DINESH S. AGARWAL, MUMBAI V. ITO 13(3)(1), MUMBAI

ITA 1712/MUM/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2649 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 16-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 271(1)(c); 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI N.V. VASUDEVAN, J.M. AND SHRI A.L. GEHL OT, A.M. ITA NO. 1712/M/09 ASSESSMENT YEAR: 2005-06 DINESH S. AGARWAL, APPELLANT 33/11, DARIYASTHAN STREET, DARYISTHAN MANDIR BUILDING, MUMBAI 400 003. (PAN AABPA 3900 E) VS. INCOME TAX OFFICER, RESPONDENT 13(3),(1), MUMBAI. APPELLANT BY : MR. SAMEER DALAL RESPONDENT BY : AARSI PRASAD ORDER PER A.L. GEHLOT, A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)-XIII, MUMBAI, ON 29.01.2009 FOR THE ASSESS MENT YEAR 2005- 06. 2. THE GROUND RAISED IN THE APPEAL IS IN RESPECT OF LEVY OF PENALTY U/S 271(1)(C) ON THE DISALLOWANCE OF EXPENSES AMOUN TING TO RS. 73,955/- ON THE ALLEGATION OF FURNISHING INACCURATE PARTICULARS OF INCOME. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE AO W HILE MAKING ASSESSMENT U/S 143(3) OF THE ACT, MADE ADDITION OF RS. 1,25,000/- AS TDS WAS NOT DEDUCTED. THE AO HAD ALSO DISALLOWED CO LLEGE OFFICE FEES OF RS. 17,800/- ON THE GROUND THAT THE SAME WAS NOT INCURRED FOR BUSINESS PURPOSES. THE AO ALSO DISALLOWED THE EXPEN SES OF RS. 73,955/-, WHICH WAS CLAIMED TO EARN INTEREST OF RS. 75,000/- AND ITA NO. 1712/M/09 DINESH S. AGARWAL 2 ELECTRICITY EXPENSES AT RS. 10,681/-. THE AO WAS OF THE VIEW THAT THE ASSESSEE HAS PROVIDED INACCURATE PARTICULARS OF INC OME AND, THEREFORE, HE LEVIED A MINIMUM PENALTY OF RS. 1,01, 225/- U/S 271(1)(C) OF THE ACT. THE CIT(A) CANCELLED PENALTY IN RESPECT OF PROFESSIONAL FEES OF RS. 1,25,000/-, COLLEGE FEES O F RS. 17,067/- AND ELECTRICITY EXPENSES OF RS. 10,681/- OBSERVING THAT THESE CLAIMS OF THE ASSESSEE WERE BONAFIDE CLAIMS AND NO PENALTY IS LEV IABLE AS DISALLOWANCES WERE MADE ON AD-HOC BASIS, WHICH DID NOT AMOUNT TO EITHER CONCEALMENT OF PARTICULARS OF INCOME OR FURN ISHING INACCURATE PARTICULARS OF INCOME. HOWEVER, THE CIT(A) CONFIRME D THE PENALTY ON DISALLOWANCE OF EXPENSES OF RS. 73,955/- OBSERVING THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME. 4. THE LEARNED AR SUBMITTED THAT THE ASSESSEE WAS C LAIMING EXPENSES LIKE CONVEYANCE EXPENSES, SALARY, PROFESSI ONAL FEES, MOTOR CAR EXPENSES IN EARLIER YEARS ALSO. THE AO DISALLOW ED THE SAID EXPENSES OF RS. 73,955/-, WHICH WAS CLAIMED AGAINST INTEREST INCOME OF RS. 75,000/- AS THESE EXPENSES WERE NOT INCURRED TO EARN THIS INTEREST INCOME. 5. AFTER HEARING THE LEARNED DR AND PERUSING THE RE CORD, WE FIND THAT WHAT IS INACCURATE PARTICULARS AND CONCEALMENT OF PARTICULARS HAS BEEN DISCUSSED BY THE ITAT IN DETAIL IN THE CAS E IN THE CASE OF MIMOSA INVESTMENT CO. PVT. LTD., 28 SOT 470 [ITA NO . 2983/MUM/07 FOR AY 2004-05 ORDER DATED 15.01.09] HELD THAT WHEN THE ASSESSEE HAS FURNISHED ALL THE MATERIAL FACTS FOR THE PURPOS E OF COMPUTATION OF TOTAL INCOME, THE AO IS DUTY BOUND TO CALCULATE COR RECT TOTAL INCOME IN ACCORDANCE WITH LAW WHICH MAY BE DIFFERENT THAN THE TOTAL INCOME CALCULATED BY THE ASSESSEE; MERE FACT THAT THE AO W HILE DISCHARGING HIS DUTY HAS RECALCULATED THE TOTAL INCOME IN ACCORDANC E WITH LAW WHICH IS NOT THE SAME AS CALCULATED BY THE ASSESSEE, IT CANN OT BE HELD THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOM E OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME OR THERE IS A DEEMED CONCEALMENT ITA NO. 1712/M/09 DINESH S. AGARWAL 3 IN ACCORDANCE WITH EXPLANATION1 OF SECTION 271(1)(C ). WE MAY ALSO REFER TO THE FOLLOWING CBDT CIRCULAR:- TAX OFFICERS ROLE IN ASSISTING TAX PAYERS OFFICE RS OF THE DEPARTMENT MUST NOT TAKE ADVANTAGE OF IGNORANCE OF AN ASSESSEE AS TO HIS RIGHTS. IT IS ONE OF THEIR DUTIES TO ASSI ST A TAXPAYER IN EVERY REASONABLE WAY, PARTICULARLY IN THE MATTER OF CLAIMING AND SECURING RELIEFS AND IN THIS REGARD THE OFFICERS SH OULD TAKE THE INITIATIVE IN GUIDING A TAX PAYER WHERE PROCEEDINGS OR OTHER PARTICULARS BEFORE THEM INDICATE THAT SOME REFUND O R RELIEF IS DUE TO HIM. THIS ATTITUDE WOULD, IN THE LONG RUN, BENEF IT THE DEPARTMENT, FOR IT WOULD INSPIRE CONFIDENCE IN HIM THAT HE MAY BE SURE OF GETTING A SQUARE DEAL FROM THE DEPARTMENT. ALTHOUGH, THEREFORE, THE RESPONSIBILITY FOR CLAIMING REFUNDS AND RELIEFS RESTS WITH THE ASSESSEES ON WHOM IT IS IMPOSED BY LAW, OF FICERS SHOULD_ (A) DRAW THEIR ATTENTION TO ANY REFUNDS OR RELIEFS TO W HICH THEY APPEAR TO BE CLEARLY ENTITLED BUT WHICH THEY HAVE O MITTED TO CLAIM FOR SOME REASON OR OTHER; (B) FREELY ADVISE THEM WHEN APPROACHED BY THEM AS TO TH EIR RIGHTS AND LIABILITIES AND AS TO THE PROCEDURE TO B E ADOPTED FOR CLAIMING REFUNDS AND RELIEFS CIRCULAR NO. 14XL-35 ) OF 1955, DATED 11.4.1955 (EXTRACTED FROM CHOKSI METAL REFINE RY V. CIT [1977] 107 ITR 63 (GUJ.) 5.1 FROM THE ABOVE ORDER, WE FIND THAT IF THE CLAIM OF THE ASSESSEE IS A BONAFIDE CLAIM, IT DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE CASE UNDER CONSIDERAT ION, THE ASSESSEE IS CLAIMING THE EXPENSES BY FURNISHING THE PARTICULARS OF INCOME EVEN IN THE EARLIER YEARS ALSO. THEREFORE, THE QUESTION OF FURNISHING OF INACCURATE PARTICULARS OF INCOME DOES NOT ARISE. HE NCE, THE PENALTY U/S 271(1)(C) SUSTAINED BY THE CIT(A) ON RS. 73,955 /- IS HEREBY CANCELLED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. PRONOUNCED ON THIS 22 ND DAY OF DECEMBER, 2009. SD/- SD/- (N.V. VASUDEVAN) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED: 22 ND DECEMBER, 2009 ITA NO. 1712/M/09 DINESH S. AGARWAL 4 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, D BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV S.NO. DESCRIPTION DATE INITLS 1. DRAFT DICTATED ON 18.12.09 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 21.12.09 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER