Rampion Eytech Pvt. Ltd., Ahmedabad V. The Dy.CIT., Circle-5, Ahmedabad

ITA 1490/AHD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6895 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-04-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 06-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Keywords: TDS; Set aside
• Section: 271(1)(c); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND T.K. SHARMA, JUDICIAL MEMBER) ITA NO.1587/AHD/2010 [ASSTT. YEAR : 2003-2004] DCIT, CIR.5 AHMEDABAD. VS. M/S.RAMPION EYETECH PVT. LTD. KALASH COMPLEX NEW SHARDA MANDIR ROAD PALDI, AHMEDABAD. PAN : AABCR 0341 M ITA NO.1490/AHD/2010 [ASSTT. YEAR : 2003-2004] M/S.RAMPION EYETECH PVT. LTD. KALASH COMPLEX NEW SHARDA MANDIR ROAD PALDI, AHMEDABAD. VS. DCIT, CIR.5 AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K. MADHUSUDAN ASSESSEE BY : SHRI S.N. DIVETIA O R D E R PER G.D. AGARWAL, VICE-PRESIDENT: THESE TWO APPEALS ARE BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XI, AHMEDABAD DATED 5.3.2010 ARISING OUT OF THE ORDER OF THE ASSESSING OFFICER P ASSED UNDER SECTION 271(1)(C) THE INCOME TAX ACT, 1961. FOR THE SAKE OF CONVENIENCE, WE DISPOSE OF ALL THESE APPEALS BY THIS COMMON ORDER. 2. FIRST WE SHALL TAKE UP THE ITA NO.1587/AHD/2010 (REVENUES APPEAL). 3. THE ONLY GROUND RAISED IN THIS APPEAL BY THE REV ENUE IS AGAINST THE REDUCTION IN THE PENALTY LEVIED UNDER SECTION 271(1 )(C) OF THE IT ACT. ITA NO.1587/AHD/2010 AND 1490/AHD/2010 -2- 4. THE FACTS OF THE CASE ARE THAT THE ASSESSING OFF ICER LEVIED PENALTY UNDER SECTION 271(1)(C) IN RESPECT OF THE FOLLOWING ADDITIONS: GRATUITY PROVISION RS.25,500/- DISCOUNT EXPNS. RS.7,84,758 FOREIGN TRAVEL EXPNS. RS.10,06,983 (OUT OF RS.20139 65) INTEREST FREE ADVANCES RS.4,73,425 (OUT OF RS.24,00 ,000) TDS RECONCILIATION (INT) RS.1,79,117 5. THE CIT(A) SUSTAINED THE PENALTY IN RESPECTS OF DISALLOWANCE OUT OF DISCOUNT AMOUNTING TO RS.7,84,758/;- AND ALSO ADDIT ION OUT OF TDS RECONCILIATION INTEREST. THE ASSESSEE IS IN APPEAL AGAINST THE PENALTY SUSTAINED ON DISCOUNT AMOUNTING TO RS.7,84,758/-. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CANCELLED THE PENALTY IN RESPECT OF REMAINING ITEMS. THE REVENUE AGGRIEVED WITH THE REDUCTION IN THE PENALTY IS IN APPEAL BEFORE US. 6. AT THE TIME OF HEARING BEFORE US, IT WAS EXPLAIN ED BY THE LEARNED COUNSEL THAT THE DISALLOWANCE OUT OF INTEREST IS DE LETED BY THE ITAT IN THE QUANTUM APPEAL VIDE ORDER IN ITA NO.961/AHD/2007 AN D 979/AHD/2007. HOWEVER, THE ITAT SUSTAINED THE DISALLOWANCE OUT OF GRATUITY PROVISION AND FOREIGN TRAVELING EXPENSES. THE LEARNED DR STA TED THAT AT LEAST IN RESPECT OF DISALLOWANCE/ADDITION SUSTAINED BY THE I TAT, PENALTY UNDER SECTION 271(1)(C) SHOULD BE UPHELD. HE HAS STATED THAT SUSTAINING OF DISALLOWANCE CLEARLY PROVED THAT WRONG EXPENDITURE WAS CLAIMED BY THE ASSESSEE. HE THEREFORE STATED THAT THE ORDER OF TH E CIT(A) SHOULD BE REVERSED WITH REGARD TO THE DELETION OF PENALTY ON GRATUITY PROVISION AS WELL AS FOREIGN TRAVELING EXPENSES. ITA NO.1587/AHD/2010 AND 1490/AHD/2010 -3- 7. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND RELIED UPON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS LTD., 322 ITR 158 AND STATED THAT MER ELY BECAUSE CERTAIN CLAIM OF EXPENSES WAS DISALLOWED ON THE ESTIMATE BA SIS, WOULD BE NO GROUND FOR LEVY OF PENALTY UNDER SECTION 271(1)(C). HE HAS STATED THAT THE MAJOR DISALLOWANCE IS OUT OF FOREIGN TRAVELING EXPE NSES WHEREIN THE ASSESSING OFFICER HAS DISALLOWED THE ENTIRE FOREIGN TRAVELING EXPENSES WHILE THE ITAT SUSTAINED 50% DISALLOWANCE OUT OF FO REIGN TRAVELING EXPENSES ON ESTIMATE BASIS, THEREFORE, ON SUCH DISA LLOWANCE OUT OF EXPENSES NO PENALTY CAN BE LEVIED. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT SIMILA R ISSUE IS CONSIDERED BY THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIA NCE PETROPRODUCTS PVT. LTD., 322 ITR 158 (SC) WHEREIN THEIR LORDSHIP HELD AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD 'PARTICULARS ' USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND T O BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY O F FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSE SSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO N, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGI NATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. (EMPHASIS ADDED) THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY TH E ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSE E CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULAR S ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRAC T PENALTY, THE ITA NO.1587/AHD/2010 AND 1490/AHD/2010 -4- DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE , NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOU S OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 2 71(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RE TURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS . (EMPHASIS ADDED) FROM THE ABOVE IT IS EVIDENT THAT THEIR LORDSHIPS H AVE CLEARLY LAID DOWN THAT MERELY AN INCORRECT CLAIM WAS MADE BY THE ASSE SSEE, IT WOULD NOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS SO AS TO MAKE THE ASSESSEE LIABLE FOR PENALTY UNDER SECTION 271(1)(C) . IN THIS CASE, IT IS NOT IN DISPUTE THAT THE DETAILS SUPPLIED BY THE ASSESSE E WERE NOT FOUND TO BE INCORRECT OR WRONG. IN FACT THE ITAT HAS REDUCED 50% OF THE DISALLOWANCE AND ALLOWED THE BALANCE 50% OF THE CLA IM OUT OF THE FOREIGN TRAVELING EXPENSES. THEREFORE, ON SUCH DISALLOWANC E NO PENALTY CAN BE LEVIED UNDER SECTION 271(1)(C). IN VIEW OF THE ABO VE, WE RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS LTD. (SUPRA) UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE AND DISMISS THE APPEAL OF THE REVENUE. ITA NO.1490/AHD/2010 (ASSESSEES APPEAL) 9. THE ONLY GROUND RAISED IN THIS APPEAL OF THE ASS ESSEE IS AGAINST THE CONFIRMATION OF PENALTY IN RESPECT OF DISCOUNT EXPE NSES OF RS.7,84,758/- . 10. AT THE TIME OF HEARING BEFORE US, IT WAS POINTE D OUT BY THE LEARNED COUNSEL THAT IN THE QUANTUM APPEAL THE ITAT HAS SET ASIDE THIS MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. HE, THE REFORE, SUBMITTED THAT AT ITA NO.1587/AHD/2010 AND 1490/AHD/2010 -5- PRESENT THE PENALTY CANNOT BE SUSTAINED. THE LEARN ED DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BEL OW. 11. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF B OTH THE SIDES AND PERUSED THE MATERIAL PLACE BEFORE US. WE FIND THA T THE ITAT WHILE CONSIDERING THE ASSESSEES APPEAL IN QUANTUM HAS SE T ASIDE THE ADDITION OF RS.7,84,758/- BACK TO THE FILE OF THE ASSESSING OFF ICER. WHEN THE ADDITION IN RESPECT OF WHICH THE PENALTY HAS BEEN L EVIED ITSELF HAS BEEN SET ASIDE, PENALTY IN RESPECT OF SUCH ADDITION CANNOT B E SUSTAINED. WE THEREFORE, CANCEL THE PENALTY IN RESPECT OF THE ADD ITION OF RS.7,84,758/-. HOWEVER, THE AO WILL BE AT LIBERTY TO RE-INITIATE T HE PENALTY PROCEEDINGS IN ACCORDANCE WITH LAW AFTER COMPLETING THE SET ASI DE ASSESSMENT IF THE FACTS OF THE CASE SO WARRANT. SUBJECT TO THIS REMA RK, THE APPEAL OF THE ASSESSEE IS ALLOWED. 12. IN RESULT, REVENUES APPEAL IS DISMISSED WHILE THE ASSESSEE APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 8 TH APRIL, 2011 SD/- SD/- (T.K. SHARMA) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 08-04-2011 C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD