Shri Lokesh Chand Jain, New Delhi V. ACIT, New Delhi

ITA 2103/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4633 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2001-2002
• Appeal Filed On: 10-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KESHAV CHAND JAIN
• Keywords: Business income; Bonafide mistake

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.2103/DEL/2015 ASSESSMENT YEAR: 2001-02 SHRI LOKESH CHAND JAIN, S-337, 2 ND FLOOR, GREATER KAILASH, PART-II, NEW DELHI. V. ASSTT. CIT, CIRCLE-30(1), NEW DELHI. TAN/PAN: AAFPJ 4243H (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI K. SAMPATH, ADV. & SHRI KESHAV CHAND JAIN, ADV. & SHRI V. RAJA KUMAR, ADV. RESPONDENT BY: SHRI AMIT JAIN, SR.D.R. DATE OF HEARING: 26 07 2018 DATE OF PRONOUNCEMENT: 07 08 2018 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 27.02.2015, PASSED BY LD. CIT (APPEALS)-XIII, NEW DELHI IN RELATION TO PENALT Y PROCEEDINGS U/S.271(1)(C) FOR THE ASSESSMENT YEAR 2 001-02. THE ASSESSEE IS MAINLY AGGRIEVED BY LEVY OF PENALTY OF RS.5,01,052/- ON DISALLOWANCE OF CLAIM OF DEDUCTION U/S.80HHC. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A N INDIVIDUAL WHO DERIVES INCOME FROM MANUFACTURING OF GARMENTS A ND EXPORTS THEREOF. THE ASSESSING OFFICER NOTED THAT T HE ASSESSEE I.T.A. NO.2103/DEL/2015 2 HAS RECEIVED SUM OF RS.12,72,741/- AS INTEREST INCO ME FROM FDRS AND HE HAS ALSO PAID SUM OF RS.15,07,927/- AS INTEREST ON VARIOUS LOANS FOR HIS BUSINESS AND ONLY NET AMOU NT OF RS.2,35,185/- WAS DEBITED TO THE P&L ACCOUNT. HOWEV ER, THERE IS ANOTHER INTEREST AMOUNT OF RS.10,000/- WHI CH TOO WAS CLAIMED FOR DEDUCTION U/S.80HHC. THE ASSESSING OFFICER HELD THAT INTEREST INCOME OF RS.12,72,741/- AND OTH ER INTEREST OF RS.10,000/- IS TO BE TAXED AS INCOME FROM OTHER SOURCES AND FURTHER MISCELLANEOUS INCOME EARNED DUE TO FLUC TUATION ON FOREIGN EXCHANGE AMOUNTING TO RS.2,40,641/- CANN OT BE HELD TO BE BUSINESS INCOME, AND THEREFORE, HE DISAL LOWED THE CLAIM OF DEDUCTION U/S.80HHC BY THESE AMOUNTS. IN T HE QUANTUM PROCEEDINGS SUCH DISALLOWANCE STOOD UPHELD IN VARIOUS ROUNDS OF LITIGATION WHICH HAS BEEN DISCUSS ED BY THE LD. CIT (A). THE PENALTY HAS BEEN LEVIED BY THE ASS ESSING OFFICER ON SUCH A DISALLOWANCE OF DEDUCTION U/S.80H HC RS.5,01,052/- ON THE CHARGE THAT THE ASSESSEE HAS F URNISHED INACCURATE PARTICULARS OF INCOME. 3. LD. CIT (A) TOO HAS CONFIRMED THE PENALTY AFTER DETAILED DISCUSSION AND AFTER OBSERVING AND HOLDING AS UNDER :- REGARDING THE DISALLOWANCES OF THE DEDUCTION CLAIME D BY THE APPELLANT, THE ORDER THE AO DATED 08.02.2010 HAS BECOME FINAL AS T HE APPELLANT DID NOT FILE ANY APPEAL AGAINST THIS ORDER DATED 31.10.2009 . AS NOTED BY AO, THE APPELLANT MADE EXCESS CLAIM OF DEDUCTION THAT AMOUN TS TO FURNISHING OF INACCURATE PARTICULARS. REGARDING 90% OF MISCELLANE OUS INCOME OF RS.5,72,614/-, THE APPELLANT REDUCED ONLY RS.2,14,0 43/- INSTEAD OF RS.5,15,352/-. THUS, THE APPELLANT CLAIMED EXCESS D EDUCTION OF RS.3,01,309/- BY FURNISHING INACCURATE PARTICULARS. THIS EXCESS CLAIM CANNOT BE ACCEPTED AS BONAFIDE MISTAKE WHICH WOULD NOT HAV E COME INTO TAXATION I.T.A. NO.2103/DEL/2015 3 WITHOUT SCRUTINY ASSESSMENT. MOREOVER, THE APPELLAN T NEVER PLEADED THE GROUND OF BONAFIDE MISTAKE. REGARDING DISALLOWANCE OF DEDUCTION AS A RESULT OF INTEREST INCOME OF RS. 12,72,741/- OUT OF FDR AN D RS. 10,000/- FROM OTHER SOURCE, APPELLANT NEVER SUBMITTED ANY EXPLANATION B EFORE THE AO AND HENCE THESE AMOUNTS ALSO COMES UNDER EXCESS CLAIM OF DEDU CTION BY FURNISHING OF INACCURATE PARTICULARS. AS FAR AS INCOME ARISING OU T OF FLUCTUATION RATE OF FOREIGN EXCHANGE, THE APPELLANT DID NOT COOPERATED WITH THE AO DURING THE ASSESSMENT PROCEEDING AS PER THE DIRECTION OF THE H ONBLE ITAT. (AS HELD IN THE CASE OF CIT VS. MOTOR GENERAL FINANCE LTD. (200 2) 254 ITR 449 (DELHI), ADVERSE INFERENCES CAN BE DRAWN WHEN SATISFACTORY E XPLANATION AND DOCUMENTARY EVIDENCES ARE ALTHOUGH, THE PENALTY PRO VISION U/S 271(1)(C) ARE NOT AUTOMATIC AND A MUST IN EVERY CASE OF ADDITION, THIS PARTICU7LAR CASE FALLS OUTSIDE SUCH GENERAL PROPOSITION. 4. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER AS WE LL AS MATERIAL REFERRED TO BEFORE US, WE FIND THAT THE PE NALTY HAS BEEN LEVIED ON DISALLOWANCE OF DEDUCTION U/S.80HHC FOR WHICH CONSISTS OF DISALLOWANCE OF INTEREST ON FDRS AT RS.12,72,741/-, MISC. INTEREST INCOME OF RS.10,000/ - AND FLUCTUATION OF FOREIGN EXCHANGE AMOUNTING TO RS.2,4 0,641/-. AS PER ASSESSING OFFICER, THE EXCESS CLAIM OF DEDUC TION THAT AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME AS THE ASSESSEE HAS REDUCED ONLY RS.2,14,043/- INSTEAD OF RS.5,15,352/- WHICH IS 90% OF THE MISC. INCOME AND ACCORDINGLY IT WAS HELD THAT THERE IS AN EXCESS DED UCTION OF RS.3,01,309/-. THE DEDUCTION ON ACCOUNT OF INTEREST INCOME WAS ALSO HELD TO BE INCOME FROM OTHER SOURCES. IN S O FAR AS FLUCTUATION RATE OF FOREIGN EXCHANGE IS CONCERNED, THE APPEAL OF THE ASSESSEE IN QUANTUM PROCEEDINGS HAVE BEEN DE CIDED AGAINST THE ASSESSEE ON TECHNICAL GROUNDS THAT ASSE SSEE DID