M/s. Unitech Indraprastha TV Ltd., New Delhi V. DCIT, New Delhi

ITA 193/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3887 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 29-04-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 13-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K CHAND
• Keywords: Gift; Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H : NEW DELHI BEFORE SHRI RAJPAL YADAV, JM AND SHRI R.C.SHARMA, A M ITA NO.193/DEL/2010 ASSESSMENT YEAR : 2006-07 M/S UNITECH INDRAPRASTHA TV LTD., 806, DEVIKA TOWER, 6, NEHRU PLACE, NEW DELHI 110 019. PAN NO.AAACU6030H. VS. DY.COMMISSIONER OF INCOME TAX, CIRCLE-18(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DINESH GUPTA, CA. RESPONDENT BY : SHRI N.K.CHAND, SR.DR. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A) DATED 26.10.2009 FOR THE AY 2006-07, IN THE MATTER OF IMP OSITION OF PENALTY U/S 271(1)(C) OF THE IT ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT ASSESSEE IS DEALING IN PRODUCTION AND MARKETIN G OF TELEVISION SERIALS, FILED ITS RETURN AT INCOME OF RS.87.67 LAKHS. DURING THE COU RSE OF SCRUTINY ASSESSMENT, THE AO STATED THAT ASSESSEE HAS INCURRED A SUM OF RS.9, 89,476/- UNDER THE HEAD BUSINESS PROMOTION. OUT OF THIS EXPENDITURE, A S UM OF RS.3,10,466/- WAS ALLEGED TO BE INCURRED FOR GIVING GIFTS TO ITS CLIENTS FROM WHOM ASSESSEE WAS HAVING GOOD INCOME. HOWEVER, THE AO DISALLOWED THE SAME BY STA TING THAT ASSESSEE COULD NOT DISCHARGE THE ONUS TO PROVE THAT THE EXPENDITURE WA S INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND ALSO GE NUINENESS OF EXPENSES BY FILING CONFIRMATION FROM THE CONCERNED PERSONS TO WHOM GIF TS WERE GIVEN. AFTER ITA-193/DEL/2010 2 DISALLOWING THE SAME, THE AO ALSO IMPOSED PENALTY U /S 271(1)(C) AND THE SAME WAS CONFIRMED BY CIT(A), AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOU ND FROM THE RECORD THAT IN VIEW OF THE ASSESSEE BEING ENGAGED IN THE BUSINESS OF TELEVISION SERIALS, IT WAS DISTRIBUTING CUSTOMARY GIFTS ON SPECIFIC OCCASIONS. PART OF BUSINESS PROMOTION EXPENSES WAS DISALLOWED BY THE AO. FOR SUCH DISALL OWANCE OF EXPENSES, THE AO ALSO LEVIED PENALTY U/S 271(1)(C) OF I.T.ACT. FROM THE RECORD, WE FOUND THAT IN ORDER TO PROVE THE GENUINENESS OF THE TRANSACTION A ND TO SHOW THAT THE EXPENDITURE WAS INDEED INCURRED WHOLLY AND EXCLUSIVELY FOR BUSI NESS PURPOSE, COPIES OF INVOICE AND NAMES OF PERSONS TO WHOM THESE GIFTS WE RE GIVEN WERE DULY SUBMITTED TO THE AO ALONGWITH THE DETAILS OF BUSINESS AND REV ENUE GENERATED FROM THE ORGANIZATIONS REPRESENTED BY THOSE PERSONS. THUS, THE ASSESSEE HAS DEMONSTRATED GENUINENESS OF THE EXPENDITURE AS WELL AS INCURRING OF THE SAME FOR THE PURPOSE OF BUSINESS, THERE WAS NO PERSONAL PURPOSE ACHIEVED FR OM THE GIFTS SO MADE. MERELY BECAUSE CONFIRMATION OF GIFTS FROM THE PERSONS TO W HOM THEY WERE GIVEN, COULD NOT BE FURNISHED BEFORE THE AO, HE DOUBTED THE GENU INENESS OF THE GIFTS AND DISALLOWED THE SAME. MERE DISALLOWANCE OF THE LEGI TIMATE EXPENSES CLAIMED WILL NOT AMOUNT TO CONCEALMENT OR FURNISHING OF INACCURA TE PARTICULARS SO AS TO LEVY THE PENALTY U/S 271(1)(C) OF THE ACT. THE ASSESSEE HAS FURNISHED BONA-FIDE EXPLANATION ALONGWITH DOCUMENTARY EVIDENCE OF THE EXPENSES SO I NCURRED. MERELY BECAUSE THE AO DID NOT ACCEPT THE EXPLANATION, WILL NOT BE SUFF ICIENT FOR LEVY OF PENALTY. HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS (P) LTD. 322 ITR 158 WHILE CONFIRMING THE ORDER OF HONBLE HIGH COUR T DELETING THE PENALTY IMPOSED U/S 271(1)(C) FOR DENIAL OF ASSESSEES CLAI M OF DEDUCTION OF INTEREST EXPENDITURE, HAS CATEGORICALLY OBSERVED THAT BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS . ACCORDINGLY, IT WAS HELD THAT DECLINE OF ASSESS EES CLAIM OF INTEREST AGAINST THE LOAN UTILIZED FOR MAKING INVESTMENT IN TAX FREE SECURITIES, WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS SO A S TO ATTRACT PENALTY U/S 271(1)(C) ITA-193/DEL/2010 3 OF THE ACT. HON'BLE SUPREME COURT IN THIS CASE AFT ER CONSIDERING THE PROPOSITION OF LAW LAID DOWN IN THE CASE OF DILIP N.SHROFF 29 1 ITR 519 (SC) AND DHARMENDER TEXTILE PROCESSORS 306 ITR 277 (SC), H ELD AS UNDER:- A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINAB LE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PA RTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDI TURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENAL TY UNDER SECTION 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVE NUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTE D BY ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PE NALTY UNDER SECTION 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF T HE LEGISLATURE. 4. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE PROPOSITION OF LAW LAID DOWN BY HON'BLE SUPREME COURT, THE INSTANT CASE IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C), ACCORDINGLY WE REVERSE THE O RDERS OF THE LOWER AUTHORITIES AND DELETE THE PENALTY SO IMPOSED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. DECISION PRONOUNCED IN THE OPEN COURT ON 21 ST MAY, 2010. SD/- SD/- (RAJPAL YADAV) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21.05.2010. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR ITA-193/DEL/2010 4