Dhanesh Iron Store, New Delhi V. ITO, New Delhi

ITA 1571/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3817 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 01-06-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 01-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BINITA DEVI
• Keywords: Depreciation
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: I NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SMT. DIVA SINGH, JUDICIAL MEMBER I.T.A NO. 1571/DEL/11 ASSTT. YEAR 2004-05 DHANESH IRON STORE, A-18B, PHASE-II, NARAINA INDL. AREA, NEW DELHI. VS. ITO, WARD 27 (1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI VED JAIN, CA RESPONDENT BY: SMT. BINITA DEVI, DR ORDER PER DIVA SINGH, JM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER DATED 28.12.2007 OF LD. CIT(A) XXIV NEW DELHI PERTAININ G TO 2004-05 ASSTT. YEAR WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUN DS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), IN CO NFIRMING PENALTY UNDER SECTION 271(C) IS BAD BOTH IN THE EYE OF LAW & ON FACTS 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE PENALTY DESPITE THE FACT TH AT THE APPELLANT HAS SUBMITTED EXPLANATION IN SUPPORT OF ITS CONTENTION THAT THERE IS NEITHER CONCEALMENT NOR FURNISHING OF INACCURATE PARTICULAR S OF INCOME. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING PENALTY AS THE CLAIM MADE BY TH E APPELLANT WAS ITA NO. 1571/DEL/11 ASSTT. YEAR 2004-05 2 BONA-FIDE & THAT ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED & AS SUCH NO PENALTY CAN BE LEVIED EVEN UNDER EXPLA NATION-1 TO SECTION 271(1)(C) OF THE ACT. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED CIT(A) HAS ERRED IN CONFIRMING PENALTY U/S 271(1)(C) REJECTING THE CONTENTION OF THE ASSESSEE THAT NO FINDING HAS BEEN GIVEN ON MERIT RE GARDING CONCEALMENT IN THE ORDER PASSED BY THE AO. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE PENALTY U/S 271(1)(C) DESP ITE THE FACT THAT THE ADDITION IN INCOME WERE MERELY ON ACCOUNT OF DISALL OWANCE OF EXPENSES & BROUGHT FORWARD LOSSES CLAIMED BY THE AS SESSEE & AS SUCH NO PENALTY IS LEVIABLE. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN IGNORING THE CONTENTION OF T EH APPELLANT THAT ON MERIT THE CLAIM OF THE EXPENSES ON ACCOUNT OF CAR EXPENSES AN D DEPRECIATION ARE ALLOWABLE EXPENDITURE. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN IGNORING THE CONTENTION OF THE APPELLANT T HAT PENALTY PROCEEDINGS ARE INDEPENDENT PROCEEDINGS AND AS SUCH THE CLAIM OF THE EXPENDITURE NEED TO BE EXAMINED AGAIN OF THE LI GHT OF THE MATERIAL AND EXPLANATION BEING PRODUCED AND REFERRED TO BY T HE APPELLANT. 2. THE RELEVANT FACTS FOUND DISCUSSED IN THE IMPUGN ED ORDER ARE AS UNDER :- FACTS, IN BRIEF, ARE THAT THE ASSESSEE FILED ITS R ETURN OF INCOME DECLARING INCOME OF RS. 4,790/-, AFTER CLAIMING SE T OFF OF BROUGHT FORWARD LOSS OF RS. 4,38,760/- OF ASSESSMENT YEAR (AY) 2003-04, IN WARD-27(1), NEW DELHI, HOWEVER THE ACIT, CENTRAL C IRCLE-14, NEW DELHI WAS HAVING JURISDICTION OVER THE CASE. THE AC IT, THEREFORE, ISSUED NOTICE UNDER SECTION 142(1) OF THE ACT ON 24 .3.05 CALLING RETURN OF INCOME FOR THE RELEVANT AY. THE APPELLANT SUBMIT TED THE PHOTOCOPY OF THE RETURN ALREADY FILED IN WARD-27(1), NEW DELH I. THE ASSESSING OFFICER COMPLETING THE ASSESSMENT VIDE HIS ORDER DA TED 27.6.06 OBSERVED THAT THE APPELLANT HAS NOT ADDED BACK THE PROPORTIONATE CAR RELATED EXPENSES IN WORKING OUT THE INCOME THOUGH H E HAS ALREADY ADDED BACK 1/3 RD DEPRECIATION ON CAR ON ACCOUNT OF ITS PERSONAL USE IN THE COMPUTATION OF INCOME SHEET ANNEXED WITH THE RE TURN. THE AO, THEREFORE, DISALLOWED RS. 41,953/- OUT OF CAR RELAT ED EXPENSES WHILE WORKING OUT INCOME VIDE IMPUGNED ORDER. FURTHER, TH E AO HASNT ALLOWED SET OFF OF BROUGHT FORWARD LOSS ON THE FACT THAT THE ASSESSMENT ITA NO. 1571/DEL/11 ASSTT. YEAR 2004-05 3 FOR AY 2003-04 WAS COMPLETED ON INCOME OF RS. 91,28 0/-. THUS, HE COMPETED THE ASSESSMENT ON TOTAL INCOME OF RS. 4,85 ,500/- SIMULTANEOUSLY, THE AO INITIATED PENALTY PROCEEDING S U/S 271(1) OF THE ACT. CONSEQUENTLY, THE PENALTY PROCEEDINGS WERE CONCLUDED VIDE IMPUGNED ORDER THEREBY IMPOSING PENALTY OF RS. 1,72 ,460/- BEING THE MINIMUM PENALTY I.E. 100% OF THE TAX SOUGHT TO HAVE BEEN EVADED BY THE ASSESSEE. 3. IN APPEAL, BEFORE THE LD. FIRST APPELLATE AUTHOR ITY TAKING INTO CONSIDERATION THE WRITTEN SUBMISSIONS FILED EX PART E ORDER, ON MERIT WAS PASSED CONFIRMING THE ACTION OF THE AO. 4. AT THE TIME OF HEARING SHRI VED JAIN, CA APPEARI NG ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE DEPARTMENT HAS PROCEEDE D ON THE FOOTING THAT THE BROUGHT FORWARD LOSSES OF THE ASSESSEE ON ACCOU NT OF THE BELATED FILING OF RETURN WAS NOT TO BE ALLOWED AND THE SAME HAD TO BE DISALLOWED WHICH IS ONE OF THE REASONS FOR LEVYING PENALTY. THE SECOND REA SON WAS THAT DISALLOWANCE OF CAR EXPENSES FOR PERSONAL USER ON THE BASIS OF E STIMATES WAS MADE. IT WAS HIS SUBMISSION THAT FIRSTLY THE RETURN FOR 2003-04 ASSTT. YEAR WAS NOT LATE AS PER THE EXTENDED DATES ISSUED BY THE CENTRAL GOVERN MENT ON ACCOUNT OF ELECTIONS IN DELHI ETC. FOR THAT PURPOSE ATTENTION WAS INVITED TO PAPER BOOK PAGES NO. 6 AND 7 WHICH STATE THAT THE RETURN WOULD BE ACCEPTED UPTO 2 ND DECEMBER, 2003 IN VIEW OF ELECTIONS SCHEDULED FOR 1 ST DECEMBER, 2003. THE RETURN FOR THE SAID YEAR, IT WAS STATED WAS FILED ON 2 ND DECEMBER, 2003 FOR WHICH PURPOSE PAPER BOOK PAGE NO. 4 WAS REFERRED TO . ADDRESSING THE ASPECT OF FULL AND COMPLETE, DISCLOSURE AT THE TIME OF FIL ING OF THE RETURN ATTENTION WAS INVITED TO PAGE 1-3 OF THE PAPER BOOK WHICH SHOWS T HAT ASSESSEE HAD CLAIMED ITA NO. 1571/DEL/11 ASSTT. YEAR 2004-05 4 BROUGHT FORWARD LOSS AS PER LAST YEARS RETURN. ACCO RDINGLY IT WAS STATED THAT NEITHER ITS A CASE OF FILING OF INACCURATE PARTICUL ARS NOR IS IT A CASE OF CONCEALMENT. IT WAS FURTHER ARGUED THAT EVEN FOR A MOMENT IT IS CONSIDERED THAT BROUGHT FORWARD LOSS IS NOT TO BE ALLOWED EVEN THEN THE IMPACT FIRST WOULD BE IN THE YEAR IN WHICH THE LOSS HAS NOT BEEN ACCE PTED AND NOT IN THE YEAR UNDER CONSIDERATION, AS SUCH PENAL ACTION IF ANY C OULD HAVE BEEN CONSIDERED THESE. A PERUSAL OF ASSTT, ORDER FOR 2003-04 WOULD SHOW THAT THE ASSESSED LOSS WAS RS. 2,28,725/- WITHOUT GETTING INTO THE FA CT AS TO WHETHER THE RETURN OF ASSESSEE WAS IN TIME OR NOT IT WAS HIS SUBMISSION T HAT AS FAR AS THE YEAR UNDER CONSIDERATION WAS CONCERNED ALL THE NECESSARY FACTS WERE BEFORE THE TAX AUTHORITIES AND THIS WOULD NEITHER AMOUNT TO CO NCEALMENT NOR IS IT A CASE OF FILING OF INACCURATE PARTICULARS. 4.1. LD. DR RELIED UPON THE IMPUGNED ORDER. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A CAREFUL CONSIDERATION OF THE SAME, WE FIND OURSELVES UNABLE TO UPHOLD THE EX PARTE ORDER ON MERIT OF LD. CIT(A). I T IS SEEN THAT THE ASSESSEE HAS DISCLOSED ALL MATERIAL AND RELEVANT FACTS AT TH E TIME OF FILING OF THE RETURN. THE CASE DOES NOT FALL EITHER IN THE CATEGORY OF CO NCEALMENT OF RELEVANT MATERIAL FACTS AND NOR DOES IT FALL IN THE AMBIT OF FILING OF INACCURATE PARTICULARS OF INCOME. THE CLAIM OF BROUGHT FORWARD LOSS AT THE TIME OF FILING OF THE RETURN WAS A BONAFIDE CLAIM AS PER FACTS AVAILABLE ON RECO RD AT THE TIME OF FILING OF THE RETURN. AS SUCH PENALTY ON THIS GROUND IS NOT MAINT AINABLE, SIMILARLY ON THE ITA NO. 1571/DEL/11 ASSTT. YEAR 2004-05 5 ASPECT OF ADDITION BASED ON ESTIMATED DISALLOWANCES OF CAR EXPENSES FOR PERSONAL USER WE AGAIN FIND THAT THE SAME DOES NOT FALL IN THE PECULIAR FACTS OF THE CASE EITHER IN THE AMBIT OF CONCEALMENT OF RELE VANT AND MATERIAL FACTS NOR DOES IT FALL IN THE AMBIT OF FILING OF INACCURATE PARTICULARS OF INCOME. THUS BEING SATISFIED BY THE EXPLANATION OFFERED SUPPORTED BY F ACTS WE DIRECT THAT THE PENALTY ORDER DESERVES TO BE QUASHED, THE IMPUGNED ORDER ACCORDINGLY IS SET ASIDE. 6. THE SAID ORDER WAS PRONOUNCED IN THE PRESENCE O F THE PARTIES AT THE TIME OF HEARING IN THE OPEN COURT . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. SD/- SD/- [G.E.VEERABHADRAPPA] [DIVA SINGH] VICE PRESIDENT JUDICIAL MEMBER DATED: 14.6.2011 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT