M/s. Devpras Institute, Baroda V. The Income tax Officer,Ward-2(2), Baroda

ITA 1743/AHD/2012

• Counselvise Citation: 174320514 RSA 2012
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 08-11-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 06-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SINGH SR DR
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI, A.K.GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.1743/AHD/2012 ASSESSMENT YEAR:2005-06 M/S DEVPRAS INSTITUTE, 301, B.N.CHAMBER, R.C. DUTT ROAD, BARODA 390007 [ PAN NO.AABFD 6666N ] V/S . INCOME TAX OFFICER, WARD-2(2), BARODA / APPELLANT .. / RESPONDENT) /BY APPELLANT SHRI TEJ SHAH, AR /BY RESPONDENT SHRI D.K. SINGH, SR-DR /DATE OF HEARING 08-11-2012 /DATE OF PRONOUNCEMENT 23-11-2012 / // / O R D E R PER KUL BHARAT, JUDICIAL MEMBER:- THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-II, BARODA (C IT(A) FOR SHORT) DATED 09-05-2012 PERTAINS FOR THE ASSESSMENT YEAR (AY) 20 05-06. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED C.I.T(A) ERRED IN LAW IN CONFIRMING THE PENALTY OF RS.46107/ - U.S. 271(1)(C) OF THE I.T. ACT. 1961. THE LEARNED C.I.T.(A) FAILED TO APPRECIATE THE FACT S AND EXPLANATIONS OFFERED BY YOUR APPELLANT. ITA NO.1743/AHD/2012 A.Y. 2005-06 M/S DEVPRAS INSTITUTE V. ITO WD-2(2) BRD PAGE 2 THE ACTION OF THE C.I.T.(A) BEING UNCALLED FOR AND AGAINST PRINCIPLES OF JUSTICE YOUR APPELLANT HEREBY PRAYS TO DELETE THE P ENALTY LEVIED BY THE C.I.T.(A) IN THE INTEREST OF JUSTICE. 2. THE FACTS AS RECORDED IN THE ORDER OF LD. CIT(A) ARE STATED AS UNDER:- 2. BACKGROUND OF THE CASE: THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGA GED IN THE BUSINESS OF RUNNING OF COMPUTER HARDWARE TRAINING SCHOOL. TH E ASSESSMENT U/S. 143(3) WAS FINALIZED ON 20.12.2007 DETERMINING TOTA L INCOME OF RS.6,87,826/- AS AGAINST RETURNED INCOME AT RS .NIL FILED BY THE ASSESSEE. THE ORDER U/S. 154 WAS PASSED ON 1902.200 8 AND BROUGHT FORWARD LOSS OF RS.2,48,618/- OF EARLIER YEARS WERE ADJUSTED AND REVISED TOTAL INCOME WAS COMPUTED AT RS.4,39,208/-.WHIE FIN ALIZING ASSESSMENT US. 143(3) OTHER ADDITION OF RS.6,75,987/- MADE ON ACCOUNT OF DISALLOWANCE U/S. 40(A)(II). PENALTY U/S 271(1)(C) WAS INITIATED WITH RESPECT TO THIS DISALLOWANCE AND WAS LEVIED BY ORDE R DATED 26.03.2010 FOR RS.46,107/- LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CONFIRMED THE PENALTY. AGAINST THIS ORDER, ASSESSEE IS IN SECOND APPEAL BEFORE US. 3. AT THE TIME OF HEARING LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE PRESENT CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE ORDER OF HONBLE CO- ORDINATE BENCH OF THIS TRIBUNAL RENDERED IN THE CAS E OF ITO V. M/S. LUCKY STAR INTERNATIONAL IN ITA NO. 1041/AHD/2010 DATED 13-03-2012. HE SUBMITTED THAT THE PENALTY HAS BEEN LEVIED ON ACCOUNT OF DISALLOWA NCE MADE U/S.40(A)(IA) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) FOR FURNISHING INACCURATE PARTICULARS OF INCOME. HE FURTHER SUBMIT TED THAT UNDER IDENTICAL FACTS, HONBLE CO-ORDINATE BENCH HAS AFFIRMED THE V IEW OF THE LD. CIT(A) DELETING THE PENALTY. ON THE CONTRARY, LD. SR-DR ST RONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT UNDER THE IDENTIC AL FACTS HONBLE CO-ORDINATE BENCH OF THIS TRIBUNAL HAS AFFIRMED THE VIEW OF THE LD. CIT(A) DELETED THE PENALTY. THE HONBLE CO-ORDINATE BENCH IN M/S. LUCKY STAR INTERNATIONAL (SUPRA) HAS HELD AS UNDER:- ITA NO.1743/AHD/2012 A.Y. 2005-06 M/S DEVPRAS INSTITUTE V. ITO WD-2(2) BRD PAGE 3 6. WE HAVE HEARD THE LEARNED BOTH THE PARTIES, PER USED THE ORDERS OF THE AUTHORITIES BELOW AND CONSIDERED THE MATERIALS ON RECORD. DURING THE COURSE OF HEARING OF THE APPEAL THE LEARNED DR RELIED UPON THE ORDER OF THE AUTHORITIES BELOW. ON THE OTHER HAND, THE LEARNED AR REFERRING TO PARA 3 AND 4 OF THE PENALTY ORDER, SUB MITTED THAT ALL THE ADDITIONS IN RESPECT OF COMMISSION EXPENSES OF RS.1 0,46,163/-, CLEARING AND FORWARDING EXPENSES OF RS.2,01,037/- AND FEES A ND LEGAL EXPENSES OF RS.1,10,200/- (TOTALING TO RS.13,57,400/-) HAVE BEEN DISALLOWED HOLDING THAT THE ASSESSEE HAS VIOLATED THE PROVISIO NS OF SECTION 40(A)(IA) OF THE IT ACT AND THAT THE AO HAS LEVIED PENALTY ON THE SAID AMOUNT BEING FULLY SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME TO THE EXTENT OF RS.13,57 ,400/- AND TREATING IT TO BE A FIT CASE FOR LEVYING PENALTY. THE ASSESSEE ALS O SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISIONS OF THEREFORE, HON BLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETRO PRODUCS PVT. LTD., 2010-TIOL-21- SC-II IN SLP(C) NO. 27161 OF 2008 DATED 17 TH MARCH, 2010 (PB-4) WHEREIN IT HAS BEEN HELD AS UNDER:- INCOME TAX 271(1) - MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPT ED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, ATTRACT PENALTY UNDER SECTION 271(1): BY ANY STRETCH OF IM AGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. 6.1 THE ASSESSEE FURTHER REFERRED TO THE DECISION O F ITAT DELHI A BENCH IN THE CASE OF DCIT VS ASIAN HOTELS LTD., 2011-TIOL-795-ITAT- DEL (ITA NO.3820/DEL/2010 DATED JANUARY, 7, 2011 (P B-1) WHEREIN IT HAS BEEN HELD AS UNDER:- INCOME TAX SECTIONS 40(A)(IA), 271(1)(C) WHETH ER PENALTY IS LEVIABLE IN A CASE WHERE THE SUBSTANTIAL RETURNED I NCOME PROVES THE BONA FIDE OF ASSESSEE VIS--VIS DISALLOWANCE OF 40(A)(IA) ASSESSEE COMPANY FILED ITS RETURN OF INCOME ON 22 ND DECEMBER 2003 DECLARING AN INCOME OF RS.6.32 CRORES. AN ASSE SSMENT WAS PASSED U/S 143(3) ON 30 TH MARCH 2006 WHEREBY TOTAL INCOME OF THE ASSESSEE HAS BEEN DETERMINED AT RS.11.53 CRORES . DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD. AO FOUND T HAT THE ASSESSEE HAD MADE THE PROVISIONS IN RESPECT OF CERT AIN FOREIGN PAYMENTS AND CLAIMED THESE PROVISIONS WITHOUT DEDUC TING CORRESPONDING TDS. AO DISALLOWED THIS CLAIM OF ASSE SSEE AND LEVIED PENALTY UNDER SECTION 271(1) RELYING UPON T HE DECISION OF RELIANCE (2010-TIOL-21-SUPREME COURT-II) CIT(A) DEL ETED THE PENALTY MATTER REACHED TO THE ITAT. ITA NO.1743/AHD/2012 A.Y. 2005-06 M/S DEVPRAS INSTITUTE V. ITO WD-2(2) BRD PAGE 4 AFTER HARING THE PARTIES THE ITAT HELD AS UNDER:- ++ THERE IS NO DOUBT THAT THE CLAIM MADE BY THE ASS ESSEE IS IN RESPECT OF BUSINESS EXPENSES. HAD THE ASSESSEE DEDU CTED THE TDS AND PAID IT TO THE GOVT. AMOUNT THEN ITS DEDUCT ION COULD BE ALLOWED. ACCORDING TO THE ASSESSEE IT HAS PAID THE TAX ALSO IN THE NEXT YEAR FOR THE SUM OF RS.7,07,294/- AND EVEN THE REAFTER DEDUCTION WAS NO GRANTED TO IT. LD. FIRST APPELLATE AUTHORITY HAS ACCEPTED THE PLEA OF ASSESSEE THAT IT WAS A BONA FI DE ERROR; ++ TAKING INTO CONSIDERATION THE OVERALL FACTS AND CIRCUMSTANCES PARTICULARLY THE AMOUNT OF DISALLOWANCE VIS--VIS T HE RETURNED INCOME, WE ARE OF THE VIEW THAT IT IS A BONA FIDE L APSE AT THE END OF THE ASSESSEE. THERE IS NO DELIBERATE ATTEMPT TO CONCEAL THE PARTICULARS OF INCOME. LD. CIT HAS RIGHTLY APPRECIA TED THE FACTS AND CIRCUMSTANCES WE DO NOT SEE ANY REASON TO INTER FERE I HIS ORDER. THE ASSESSEE FURTHER SUBMITTED THAT THE FACTS IN TH E ABOVE CASE ARE IDENTICAL TO THAT OF THE PRESENT CASE OF THE ASSESS EE AND THE ISSUE IS COVERED BY THE ABOVE DECISION. 6.2 THE ASSESSEE FURTHER SUBMITTED THAT THE ISSUE I S ALSO COVERED BY THE DECISION OF ITAT HYDERABAD A BENCH DATED 17 TH JUNE, 2010 IN THE CASE OF ACIT VS M/S SEAWAYS SHIPPING LTD. IN ITA NO. 80/H/2011 FOR AY 2005-06 (PB 9 TO 11) WHEREIN ALSO IDENTICAL ISSU E HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE AND AGAIN ST THE REVENUE VIDE PARA 5 OF ITS ORDER BY HOLDING AS UNDER:- AT THE TIME OF HEARING ON 16.6.2011, NONE APPEARED ON BEHALF OF THE ASSESSEE. WE HEARD THEREFORE, DEPARTMENTAL REPRESENTATIVE. IN THIS CASE, PENALTY IS LEVIED FOR DISALLOWANCE OF EXPENDITURE U/S.40(A)(IA) OF THE INCOME TAX ACT. NO N DEDUCTION OF TDS BY THE ASSESSEE WAS RESULTED IN DISALLOWANCE OF EXPENDITURE U/S. 40(A)(IA), THAT ITSELF CANNOT BE CONSTRUED AS FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. THE ASSESSEE HAS FAILED TO DEDUCT TDS WHICH RESULT IN D ISALLOWANCE OF EXPENDITURE. IN OUR OPINION, THE MISTAKE COMMITTED BY THE ASSESSEE WAS COMPENSATED BY DISALLOWING THE EXPENDI TURE. FURTHER, THE REVENUE CANNOT PENALIZE THE ASSESSEE B Y LEVYING PENALTY U/S.271(1)(C) OF THE ACT. IN ORDER TO LEVY PENALTY U/S. 271(1)(C) OF THE ACT, THERE HAS TO BE CONCEALMENT O F PARTICULARS OF INCOME OF THE ASSESSEE OR THE ASSESSEE MUST HAVE FU RNISHED INACCURATE PARTICULARS OF ITS INCOME. PRESENT IS NO T THE CASE OF CONCEALMENT OF INCOME OR IT IS NOT THE CASE OF REVE NUE THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME. THE DEPARTMENT HAS NOT FOUND OUT THAT THE ASSESSEE HAS FURNISHED ITA NO.1743/AHD/2012 A.Y. 2005-06 M/S DEVPRAS INSTITUTE V. ITO WD-2(2) BRD PAGE 5 ANY FACTUAL INCORRECT INFORMATION AND THE ASSESSEE IS NOT GUILTY OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN OUR OPINION, THE CONDITIONS LAID DOWN IN SECTION 271(1)(C) OF THE AC T IS NOT COMPLIED WITH. BEING SO, LEVY OF PENALTY IS NOT JUS TIFIED MERELY BECAUSE THE ASSESSEE HAS CLAIMED CERTAIN EXPENDITUR E THAT EXPENDITURE IS NOT ELIGIBLE IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND FOR THAT REASON, EXPENDITU RE IS DISALLOWED. PENALTY CANNOT BE LEVIED FOR MERE MAKING OF A CLAIM OF EXPENDITURE WHICH IS NOT SUSTAINABLE AND DELETION O F PENALTY BY THE LEARNED CIT(A) IS JUSTIFIED. WE PLACE RELIANCE ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. (322 ITR 158 (SC). ACCORDINGLY THE GROUND RAISED BY THE REVENUE HOLDS NO MERIT. 6.3 THE LEARNED DR IN HIS REJOINDER HAS NOT PRODUCE D ANY MATERIAL TO CONTROVERT THE AFORESAID SUBMISSIONS OF THE ASSESSE E. 7. IN VIEW OF ABOVE DISCUSSIONS AND THE DECISIONS C ITED BY THE ASSESSEE, WE FIND FORCE IN THE SUBMISSIONS OF THE A SSESSEE. WE ARE OF THE VIEW THAT THE LEARNED CIT(A) ON PROPER APPRECIA TION OF THE FACTS OF THE CASE, CONSIDERING THE SUBMISSIONS OF THE ASSESS EE AND THE CITATIONS REFERRED TO BY THE AS BEFORE HIM, HAS RIGHTLY DELET ED THE PENALTY AND WE FIND NO JUSTIFICATION TO INTERFERE IN THE ORDER OF THE LEARNED CIT(A) DELETING THE PENALTY IN THE MATTER IN THE ABSENCE O F ANY MATERIAL PRODUCED BY THE LEARNED DR TO CONTROVERT THE SAME. WE CONFIRM HIS FINDINGS. THERE IS NO MERIT IN THE GROUND OF APPEAL OF THE REVENUE. THE SAME IS ACCORDINGLY DISMISSED. SINCE THE HONBLE CO-ORDINATE BENCH OF THIS TRIBUNA L HAS TAKEN A VIEW IN SIMILAR FACTS AND CIRCUMSTANCES RESPECTFULLY FOLLOW ING THE DECISION OF HONBLE CO-ORDINATE BENCH RENDERED IN THE CASE OF M/S LUCKY STAR INTERNATIONAL (SUPRA) IN ITA NO.1041/AHD/2010 WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY. IN THIS VIEW OF THIS MATTER, APPEAL OF ASSESSEE IS ALLOWED. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (A.K.GARODIA) ( KUL BHARAT) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, ITA NO.1743/AHD/2012 A.Y. 2005-06 M/S DEVPRAS INSTITUTE V. ITO WD-2(2) BRD PAGE 6 *DKP !' #- 23/11/2012 )*+ , --. --. --. --. /. /. /. /. / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '+'-1 2 / CONCERNED CIT 4. 2- / CIT (A) 5. .56 ---1, -1 , )*+ / DR, ITAT, AHMEDABAD 6. 69: ;< / GUARD FILE. BY ORDER/ , /TRUE COPY/ =/) '> -1 , )*+ , STRENGTHEN PREPARATION & DELIVERY O F ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 08/11 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE NO 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 12/11 4) DATE OF CORRECTION 16/11 5) DATE OF FURTHER CORRECTION 6) DATE OF INITIAL SIGN BY MEMBERS 21/11 7) ORDER UPLOADED ON 23/11 8) ORIGINAL DICTATION PAD-PART HAS BEEN ENCLOSED IN THE FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 23/11