Shri Dharmesh Natubhai Shah, Ahmedabad V. The CIT(A)-XVI, Ahmedabad

ITA 1907/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6086 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-04-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 23-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

, * ** *CH CHCH CH* ** * IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER I.T.A. NO.1907/AHD/2014 ( / ASSESSMENT YEAR : 2008-09) SHRI DHARMESH NATUBHAI SHAH 102, ANIKET BUILDING, NEAR MUNICIPAL MARKET, NAVRANGPURA, AHMEDABAD 380 009 VS. CIT(A)-XVI, AHMEDABAD. ! PAN/GIR NO. : AFUPS 6407 C ( ' / APPELLANT ) .. ( #' RESPONDENT ) '$ APPELLANT BY : MS. URVASHI SODHAN, A.R. #'%$ / RESPONDENT BY : SHRI JAMES KURIAN, SR. D.R. & ' (%) * / DATE OF HEARING 26/04/2017 +,-. %) * / DATE OF PRONOUNCEMENT 28/04/2017 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-XVI, AHMEDABAD, DATED 27/11/2013 FOR THE ASSESSMENT YEAR (AY) 2008-09. ITA NO.1907/AHD /2014 - 2 - 2. ASSESSEE HAS BEEN TAKEN FOLLOWING GROUNDS OF APP EALS: I. LD. CIT (A) ERRED IN LAW AND ON FACTS IN LEVYING PENALTY U/S 271 (L)(C) OF THE ACT ON ENHANCEMENT OF INCOME DISALLOWING GENUIN E BUSINESS EXPENSES OF RS.51,60,000/- BY APPELLATE AUTHORITY. LD. CIT (A) OUGHT NOT TO HAVE LEVIED PENALTY WHEN THE APPELLANT NEITHER FURNISHED INACCU RATE PARTICULARS OF INCOME NOR CONCEALED INCOME. IT BE SO HELD NOW. II. LD. CIT (A) ERRED IN LAW AND ON FACTS IN LEVYING PE NALTY IGNORING THE FACT THAT APPELLANT DISCHARGED INITIAL ONUS CAST UN DER LAW SUBMITTING DETAILED EXPLANATION WITH DOCUMENTARY EVIDENCE TO SUBSTANTIA TE CLAIM OF EXPENSES INCURRED FOR THE PURPOSE OF BUSINESS. LD. CIT(A) OU GHT NOT TO HAVE HELD EXPLANATION 1 TO SECTION APPLICABLE TO FACTS OF THE CASE. IT BE SO HELD NOW. III. LD. CIT (A) ERRED IN LAW AND ON FACTS IN LEVYI NG PENALTY NOT APPRECIATING THAT THE CLAIM DISALLOWED ONLY BECAUSE OF NON APPEARANCE OF RECIPIENTS AND BEING CONTENTIOUS IS NOT EXIGIBLE TO PENALTY AUTOMATICALLY WHEN NO COGENT EVIDENCE OF CONCEALMENT OF INCOME IS BROU GHT ON RECORD. THE ORDER OF LD. CIT (A) DESERVES TO BE QUASHED AND PENALTY L EVIED DESERVES TO BE DELETED. IV. LD. CIT (A) ERRED IN LAW AND ON FACTS IN NOT AP PRECIATING THE SUBMISSIONS THAT THE APPELLANT ALREADY SUBJECTED TO PENALTY PROCEEDINGS BY AO DID NOT DESERVE TO BE SUBJECTED TO A SEPARATE ROUND OF PENAL PROCEEDINGS WHEN APPEAL AGAINST THE QUANTUM PROCEEDINGS IS PENDING F OR ADJUDICATION BEFORE THE HON'BLE ITAT. IT IS THEREFORE PRAYED TO QUASH PENAL TY LEVIED ON INCOME ENHANCED IN APPELLATE PROCEEDINGS. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- IN THIS CASE, SCRUTINY ASSESSMENT WAS COMPLETED U/S . 143(3) OF THE IT ACT, DETERMINING TOTAL INCOME AT RS. 1,92,02,100/- AS AG AINST RETURNED INCOME OF RS. 1,77,46,735/-. ITA NO.1907/AHD /2014 - 3 - 4. THEREFORE, A SHOW CAUSE NOTICE WAS SERVED ABOVE THE APPELLANT AND APPELLANT FILED HIS REPLY: I). IN THE FIRST PARA OF THE NOTICE, IT HAS BEEN WR ONGLY CONCLUDED BY APPELLANT THAT HE HAS FURNISHED INACCURATE PARTICUL ARS WITH REFERENCE TO ASSESSEES INCOME TAX ASSESSMENT FOR THE ASST. YEAR 2008-09 TO THE A.O OR IN THAT FOR APPEAL TO CIT. II). IN THE ORDER PASSED BY YOUR HONOUR WITH REFERE NCE TO ABOVE APPEAL, IT HAS BEEN FOUND OUT THAT THERE ARE MISTAK ES AND NOT CONSIDERING-CERTAIN DOCUMENTARY PROOF AND SUBMISSIO NS MADE BY ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AND APPE AL HEARINGS. III). ASSESSEE HAS FILING SEPARATELY APPLICATION FO R RECTIFICATION U/S.154 RES2654 OF THE INCOME TAX ACT, 1961. IV). THERE CAN BE NO DISPUTE WITH REGARD TO THE POS ITION OF LAW THAT UNDER SECTION 271(1)(C) PENALTY CAN BE LEVIED ONLY IF EITHER THE ACT OF 'CONCEALMENT OF PARTICULARS OF INCOME' OR 'FURNISHI NG OF INACCURATE PARTICULARS OF INCOME' IS FOUND TO HAVE BEEN COMMIT TED BY THE ASSESSEE. THESE ARE TWO DIFFERENT OMISSIONS OR DEFAULTS ALBE IT THEY REFER TO DELIBERATE ACT ON THE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE WOULD NOT CONSTITUTE A DELIBERATE ACT OF EITHER SUPPRESSIOVERI OR SUGGESTIOFALSY. BY THE MERE REASON OF SUCH CONCE ALMENT OR OF FURNISHING OF INACCURATE PARTICULARS ALONE, THE ASS ESSEE DOES NOT, IPSO FACTO, BECOME LIABLE TO A PENALTY, IMPOSITION OF PE NALTY IS NOT AT ALL AUTOMATIC. MEANING THEREBY, ANY ADDITION IN QUANTUM WOULD NOT LEAD TO AUTOMATIC LEVY OF PENALTY AND THIS IS ALSO TRUE IN RESPECT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. NOT ONLY IS THE L EVY OF PENALTY DISCRETIONARY IN NATURE BUT THE DISCRETION HAS TO B E EXERCISED KEEPING THE RELEVANT FACTORS IN MIND AND THE APPROACH OF TH E TAXMAN MUST BE FAIR AND OBJECTIVE. V). THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND THE CIT [APPEALS] ,WERE MADE IN UTTER DISREGARD OF THE STAT EMENTS, PROOFS AND EXPLANATIONS PLACED ON RECORD BY ASSESSEE THAT HAVE NOT BEEN PROVED ERRONEOUS OR INACCURATE. THE DISALLOWANCE HAS BEEN MADE BASED ON THE ITA NO.1907/AHD /2014 - 4 - DETAILS SUBMITTED BY ASSESSEE AND, THEREFORE, IT IS RESPECTFULLY SUBMITTED THAT THERE HAS BEEN NO CONCEALMENT OF ANY INCOME. VI). WITHOUT PREJUDICE TO ABOVE, ASSESSEE SUBMIT TH AT MERELY BECAUSE ASSESSEES CONTENTIONS ARE NOT ACCEPTED BY THE DEPA RTMENT, PENALTY CANNOT BE LEVIED. FURTHER, IT IS A SETTLED LAW THAT THE ASSESSEE CANNOT BE PENALISED FOR CANVASSING A VIEW DIFFERENT FROM THE DEPARTMENTAL VIEW AND WHERE THE ASSESSEE IS MERELY CONTENDING FOR A P ARTICULAR POSITION CONTRARY TO THE VIEW TAKEN BY THE A.O IN THIS REGARD, ASSESSEE PLACE RELIANCE ON THE FOLL OWING DECISIONS: IN THE DECISION OF HON 'BLE CALCUTTA HIGH COURT IN BURMAH-SHELL OIL STORAGE AND DISTRIBUTION CO. OF INDIA LTD. VS. ITO (112 ITR 592) WHEREIN IT HAS BEEN HELD THAT THE REJECTION OF THE CONTENTION RAISED BY THE ASSESSEE CANNOT LEAD TO THE CONCLUSIO N THAT THERE HAS BEEN CONCEALMENT OF PARTICULARS OF INCOME OR FU RNISHING OF INACCURATE PARTICULARS THEREOF BY THE ASSESSEE. THE REFORE, YOU WILL APPRECIATE THAT IRRESPECTIVE OF WHETHER THE SA ID CONTENTIONS ARE ULTIMATELY UPHELD OR TURNED DOWN, THEY CANNOT B E TERMED AS FRIVOLOUS, DISHONEST OR MALA FIDE. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS . SHIVLAL DESAI & SONS (1978) (114ITR 388) HAS CATEGORICALLY HELD THAT MERELY BECAUSE THERE ARE CERTAIN ADDITIONS/ DISALLO WANCES IN THE ASSESSMENT PROCEEDINGS, IT WILL NOT BRING IN ITS WA KE THE LEVY OF PENALTY. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CASE OF CIT VS. AJAIB SINGH & CO. (170 CTR 489) HAS HELD THAT MEREL Y BECAUSE CERTAIN EXPENSES CLAIMED BY THE ASSESSEE HAS BEEN D ISALLOWED IT DOES NOT MEAN THAT THE ASSESSEE HAS FURNISHED INCOR RECT PARTICULARS OF ITS INCOME. VI). WE WOULD LIKE TO PLACE ON RECORD THAT ASSESSEE HAS NOT CONCEALED ANY DETAILS OR INCOME IN HIS INCOME TAX RETURN AND ALSO NEVER FURNISHED ANY WRONG OR INACCURATE PARTICULARS. ITA NO.1907/AHD /2014 - 5 - APPELLANT IS IN PROCESS OF FILING NECESSARY APPEAL BEFORE THE HIGHER TAX AUTHORITIES ITAT CONSIDERING ASSESSEES ABOVE SUBMISSION, AND ALSO I N VIEW OF THE FACTS ON RECORD, ASSESSEE REQUEST CIT TO DROP THE PROCEED INGS FOR LEVYING THE PENALTY U/S. 271 (1)( C ) AND OBLIGE. IF ANY FURTHE R DETAILS REQUIRED, PLEASE DO CALL ASSESSEE. ...' SUBSEQUENTLY ONE MORE SHOW CAUSE NOTICE U/S. 271 (1 )( C) WAS ISSUED BY THIS OFFICE ON 21-5-2014 WHICH WAS DULY SERVED ON T HE SAME DAY TO THE APPELLANT WITH A REQUEST TO MAKE ITS SUBMISSIONS ON OR BEFORE 29-05- 2014. IN COMPLIANCE TO THE SAME SHRI SHRIKANT SHAH, CA ATTENDED THE OFFICE AND FILED WRITTEN SUBMISSIONS WHICH IS REPRO DUCED AS UNDER :- '....IN CONTINUATION OF HIS REPLY DATED 24/1/2014 O N ABOVE SUBJECT MATTER, HE WOULD LIKE TO SUBMIT FURTHER THAT: I). IT APPEARS THAT THE LEARNED CIT(A) HAS ISSUED T HE SAID PENALTY NOTICE TOWARDS ADDITIONAL ADDITION MADE BY APPELLANT OF RS 51,60,000 OF COMMISSION EXPENSES BY INVOKING SECTION 143T31 OF THE ACT. II). IF THAT IS SO..THAN SUBMISSIONS MADE BY APPELL ANT ON 18/11/2013 ANDON 23-1-2012 IN THIS REGARDS IN WHICH ASSESSEE HAS NOTED INACCURACIES INCONSTANCIES AND DEFICIENCIES WHICH PATENTLY WRONG AND MISTAKES MADE BY THE CIT [A] AND SAME IS TO BE CORRECTED FIRST, WHIC H ASSESSEE HAS POINTED OUT IN HIS SEPARATE RECTIFICAT ION APPLICATION UNDER SECTION154. III). AND IF THIS MISTAKES AND DEFICIENCY IN THE SA ID ORDER IS CORRECTED THAN THERE WANT BE ANY INACCURACIES, INCONSTANCIES AND DEFICIENCIES WHICH CAN ATTRACT PE NALTY U/S. 271 [1] [C] FOR ALLEGED DISALLOWANCES OF COMMI SSION EXPENSES OF RS 51,60,000/- IV). FURTHER, WARDS SAME ADDITION A SEPARATE PENALT Y PROCEEDINGS U/S. 271(1)[C] HAS BEEN INITIATED BY TH E ITA NO.1907/AHD /2014 - 6 - ASSESSING OFFICER - ACIT CIRCLE -10, WHICH APPELLAN T AM ATTENDING AND REPLYING SEPARATELY. I REQUEST YOUR HONOUR FOR NOT TO INITIATE SUCH MULT IPLE PENAL PROCEEDINGS FOR SAME MATTER AND SAME CAUSE. V). ALSO, APPELLANT HAS MADE FURTHER APPEAL TO ITAT AGAINST SAID CIT[A] ORDER AND ALSO AGAINST THE PENALTY PROCEEDINGS U/S 271-[1][C] CONSIDERING APPELLANTS ABOVE & EARLIER SUBMISSIONS AND FACTS OF THE CASE, APPELLANT REQUEST TO DROP PROCEE DINGS U/S. 271, [1] [C] AT THIS STAGE AND OBLIGE....' 5. BUT SAME WAS NOT TENABLE IN THE EYES OF THE REVE NUE AND PENALTY OF RS.17,53,884/- WAS LEVIED. 6. AGAINST THE SAID ORDER NOW APPEAL IS BEFORE US. 7. LEARNED AR STATED THAT IN QUANTUM PROCEEDINGS, Q UANTUM HAS BEEN DELETED BY THE AUTHORITIES. LEARNED DR ALSO ACCEPTE D THIS, THAT QUANTUM HAS BEEN DELETED. 8. SINCE QUANTUM HAS BEEN DELETED BY THE REVENUE, W E DONT FIND ANY REASON TO CONTINUE WITH THE PENALTY PROCEEDINGS. 9. THEREFORE, WE SET ASIDE THE ORDER OF THE CIT(A) AND APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ITA NO.1907/AHD /2014 - 7 - 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. THIS ORDER PRONOUNCED IN OPEN COURT ON 28/04/2017 SD/- SD/- IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; (PRAMOD KUMAR) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 28/04/2017 !'# $#! COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #' / THE RESPONDENT. 3. 012) & 3) / CONCERNED CIT 4. & 3) 45 / THE CIT(A)- 5. 67 8)'12 *12. 0 / DR, ITAT, AHMEDABAD 6. 8 9: ( GUARD FILE. % & / BY ORDER, # 6)) //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY