AGXPP6505E. PAN : AGXPP6505E. PAN : AGXPP6505E. VS. VS. VS. VS. ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -17, 17, 17, 17, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. LALITHA KRISHNAMURTHY, CA. RESPONDENT BY : SHRI B.R.R. KUMAR, SR.DR. DATE OF HEARING : 25.02.2015 25.02.2015 25.02.2015 25.02.2015 DATE OF PRONOUNCEMENT : 04.03.2015 04.03.2015 04.03.2015 04.03.2015 ORDER ORDER ORDER ORDER PER G.C. GUPTA PER G.C. GUPTA PER G.C. GUPTA PER G.C. GUPTA, VP , VP , VP , VP : :: : THESE TWO APPEALS BY THE ASSESSEE FOR THE AY 2003- 04 AND 2004- 05 ARE DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) -II, NEW DELHI DATED 17 TH OCTOBER, 2012. THESE ARE BEING DISPOSED OF WITH T HIS CONSOLIDATED ORDER. ITA NO.133/DEL/2013 ITA NO.133/DEL/2013 ITA NO.133/DEL/2013 ITA NO.133/DEL/2013 (AY 2003 (AY 2003 (AY 2003 (AY 2003- -- -04) : 04) : 04) : 04) :- -- - 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS REGARDING THE VALIDITY OF PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 AMOUNTING TO `55,158/-. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THERE WAS A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF T HE ACT AGAINST THE ASSESSEE ON 7 TH OCTOBER, 2004 AND, AFTER DISCUSSION, THE ASSESSEE ITA NOS.133 & 134/DEL/2013 2 SURRENDERED AN AMOUNT OF `9 LAKHS DURING SEARCH OPE RATION TO COVER THE SO-CALLED DISCREPANCIES. HOWEVER, FROM THE DET AILS SUBMITTED BY THE ASSESSEE AT THE TIME OF SEARCH ITSELF, THE ASSE SSING OFFICER HAS MADE CERTAIN DISALLOWANCES ON WHICH PENALTY FOR CON CEALMENT OF INCOME HAS BEEN LEVIED UNDER SECTION 271(1)(C) OF T HE ACT. SHE SUBMITTED THAT THE ITEMS OF EXPENSES DISALLOWED BY THE ASSESSING OFFICER WERE ALREADY WITH THE INVESTIGATION WING OF THE DEPARTMENT AND THE AMOUNT OF EXPENSES WAS DEBITED TO THE CAPIT AL ACCOUNT OF THE ASSESSEE AND NO EXPENDITURE WAS INCURRED OUTSIDE TH E CAPITAL ACCOUNT OF THE ASSESSEE. SHE SUBMITTED THAT THE DISALLOWAN CES WERE OUT OF THE DETAILS OF NET INCOME AND EXPENDITURE AS REPRODUCED BY THE CIT(A) IN ITS APPELLATE ORDER. 4. LEARNED DR HAS OPPOSED THE SUBMISSIONS OF THE LE ARNED COUNSEL FOR THE ASSESSEE. HE REFERRED TO THE RELEVANT PORT ION OF THE ASSESSMENT ORDER AND THE APPELLATE ORDER PASSED BY THE CIT(A) IN SUPPORT OF THE CASE OF THE REVENUE. HE RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF MAK DATA P.LTD. VS. CIT [201 3] 358 ITR 593 (SC). 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE S IDES AND PERUSED THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A). WE FIND THAT THE DALALI INCOME WAS ESTIMATED BY THE ASSESSING OF FICER AT `15.85 LAKHS WHICH WAS REDUCED TO `1.25 LAKHS BY THE CIT(A ). THE PENALTY WAS IMPOSED ON THIS AMOUNT OF INCOME FROM DALALI BUSINE SS AND ON `4,025/- ON ACCOUNT OF CAPITAL EXPENDITURE AND `46,000/- ON ACCOUNT OF DISALLOWANCE UNDER SECTION 37(1) OF THE ACT. WE FI ND THAT PENALTY UNDER SECTION 271(1)(C) WAS IMPOSED ON THESE ITEMS OF DISALLOWANCES. THE DALALI INCOME HAS BEEN ASSESSED ON THE BASIS OF ESTIMATE ONLY AND THE ASSESSEE GOT SUBSTANTIAL RELIEF IN ITS QUANTUM APPEAL BEFORE THE CIT(A) IN THE MATTER OF ESTIMATION OF ITS DALALI IN COME. THE DISALLOWANCE OF `4,025/- ON ACCOUNT OF CAPITAL EXPE NDITURE IS A PETTY ITA NOS.133 & 134/DEL/2013 3 DISALLOWANCE. THE ADDITIONS MADE MAY BE JUSTIFIED IN THE FACTS OF THE CASE BUT DO NOT JUSTIFY THE IMPOSITION OF PENALTY U NDER SECTION 271(1)(C) OF THE ACT. IT IS A CASE WHERE ALL MATER IAL FACTS WERE DISCLOSED BY THE ASSESSEE. MERELY BECAUSE THERE WAS AN HONES T DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE DEPARTMENT REG ARDING CERTAIN DISALLOWANCES MADE, IT DOES NOT FOLLOW THAT THE ASS ESSEE SHOULD BE MADE LIABLE FOR IMPOSITION OF PENALTY FOR CONCEALME NT OF INCOME OR FILING OF INACCURATE PARTICULARS OF INCOME. IN THI S VIEW OF THE MATTER, WE ARE OF THE VIEW THAT IT WAS NOT A FIT CASE FOR IMPO SITION OF PENALTY, WHICH IS ACCORDINGLY CANCELLED, AND THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. ITA NO.13 ITA NO.13 ITA NO.13 ITA NO.134 44 4/DEL/2013 /DEL/2013 /DEL/2013 /DEL/2013 (AY 200 (AY 200 (AY 200 (AY 2004 44 4- -- -05 0505 05) : ) :) : ) :- -- - 6. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS REGARDING THE IMPOSITION OF PENALTY OF `89,955/- IMPOSED UNDER SE CTION 271(1)(C) OF THE ACT. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT IT IS A CASE WHERE THE ADDITION WAS MADE ON ACCOUNT OF DALALI IN COME BY WAY OF ESTIMATE ONLY AND CERTAIN ITEMS OF EXPENSES WERE DI SALLOWED. THE DISALLOWED ITEMS OF EXPENDITURE WERE PART OF THE DE TAILS OF INCOME/EXPENDITURE OF THE ASSESSEE WHICH WERE AVAIL ABLE WITH THE INVESTIGATION WING OF THE DEPARTMENT. THE DEDUCTIO N OF EXPENDITURE CLAIMED BY THE ASSESSEE WAS DEBITED TO THE CAPITAL ACCOUNT OF THE ASSESSEE. SHE SUBMITTED THAT IT IS A CASE OF DIFFE RENCE OF OPINION WITH REGARD TO ALLOWABILITY OF CERTAIN AMOUNT OF EXPENSE S CLAIMED BY THE ASSESSEE. 8. LEARNED DR HAS OPPOSED THE SUBMISSIONS OF THE LE ARNED COUNSEL FOR THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEES CONDUCT WAS NOT BONA FIDE AND THE AMOUNTS CLAIMED AS DEDUCTION WERE NOT SUPP ORTED ITA NOS.133 & 134/DEL/2013 4 BY ANY EVIDENCE WHATSOEVER. HE REFERRED TO THE REL EVANT PORTION OF THE APPELLATE ORDER OF LEARNED CIT(A) IN SUPPORT OF THE CASE OF THE REVENUE. HE ALSO RELIED ON THE DECISION OF HON'BLE SUPREME C OURT IN THE CASE OF MAK DATA P.LTD. VS. CIT [2013] 358 ITR 593 (SC). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E PERUSED THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A). WE FIND THAT THE ASSESSING OFFICER MADE ADDITION OF `6,73,163/- RELA TING TO DALALI BUSINESS BY WAY OF ESTIMATE. THE ASSESSEE WAS SUBJ ECTED TO SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT ON 7 TH OCTOBER, 2004. IN QUANTUM APPEAL, THE ASSESSEE GOT SUBSTANT IAL RELIEF AND THE CIT(A) SUSTAINED THE ADDITION TO THE EXTENT OF `1,9 9,900/- ON ACCOUNT OF DALALI BUSINESS. ON THIS AMOUNT, THE ASSESSING OFF ICER HAS IMPOSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN THI S CASE, THE DALALI PAYMENTS OF `1,59,900/- AND OUT OF POCKET EXPENSES `40,000/- WERE DISALLOWED BY THE CIT(A). WE FIND THAT THE PENALTY WAS IMPOSED AT THE RATE OF 150% ON THIS AMOUNT OF DALALI BUSINESS. TH E ASSESSEE HAS FILED RETURN OF INCOME FOR THE RELEVANT YEAR DECLARING IN COME OF `3,53,430/- WHICH INCLUDES THE AMOUNT OF `2,00,000/- SURRENDERE D DURING THE COURSE OF SEARCH OPERATION. THE DISALLOWANCES SUST AINED BY THE CIT(A) IN THE QUANTUM APPEAL OF THE ASSESSEE AT `1,99,900/ - WERE OUT OF THE DETAILS AVAILABLE WITH THE INVESTIGATION WING OF TH E DEPARTMENT AND THE RELEVANT DETAILS HAVE BEEN FILED IN COMPILATION BEF ORE THE TRIBUNAL. IT IS A CASE OF HONEST DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE REVENUE REGARDING ALLOWABILITY OF CERTAIN DEDUCTION S OF EXPENSES CLAIMED BY THE ASSESSEE. THE AMOUNT OF EXPENSES HA S BEEN CLAIMED TO HAVE BEEN DEBITED TO THE CAPITAL ACCOUNT OF THE ASSESSEE AND THIS PLEA OF THE ASSESSEE COULD NOT BE CONTROVERTED BY T HE REVENUE. THE DISALLOWANCES SUSTAINED BY THE APPELLATE AUTHORITIE S IN THIS CASE MAY BE JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE BUT THEY DO NOT JUSTIFY THE IMPOSITION OF PENALTY UNDER SECTION 271 (1)(C) OF THE ACT. ITA NOS.133 & 134/DEL/2013 5 THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM OF DE DUCTION OF CERTAIN AMOUNTS BY FILING ANY DOCUMENTARY EVIDENCE IN SUPPO RT OF ITS CLAIM BUT, THAT, BY ITSELF, WOULD NOT JUSTIFY THE IMPOSIT ION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN THIS VIEW OF THE MATTER, WE ARE OF THE VIEW THAT IT IS NOT A FIT CASE FOR IMPOSITION OF PE NALTY UNDER SECTION 271(1)(C) OF THE ACT AND, ACCORDINGLY, THE PENALTY IMPOSED IS CANCELLED AND GROUND OF APPEAL OF THE ASSESSEE ARE ALLOWED. 10. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 4 TH MARCH, 2015. SD/- SD/- ( (( (T.S. KAPOOR T.S. KAPOOR T.S. KAPOOR T.S. KAPOOR) )) ) (G. (G. (G. (G.C. GUPTA C. GUPTA C. GUPTA C. GUPTA) )) ) ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. APPELLANT : SHRI SANWAR MAL PANSARI, SHRI SANWAR MAL PANSARI, SHRI SANWAR MAL PANSARI, SHRI SANWAR MAL PANSARI, 2638/8, L.H. CHAMBERS, NAYA BAZAR, 2638/8, L.H. CHAMBERS, NAYA BAZAR, 2638/8, L.H. CHAMBERS, NAYA BAZAR, 2638/8, L.H. CHAMBERS, NAYA BAZAR, DELHI DELHI DELHI DELHI 110 006. 110 006. 110 006. 110 006. 2. RESPONDENT : ASSISTANT COMMISSIONER OF INCOME TA X, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -17, NEW DELHI. 17, NEW DELHI. 17, NEW DELHI. 17, NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR