ACIT, New Delhi V. M/s. Indo Monex, New Delhi

ITA 1585/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65344 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 30-12-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 04-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Keywords: Opportunity of being heard
• Section: 80HHC

Judgement Text

ITA NO.1585/DEL/2012 ASSTT.YEAR: 2003-04 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `C NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER I.T.A.NO.1585/DEL/2012 ASSESSMENT YEAR : 2003-04 ASSTT.COMMISSIONER OF INCOME TAX, VS INDO MO NEX, CIRCLE 27(1), D-BLOCK, A-31, NARAINA INDUSTRIAL AREA, VIKAS BHAWAN, NEW DELHI. PHASE-II, NEW DELHI. (PAN: AAAFI2746K) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SATPAL SINGH, SR.DR RESPONDENT BY : NONE PER CHANDRAMOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX(A)-XVII, NEW DELHI DATED 31.01.2012 FOR AY 2003-04 BY WHICH THE COMMISSIONER OF INCOME TAX( A) DELETED THE PENALTY OF RS. 3,06,560 LEVIED BY THE ASSESSING OFF ICER U/S 271(1)(C) OF THE ACT (HEREINAFTER REFERRED TO AS THE ACT). 2. BRIEFLY STATED, THE FACTS GIVING RISE TO THIS AP PEAL ARE THAT THE ASSESSEE FILED A RETURN DECLARING AN INCOME OF RS.53,46,390 FOR AY 2003-04 WHICH WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY A NOTICE U/S 143(2) OF THE ACT WAS ISSUED AND DULY ITA NO.1585/DEL/2012 ASSTT.YEAR: 2003-04 2 SERVED ON THE ASSESSEE. THE ASSESSING OFFICER NOTE D THAT THE APPELLANT HAD RECEIVED INTEREST OF RS.23,45,708 ON FIXED DEPOSITS AND HE EXCLUDED 90% OF SUCH INTEREST INCOME FROM PROFIT ELIGIBLE FOR DEDUC TION AS PER CLAUSE (BAA) OF THE EXPLANATION TO SECTION 80HHC OF THE ACT WHICH R ESULTED IN PART DISALLOWANCE OF THE CLAIM OF DEDUCTION U/S 80HHC OF THE ACT. THE ASSESSING OFFICER CONCLUDED THE ASSESSMENT, ASSESSI NG TAXABLE INCOME AT RS.60,61,360. AGGRIEVED, THE ASSESSEE FILED AN APP EAL BEFORE COMMISSIONER OF INCOME TAX(A)-XXIV, NEW DELHI WHICH WAS DISMISSE D THROUGH ORDER DATED 21.08.2006. THE ASSESSEE FILED A SECOND APPE AL BEFORE ITAT DELHI E BENCH IN ITA NO.3331/D/2006 AND THE SAME WAS ALLOWE D WITH FOLLOWING OBSERVATIONS:- BOTH THE PARTIES WERE FAIR ENOUGH TO CONCEDE THAT SINCE THIS ISSUE STANDS DECIDED BY THE DECISION OF ITAT (SPECIAL BENCH) IN THE CASE OF LAL SONS ENTERPRISES VS DCIT, 89 ITD 25 (DEL) (SB): 82 TTJ 1048 (SB) DEL AS WELL AS THE RECENT DECISION OF THE JURISDICTIONAL H IGH COURT OF DELHI IN THE CASE OF COMMISSIONER OF INCOM E TAX VS SHRI RAM HONDA POWER EQUIP(2007) 289 ITR 475 THE ASSESSEE IS ENTITLED FOR THE NETTING OF THE INT EREST, SUBJECT TO THE CONDITION THAT THE ASSESSEE FULFILLS THE GUIDELINES LAID DOWN BY THE TRIBUNAL IN THE CASE OF LAL SONS ENTERPRISES VS DCIT (SUPRA) DECIDED BY THE SPE CIAL BENCH. IN THIS VIEW OF THE MATTER, WE RESTORE THIS ISSUE OF NETTING OF INTEREST TO THE FILE OF THE ASSESSING OF FICER TO DECIDE THE SAME AFRESH IN THE LIGHT OF THE GUIDELIN ES ISSUED IN THE CASE OF LAL SONS ENTERPRISES (SUPRA) AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. FOR THIS LIMITED PURPOSE, THE ISSUE IS R ESTORED TO THE FILE OF THE ASSESSING OFFICER FOR COMPLIANCE AND ITA NO.1585/DEL/2012 ASSTT.YEAR: 2003-04 3 ORDER OF COMMISSIONER OF INCOME TAX(A) IS ALSO SET ASIDE ONLY TO THIS EXTENT. HENCE, THE MATTER WAS RESTORED TO THE FILE OF THE A SSESSING OFFICER FOR LIMITED PURPOSE I.E. TO DECIDE THE ISSUE WHETHER TH E ASSESSEE WAS ENTITLED FOR NETTING OF INTEREST. 3. THE ASSESSING OFFICER VIDE HIS ORDER U/S 254/143 (3) OF THE ACT DATED 24.12.2008 ADDED BACK INTEREST OF RS.23,84,176 AND INITIATED THE PROCEEDINGS U/S 271(1)(C) OF THE ACT. 4. FINALLY, THE ASSESSING OFFICER HELD THAT THE ASS ESSEE HAD FURNISHED INACCURATE PARTICULARS OF THE TOTAL INCOME AS REFER RED IN SECTION 2(45) OF THE ACT AND FURTHER HELD THAT THE ASSESSEE IS LIABLE T O LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE ASSESSING OFFICER IMPOSE D THE PENALTY OF RS.3,06,560 WITH A FINDING THAT THE CASE OF THE ASS ESSEE WAS SQUARELY COVERED UNDER EXPLANATION 1 OF SECTION 271(1)(C) OF THE ACT . 5. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE T HE COMMISSIONER OF INCOME TAX(A)-XVII, NEW DELHI WHICH WAS ALLOWED WIT H THE FOLLOWING OBSERVATIONS:- 4.3 THE PENALTY ORDER IS ACTUALLY SILENT ON THE ASP ECT OF NETTING OF INTEREST WHICH WAS SET ASIDE BY THE HON BLE ITAT. THOUGH, THE PENALTY IS LEVIED FOR FURNISHING INACCURATE PARTICULARS OF TOTAL INCOME, THE EXACT N ATURE OF THESE INACCURATE PARTICULARS ARE NOWHERE MENTION ED IN THE PENALTY ORDER. THE ASSESSING OFFICER HAVE RESO RTED TO EXPLANATION 1 TO 271(1)(C) OF THE I.T. ACT, 1961, W HICH ARE DEEMING PROVISIONS. THE ADDITION WAS MADE TO T HE ITA NO.1585/DEL/2012 ASSTT.YEAR: 2003-04 4 RETURNED INCOME AS A RESULT OF THE HONBLE ITAT ORD ER AND THE SAME IS IMPROPER AS IT WAS APPELLANT WHO WE NT ON APPEAL AND THE HONBLE ITATS ORDER WAS ONLY ON THE LIMITED ISSUE OF NETTING OF INTEREST. THE ASSESSIN G OFFICER INSTEAD OF LIMITING HERSELF TO THE DIRECTION OF THE ITAT EXPANDED THE ISSUE TO INCLUDE INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES;. THE PENALTY LEVI ED FOR NOT INCLUDING INTEREST INCOME UNDER THE HEAD INCOM E FROM OTHER SOURCES IS NOT SUSTAINABLE AS THE ASSES SING OFFICER HAS GONE BEYOND THE LIMITED ISSUE SET ASIDE BY THE ITAT AND THE PENALTY IS LEVIED ON AN IMPROPER ADDIT ION. 4.4 IT APPEARS THAT THE ASSESSING OFFICER IS OF THE VIE W THAT IF THE APPELLANT HAD NOT FILED AN APPEAL AGAINST AN ADDITION, THEN PENALTY IS REQUIRED TO BE LEVIED RES ORTING TO EXPLANATION 1 TO 271(1)( C) OF THE ACT, 1961. I N THIS CONNECTION, IT IS PERTINENT TO NOTE THE OBSERVATION OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS (P) LTD. WHERE IT IS POINTED OUT THAT BY T HE HONBLE SUPREME COURT IN ITS DECISION IN THE CASE O F DHARMENDRA TEXTILES HAD ONLY RULED THAT MENS REA IS NO MORE AN ESSENTIAL REQUIREMENT FOR LEVYING PENALTY U /S 271(1)(C) OF THE I.T. ACT, 1961. THEREFORE, THE DEPARTMENT AS OF NOW NEED NOT PROVE MENS REA IN PENALTY PROCEEDINGS BUT THE MEANING OF THE WORD CONCEALMENT AND INACCURATE CONTINUES TO BE GOOD LAW. THE HONBLE SUPREME COURT ALSO HELD IN THE AB OVE CASE OF RELIANCE PETRO PRODUCTS (P) LTD. THAT IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTE D BY THE ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C). THAT IS CL EARLY NOT THE INTENDMENT OF THE LEGISLATURE. 4.5 PENALTY PROVISIONS ARE NOT AUTOMATIC PROVISIONS AND THE WORDS CONCEALMENT AND INACCURATE CONTINUE TO BE GOOD LAW AND IN THIS CASE THE EXACT REASON FOR THE LEVY OF PENALTY IS NOWHERE MENTIONED IN THE PENALTY ORDER. THE PENALTY LEVIED IN THIS CASE FOR NOT INCLUDING INTER EST ITA NO.1585/DEL/2012 ASSTT.YEAR: 2003-04 5 INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES I S NOT SUSTAINABLE AS THE SAME IS LEVIED ON AN IMPROPE R ADDITION. THEREFORE, PENALTY OF RS.3,06,560/- IS H EREBY DELETED AND THIS GROUND OF APPEAL IS ALLOWED. 6. ON THE DATE OF HEARING, NEITHER THE ASSESSEE APP ELLANT NOR HIS REPRESENTATIVE APPEARED BEFORE US. WE ALSO NOTE TH AT THERE IS NO APPLICATION FOR ADJOURNMENT FROM THE ASSESSEE. ON PERUSAL OF I MPUGNED ORDER AND ENTIRE RECORD, WE FIND IT JUST AND PROPER TO DECIDE THE AP PEAL AFTER HEARING THE DR AND ACCORDINGLY WE PROCEED TO ADJUDICATE THE APPEAL . 7. WE HAVE HEARD ARGUMENTS OF THE DEPARTMENTAL REPR ESENTATIVE IN THE LIGHT OF MATERIAL ON RECORD BEFORE US. LD. DR SUBM ITTED THAT THE DECISION OF THE COMMISSIONER OF INCOME TAX(A) IS NOT ACCEPTABLE ON THE GROUND THAT THE INTEREST INCOME EARNED BY THE ASSESSEE HAS NO NEXUS WITH THE BUSINESS OF EXPORT AND WAS RIGHTLY TREATED AS INCOME FROM OTHER SOURCES BY THE ASSESSING OFFICER AND THIS FACT WAS NOT DISPUTED BY THE ASSESSEE. HE ALSO SUBMITTED THAT THE COMMISSIONER OF INCOME TAX(A) DE LETED THE PENALTY FOR NOT INCLUDING INTEREST INCOME UNDER THE HEAD INCOM E FROM OTHER SOURCES AS THE SAME WAS LEVIED ON AN IMPROPER ADDITION. BUT I N FACT, INTENTION OF THE ASSESSEE WAS NOT GOOD BECAUSE HE ADDED INTEREST INCOME TO THE INCOME OF THE BUSINESS OF EXPORT WHICH WAS ELIGIBLE FOR DEDUC TION U/S 80HHC OF THE ACT. ITA NO.1585/DEL/2012 ASSTT.YEAR: 2003-04 6 8. ON BARE READING OF THE IMPUGNED ORDER, WE OBSERV E THAT THE COMMISSIONER OF INCOME TAX(A) RELIED ON THE JUDGMEN T OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCT S LTD. VS COMMISSIONER OF INCOME TAX REPORTED AS (2010) 2010 TPI23(SC) , SLP )C) NO. 27161 OF 2008 WHEREIN THEIR LORDSHIPS HELD THAT IF THE CONTENTIO NS OF THE REVENUE ARE ACCEPTED FOR LEVY OF PENALTY, THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE BY THE ASSESSEE IS NOT ACCEPTE D BY THE ASSESSING OFFICER FOR ANY REASON, THEN THE ASSESSEE WILL INVI TE PENALTY U/S 271(1)(C) OF THE ACT WHICH IS NOT THE INTENTION OF THE LEGISLATU RE. 9. AFTER CAREFUL CONSIDERATION OF FACTS AND CIRCUMS TANCES OF THE CASE, WE OBSERVE THAT THE PENALTY PROVISIONS U/S 271(1)(C) O F THE ACT ARE NOT AUTOMATIC PROVISIONS AND THE WORDS CONCEALMENT AND INACCUR ATE MUST BE TAKEN IN A GOOD SPIRIT CONSIDERING THE ACT OF THE ASSESSEE WIT H HIS INTENTION AND IN THE CASE IN HAND, ON MICRO READING OF THE PENALTY ORDER , WE ARE UNABLE TO SEE EXACT REASONS FOR LEVY OF PENALTY. ON THE OTHER HA ND, AS PER IMPUGNED ORDER, THE LD. COMMISSIONER OF INCOME TAX(A) CONSIDERED TH E FACTS AND CIRCUMSTANCES OF THE CASE AND HELD THAT THE PENALTY LEVIED FOR NOT INCLUDING INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER S OURCES IS NOT SUSTAINABLE AS THE SAME WAS LEVIED ON IMPROPER ADDI TION. ACCORDINGLY, HE ITA NO.1585/DEL/2012 ASSTT.YEAR: 2003-04 7 RIGHTLY DELETED THE PENALTY LEVIED BY THE ASSESSING OFFICER WITHOUT GIVING ANY SOUND OR EXACT REASON. 10. IN VIEW OF ABOVE, WE FINALLY HOLD THAT THE COMM ISSIONER OF INCOME TAX(A) RIGHTLY RELIED ON THE JUDGEMENT OF RELIANCE PETRO PRODUCTS LTD. (SUPRA) AND WE HAVE NO REASON TO INTERFERE WITH THE FINDINGS GIVEN BY HIM. THEREFORE, WE HOLD THAT THIS APPEAL BY THE REVENUE IS DEVOID OF MERITS AND DESERVES TO BE DISMISSED. HENCE, WE DISMISS THE SA ME. 11. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.09.2012. SD/- SD/- (SHAMIM YAHYA) (CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 07TH SEPTEMBER 2012 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR