Formative Fashions Pvt.Ltd., Surat V. The Dy.CIT.,Circle-1, Surat

ITA 1952/AHD/2011

• Counselvise Citation: 195220514 RSA 2011
• Duration Of Justice: 3 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 17-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 05-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR SR DR
• Assessee Lawyers: S B VAIDYA

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ././ ./ ITA NO. 1952/AHD/2011 / ASSESSMENT YEAR: 2007-08 FORMATIVE FASHIONS PVT LTD 3024, WORLD TRADE CENTRE, RING ROAD, SRUAT, PAN : AAACF 8809 P V/S. DCIT, CIRCLE-1, SURAT / // / (APPELLANT) !' !' !' !' / // / (RESPONDENT) ASSESSEE(S) BY : SHRI S.B. VAIDYA, AR REVENUE BY : SMT. SONIA KUMAR, SR. DR. #$ % &'/ // / DATE OF HEARING : 17/06/2015 () % &' / // / DATE OF PRONOUNCEMENT: 25/06/2015 *+ *+ *+ *+/ // / O R D E R PER G.D. AGRAWAL, VICE PRESIDENT: THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRE CTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX(APPEALS )-I, SURAT DATED 16.06.2011, PERTAINING TO ASSESSMENT YEAR 2007-08. 2. THE ONLY GROUND RAISED IN THIS APPEAL BY THE ASS ESSEE IS AGAINST THE LEVY OF PENALTY OF RS.4,61,417/- U/S. 271(1)(C) BY THE ASSESSING OFFICER. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. THE PENALTY U/S 271(1)(C) HAS BEEN LEVI ED IN RESPECT OF FOLLOWING TWO ADDITIONS :- I) DISALLOWANCE OF COMMISSION AND BROKERAGE EXPENSES RS.10,08,707/- II) DISALLOWANCE OF TRAVELLING EXPENSES RS.3,62,112/- ITA NO. 1952/AHD/2011 FORMATIVE FASHIONS PVT LTD VS. DCIT FOR AY 2007-08 2 4. ON APPEAL BEFORE THE ITAT, IT SET ASIDE THE DISA LLOWANCE OF RS.10,08,707/- BACK TO THE FILE OF THE ASSESSING OF FICER. THEREFORE, AT PRESENT, SINCE THE ADDITION DOES NOT STAND, THE PENALTY BASE D UPON SUCH ADDITION CANNOT BE SUSTAINED. 5. THE DISALLOWANCE OUT OF TRAVELLING EXPENSES RS.3 ,62,112/- IS SUSTAINED BY THE ITAT WITH THE FINDING THAT THE ASSESSEE WAS UNABLE TO PROVE THAT THE FOREIGN TOURS OF THE DIRECTORS WERE FOR THE PURPOSE OF BUSINESS. IN OUR OPINION, MERELY BECAUSE THE TRAVELLING EXPENSES INC URRED BY THE ASSESSEE AND CLAIMED AS DEDUCTION IS DISALLOWED WOULD NOT AU TOMATICALLY RESULT INTO LEVY OF PENALTY U/S 271(1)(C). WHILE TAKING THIS V IEW, WE DERIVE SUPPORT FROM THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD, REPORTED IN [2010] 322 ITR 158 (SC), WHEREIN THEIR LORDSHIPS HELD AS UNDER:- WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FA LSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A ME RE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INAC CURATE PARTICULARS. 6. THE RATIO OF ABOVE DECISION OF HONBLE APEX COUR T WOULD BE SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEES CASE, BEC AUSE NO DETAILS FURNISHED BY THE ASSESSEE HAVE BEEN FOUND TO BE FALSE OR INACCUR ATE. THE GENUINENESS OF THE EXPENDITURE INCURRED IS NOT IN DISPUTE, BUT THE CLAIM OF THE EXPENDITURE WAS DISALLOWED FOR THE FAILURE OF THE ASSESSEE TO E STABLISH THAT THE EXPENDITURE WAS INCURRED FOR THE PURPOSE OF BUSINES S. ON THESE FACTS, IN OUR OPINION, THE DECISION OF THE HONBLE APEX COURT WOU LD BE SQUARELY ITA NO. 1952/AHD/2011 FORMATIVE FASHIONS PVT LTD VS. DCIT FOR AY 2007-08 3 APPLICABLE. RESPECTFULLY, FOLLOWING THE SAME, WE H OLD THAT THE LEVY OF PENALTY IN RELATION TO DISALLOWANCE OF TRAVELLING E XPENSES CANNOT BE SUSTAINED. IN VIEW OF ABOVE, THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) IS CANCELLED. 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 25 TH JUNE, 2015 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (G.D. AGRAWAL) VICE-PRESIDENT AHMEDABAD; DATED 25/06/2015 BIJU T., PS *+ % !&, -*,& *+ % !&, -*,& *+ % !&, -*,& *+ % !&, -*,&/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. & #. / CONCERNED CIT 4. #. ( ) / THE CIT(A) 5. ,12 !& , , / DR, ITAT, AHMEDABAD 6. 2 4$ / GUARD FILE . *+# *+# *+# *+# / BY ORDER, TRUE COPY 5 55 5/ // / 6 6 6 6 ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD