Jogn Tinson & Coy. Pvt. Ltd., V. ITO, Ward 4(2),

ITA 1405/DEL/2007

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74341 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 09-01-2014
• Assessment Year: 1993-1994
• Appeal Filed On: 22-03-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Keywords: Depreciation; Business expenditure; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.1405/DEL/2007 ASSESSMENT YEAR : 1993-94 M/S JOHN TINSON & CO. PVT. LTD., ITO, 54-JANPATH, WARD-4 (2), NEW DELHI. V. NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AAACJ AAACJ AAACJ AAACJ- -- -1323 1323 1323 1323- -- -Q QQ Q APPELLANT BY : SHRI U.N. MARWAH, ADVOCATE. RESPONDENT BY : SHRI SATPAL SINGH, SR. DR. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST UPHOLDING OF PENALTY ORDER PASSED BY LD CIT(A) VIDE ORDER DATED 8 .12.2006. THE APPEAL WAS EARLIER HEARD BY THE TRIBUNAL ON DATED 27 .10.2010 WHICH WAS ALLOWED BY THE TRIBUNAL ON THE BASIS THAT PENALTY PROCEEDINGS WERE TIME BARRED. THE REVENUE TOOK THE MATTER BEF ORE HON'BLE DELHI HIGH COURT AND HON'BLE HIGH COURT VIDE ITS JUDGMENT REMANDED THE ISSUE BACK TO THE TRIBUNAL FOR CONSIDERING THE CASE ON MERITS. IN VIEW OF THE ABOVE, THE APPEAL WAS HEARD ON MERITS. 2. AT THE OUTSET, THE LD AR SUBMITTED THAT PENALTY W AS IMPOSED DUE TO ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THREE ADDITIONS NAMELY (I) DISALLOWANCE OF DEPRECIATION ON LEASED ASSETS, (II) DISALLOWANCE OF BUSINESS EXPENDITURE AND (III) DISALLOW ANCE OF INTEREST ITA NO1405/DEL/2007 2 ON MORTGAGE LOANS. THE LD AR SUBMITTED THAT THE ISSUE S INVOLVED WERE DEBATABLE AS THE ADDITIONS WERE MADE DUE TO DIFFEREN CE OF OPINION WHICH IS APPARENT FROM THE FACT THAT ASSESSING OFFICER H AD DISALLOWED AND LD CIT(A) HAD ALLOWED WHEREAS THE TRIBUNAL HAD A GAIN DISALLOWED. THE HOLDING OF DIFFERENT VIEWS BY THE THREE AUTHORIT IES ITSELF PROVE THAT THE ADDITIONS WERE ON ACCOUNT OF DIFFERENCE OF OPIN ION. IT WAS FURTHER SUBMITTED THAT NO PARTICULARS WERE CONCEALED AND FULL PARTICULARS WERE FILED WITH REGARD TO INTEREST ON MORTGAGE LOANS BUSINE SS EXPENSES AND DEPRECIATION AND THE DISALLOWANCES BY ASSESSING OFFICER W ERE MADE FROM THE P&L A/C ITSELF, THEREFORE, THERE WAS NO CONC EALMENT OF PARTICULARS OF INCOME AND ADDITION WAS MADE ONLY ON A CCOUNT OF DIFFERENCE OF OPINION. 3. THE LD AR RELIED UPON A NUMBER OF CASE LAWS WHEREI N THE PENALTY WAS DELETED HOLDING THAT THE ADDITIONS WERE O NLY ON ACCOUNT OF DIFFERENCE OF OPINION AND FURTHER WITH THE PROPOSITI ON THAT DISALLOWANCE OF A CLAIM CANNOT TANTAMOUNT TO DISCLOSURE OF INACCU RATE PARTICULARS. 1.UTI BANK LTD. V. ACIT IN I.T.A.NOS.2572/2006,4386 & 4388/2007 & 790/AHD/2012. 2. DEVSONS PVT. LTD. V. CIT (2011) 196 TAXMAN 21 (DEL HI HC). 3. CIT V. UNIVERSITY PRINTERS (1991) 188 ITR 206 (ALL D.). 4. CIT V. AURIC INVESTMENT & SECURITIES LTD. (2007) 1 63 TAXMAN 533 (DEL.). 5. CIT V. RELIANCE PETROPRODUCTS LTD. 322 ITR 158.(S C). 6. COMET LEASING & FINANCE LTD. V. ACIT 2011 TMI 208 -626 (DEL. ITAT). 7. CIT V. MAHANAGAR TELEPHONE NIGAM LTD.,2010 TIOL 726 (DEL. HC). ITA NO1405/DEL/2007 3 4. IN VIEW OF THESE CASE LAWS, THE LD AR ARGUED THAT PENALTY U/S 271(1)( C) WAS NOT IMPOSABLE. 5. THE LD DR, ON THE OTHER HAND RELIED UPON THE AUT HORITIES BELOW. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE DISALLOWANCE OF EXPENSES WAS MADE OUT OF P&L A/C WHICH WAS FILED BY THE ASSESSEE ALONG WITH ITS RETURN OF INCOME. MOREOVER, WE OBSERVE THAT THE EXPENSES WERE DISALLOWED BY THE ASSESSING OFFICER AND WERE ALLOWED BY LD CIT(A) WHICH WERE FURTHER DISALLOWED B Y THE ITAT WHICH ITSELF SHOWS THAT THERE WAS TWO POSSIBLE VIEWS ON THE ADDI TIONS AND VARIOUS DECISIONS AS RELIED UPON BY THE LD AR HAS HELD U NDER THESE CIRCUMSTANCES THE PENALTY U/S 271(1)(C) CANNOT BE IMPO SED. WE ALSO FIND THAT MERE NON ACCEPTANCE OF A CLAIM FOR EXPEND ITURE CANNOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. RELIANCE PETRO PRODUCTS LTD. HAS HELD UNDER:- THE LORDSHIPS HELD THAT PENALTY CANNOT BE IMPOSED EVE N FOR MAKING UNSUSTAINABLE CLAIMS AND BY NO STRETCH OF IMAGI NATION CAN MAKING OF AN INCORRECT CLAIM OF EXPENDITURE TAN TAMOUNT TO FURNISHING OF INACCURATE PARTICULARS. IF THE CONTENTI ON OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WHER E THE CLAIM MADE IS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASONS, THE ASSESSEE WILL INVITE PENALTY U/S 271(1)( C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. SIMILARLY, IN THE CASE OF CEMENT MARKETING CO. OF IN DIA V. ACST REPORTED IN 124 ITR 15 (SC) THE HON'BLE SUPREME COU RT HAS HELD AS UNDER:- ITA NO1405/DEL/2007 4 WHEN AN ASSESSEE CANVASSES A CLAIM BASED ON POSSIBLE LEGAL VIEW, PENALTY FOR CONCEALMENT OF INCOME SHOULD NOT B E LEVIED MERELY BECAUSE THE CLAIM HAD BEEN DISALLOWED IN THE ASSESSMENT. BONA FIDE BELIEF THAT FREIGHT IS NOT INCLUDA BLE IN TOTAL TURNOVER PENALTY CANNOT BE LEVIED. 7. IN VIEW OF THE ABOVE JUDICIAL PRONOUNCEMENTS WE F IND THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED IN ITS FAVOUR. TH EREFORE, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 14TH DAY OF MARCH, 2014. SD/- SD/- (U.B.S. BEDI) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT.14.03.2014. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. (ITAT, NEW DELHI). DATE OF HEARING 9.1.2014 DATE OF DICTATION 8.3.2014 DATE OF TYPING 10.3.2014 DATE OF ORDER SIGNED BY 14.03.2014 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET & SENT TO THE BENCH CONCERNED. ITA NO1405/DEL/2007 5