M/s. Veer Gems, Surat V. The Dy. CIT, Central Circle-3, Surat

ITA 1767/AHD/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2138 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 20-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRINIVAS T BIDARI
• Assessee Lawyers: RASESH SHAH
• Keywords: Opportunity of being heard; Bonafide belief; Difference of opinion
• Section: 271(1)(c); 143(3)

Judgement Text

VEER GEMS V. DCIT-CC-3 SURAT / I.T.A. NO.1767/AHD/2017/A.Y.10-11 PAGE 1 OF 4 , , IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O. P. MEENA, ACCOUNTANT MEMBER . . ./ I.T.A NO.1767/AHD/2017: / ASSESSMENT YEAR: 2010- 11 M/S. VEER GEMS 7/2982/ PARSI SHERI SAIYEDPURA SURAT 395003 PAN: AABFV 6446 L V. DEPUTY COMMISSIONER OF INCOME, CENTRAL CIRCLE-3 SURAT APPELLANT /RESPONDENT ASSESSEE BY SHRI RASESH SHAH, CA REVENUE BY SHRI SRINIVAS T. BIDARI, CIT(D.R.) DATE OF HEARING 26.07.2019 DATE OF PRONOUNCEMENT 26.07.2019 /ORDER PER O. P. MEENA, AM 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-4 SURAT (IN SHORT THE CIT (A)) DATED 22.05.2017 PERTAINING TO ASSESSMENT YEAR 2010-11 BY WHICH THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF PENALTY OF RS. 64,380 LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 2. SUCCINCT FACTS ARE THAT THE RETURNED INCOME OF NIL WAS ASSESSED U/S. 143(3) READ WITH SECTION 153C OF THE ACT BY MAKING ADDITION OF RS. 9,64,15,353 UNDER SECTION 92CA(3) AND DISALLOWANCE OF RS. 2,08,359 BEING FOREIGN TRAVELLING EXPENSES. THE AO ALSO INITIATED PENALTY PROCEEDINGS ON ABOVE ADDITIONS. HOWEVER, IN APPEAL LD. CIT (A) HAD DELETED THE ADDITION MADE UNDER SECTION 92CA(3) AND VEER GEMS V. DCIT-CC-3 SURAT / I.T.A. NO.1767/AHD/2017/A.Y.10-11 PAGE 2 OF 4 CONFIRMED THE DISALLOWANCE OF FOREIGN TRAVELLING EXPENSES. THEREFORE, THE AO AFTER GIVING OPPORTUNITY OF BEING HEARD, LEVIED PENALTY OF RS. 64,380 UNDER SECTION 271(1)(C) ON ACCOUNT OF FOREIGN TRAVELLING EXPENSES CLAIMED. 3. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). HOWEVER, CIT (A) HAS ALSO CONFIRMED THE PENALTY BY OBSERVING THAT THE FOREIGN TRAVELLING EXPENSES IN RESPECT OF SHRI JAGDISH GANDHI OF RS. 1,59,834 AND RS. 48,525 IN RESPECT OF JAYDEV BHATTI NOT BEEN SUBSTANTIATED NOR THE PURPOSE OF FOREIGN VISIT WAS FILED NOR DETAILS OF VISITS WERE SUBSTANTIATED, 4. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT MERE DISALLOWANCE OF EXPENSE DOES NOT AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME IN THE LIGHT OF APEX COURT DECISION IN THE CASE OF CIT V RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158 (SC); [2010] 189 TAXMAN 322(SC). THEREFORE, LD. CIT (A) WAS NOT JUSTIFIED IN SUSTAINING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 5. PER CONTRA, THE LEARNED D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE AO HAS MADE ADDITION ON THE BASIS OF FACTS DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME AND ALSO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ADDITION IS MADE BY THE AO, AS VEER GEMS V. DCIT-CC-3 SURAT / I.T.A. NO.1767/AHD/2017/A.Y.10-11 PAGE 3 OF 4 ACCORDING TO HIM, THE FOREIGN TRAVELLING EXPENSES DEBITED IN THE NAME OF TWO PERSONS WERE NOT SUBSTANTIATED WITH NECESSARY EVIDENCE AND PURPOSE OF VISIT. HOWEVER, WE OBSERVE THAT THE ASSESSEE HAS CLAIMED THAT THE FOREIGN TRAVELLING EXPENSES WERE INCURRED ON ACCOUNT OF BUSINESS PURPOSE OF WHICH DETAILS WERE FILED. HOWEVER, THE ADDITION WAS MADE ON DIFFERENCE OF OPINION FROM THE POINT OF VIEW OF THE ASSESSEE AND THE AO. IT IS TRITE LAW THAT PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE PROCEEDINGS FROM ASSESSMENT PROCEEDINGS. THE FINDING RECORDED IN THE ASSESSMENT ORDER IS NOT CONCLUSIVE FOR DECIDING THE IMPOSITION OF PENALTY. IT ONLY HAS A PERSUASIVE VALUE. ANY FINDING RECORDED IN THE ASSESSMENT ORDER DOES NOT MEAN THAT THE PENALTY HAS TO BE IMPOSED AUTOMATICALLY. JUST BECAUSE APPELLANTS EXPLANATION WAS NOT FOUND ACCEPTABLE BY THE AO, IT DOES NOT FOLLOW THAT THAT THE APPELLANT WAS UNABLE TO SUBSTANTIATE HIS EXPLANATION BY PROVIDING VARIOUS EVIDENCES AND JUDICIAL OPINIONS. EXPLANATION-1 TO SECTION 271(1) (C) OF THE ACT DOES THEREFORE, NOT COVER THE CASE OF THE APPELLANT. BASED ON THE ABOVE FACTS OF THE CASE, IT CAN BE HELD THAT THE APPELLANT HAD MADE ALL THE NECESSARY DISCLOSURES ON A BONAFIDE BELIEF, WHICH IS NOT AGREEABLE TO THE AO, IT WILL NOT AUTOMATICALLY LEAD TO A CASE FOR PENALTY UNDER SECTION 271(1)(C) OF THE ACT. SIMILARLY, THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILE 249 ITR 125 (GUJARAT) HELD THAT ADDITION MADE IS NOT CONCLUSIVE, WHERE THE ASSESSEE HAS FURNISHED EVIDENCE; IT WAS HELD THAT NO PENALTY IS LEVIABLE. WE ARE THEREFORE OF THE CONSIDERED VIEW THAT THE PENALTY IS VEER GEMS V. DCIT-CC-3 SURAT / I.T.A. NO.1767/AHD/2017/A.Y.10-11 PAGE 4 OF 4 NOT SUSTAINABLE IN VIEW OF DECISION OF THE HONBLE SUPREME COURT IN CASE OF CIT V RELIANCE PETROPRODUCTS PVT. LTD. (322 ITR 158) (SC) HELD THAT MERELY BECAUSE THE ASSESSEE HAS CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE BY THE REVENUE, PENALTY U/S. 271(1) (C) OF THE ACT CANNOT BE ATTRACTED. THE HON'BLE SUPREME COURT ALSO OBSERVED THAT MERE DISALLOWANCE OF CLAIM MADE BY THE ASSESSEE, CANNOT AMOUNT FURNISHING OF INACCURATE PARTICULARS OF INCOME UNLESS, THE INFORMATION AS GIVEN IN RETURN OF INCOME WAS FOUND TO BE INCORRECT OR INACCURATE. IN THE LIGHT OF ABOVE DISCUSSION, THE PENALTY LEVIED AT RS64,380 IS THEREFORE, DELETED. THIS GROUND OF APPEAL IS THEREFORE ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. 8. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER SURAT: DATED: JULY 26, 2019/OPM COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT