Shri Bhagwandas Tribhovandas Patel, Ahmedabad V. The Income tax Officer,Ward-10(2), Ahmedabad

ITA 2138/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9111 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-09-2009
• Assessment Year: 1990-1991
• Appeal Filed On: 06-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOVIND SINGHLA
• Keywords: Depreciation; Bonafide belief
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI T.K. SHARMA, JUDICIAL MEMBER & SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER ITA NO. 2138/AHD/2009 ASSESSMENT YEAR : 1990-91 BHAGWANDAS TRIBHOVANDAS PATEL, VS ITO, WARD 10(2) , AHMEDABAD AHMEDABAD PAN NO. AAVPP9694E (APPELLANT) (RESPONDENT) APPELLANT BY : SH HEMANSHU SHAH, C.A. RESPONDENT BY : SH GOVIND SINGHLA, DR ORDER PER T.K.SHARMA, J.M. THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER OF LEARNED CIT(A) DATED 27.4.2009 FOR CONFIRMING THE PENALTY OF RS. 22,725/- LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME TAX A CT FOR THE ASSESSMENT YEAR 1990-91. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PH YSICALLY HANDICAPPED CLAIMING DEDUCTION U/S 80U OF INCOME TAX ACT, 1961. IN THE EARLIER YEAR, HE BROUGHT A TRUCK AND GAVE IT TO SHRI RAMESHBHAI N SH AH OF BARODA FOR RUNNING ON HIRE. DURING ASSESSMENT YEARS 1988-89 AND 1989- 90, THE ASSESSEE GAVE IT ON HIRE FOR A FIXED RENT OF RS. 90,000/- AND RS. 72,000/- PER ANNUM RESPECTIVELY. IN THE ASSESSMENT YEAR IN APPEAL, N O INCOME WAS RECEIVED FROM SHRI RAMESHBHAI N SHAH, THEREFORE, NO INCOME FROM THE TRUCK WAS 2 DECLARED BY THE ASSESSEE. IN THE ASSESSMENT ORDER; ASSESSING OFFICER MADE ADDITION OF RS. 90,000/- WHICH ON APPEAL WAS RESTRI CTED TO RS. 72,000/- BY THE ITAT. THE ITAT ALSO ALLOWED THE BENEFIT OF DEPREC IATION ON THE TRUCK. IN THIS MANNER NET INCOME SUSTAINED WAS RS. 57,385/-. ON T HIS AMOUNT, THE ASSESSING OFFICER LEVIED THE PENALTY U/S 271(1) (C) OF THE ACT AMOUNTING TO RS.22,725/-. 3. BEFORE THE LEARNED CIT(A), THE COUNSEL FOR THE A SSESSEE RAISED THE FOLLOWING CONTENTIONS: I) THE APPELLANT HAS NOT EARNED ANY INCOME DURING T HE YEAR. II) IN FACT THE TRUCK WAS GIVEN ON SALE TO SHRI RAM ESH N SHAH WHO FINALLY SOLD THE TRUCK IN SUBSEQUENT YEAR & NO INCOME WAS EARNED IN ASSESSMENT YEAR 1990-91. III) EVEN THE INCOME OF RS. 57,385/- IS BASED ON ES TIMATION OF ITAT AND ON ESTIMATION PENALTY U/S 271(1)(C) CANNO T BE LEVIED. IV) NO DEPRECIATION WAS CLAIMED BY THE APPELLANT ON THE TRUCK. VS ) IN VIEW OF THE JUDGEMENT OF ITAT, ALLAHABAD IN THE CASE OF NIRMA CHEMICALS WORKS ORDER DATED 20.8.2007, DILIP N SHROFF 291 ITR 579 (SC), PENALTY SHOULD NOT BE LEV IED. 4. AFTER CONSIDERING THE AFORESAID SUBMISSIONS IN T HE IMPUGNED ORDER, LEARNED CIT(A) FOLLOWING THE JUDGMENT OF THE HON'BL E SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILES PROCESSORS 306 ITR 276 (SC) CONFIRMED THE PENALTY LEVIED BY ASSESSING OFFICER. THE LEARNED AS SESSING OFFICER TOOK THE VIEW THAT EVEN IN CASE OF ADDITION MADE ON ESTIMATE BASIS, PENALTY CAN BE LEVIED U/S 271(1)(C) OF THE ACT UNLESS THE ASSESSE E PROVES HIS BONAFIDES AND DISCLOSES THE FACTS NECESSARY FOR HIS COMPUTATION O F INCOME. AGGRIEVED BY THIS, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. 3 5. AT THE TIME OF HEARING ON BEHALF OF ASSESSEE SHR I HEMANSHU SHAH APPEARED AND CONTENDED THAT ASSESSEE WAS DECLARING THE INCOME FROM TRUCK ON RECEIPT BASIS. IN THE LAST TWO YEARS, WHATEVER I NCOME WAS RECEIVED, THE SAME WAS DECLARED BY THE ASSESSEE. IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IN APPEAL, NO INCOME WAS RECEIVED; THEREFORE, THE ASSESSEE WAS OF THE BONAFIDE BELIEF THAT HE IS NOT REQUIRED TO SHOW ANY INCOME FROM THE TRUCK UNLESS IT IS RECEIVED. COUNSEL OF THE AS SESSEE FURTHER SUBMITTED THAT ASSESSEE IS A PHYSICALLY HANDICAP PERSON, HE COULD NOT FOLLOW UP THE MAINTENANCE OF THE TRUCK. THERE WAS A REASONABLE C AUSE FOR NOT SHOWING THE INCOME WHICH WAS NOT RECEIVED BY THE ASSESSEE. HE S UBMITTED THAT THE BONAFIDE BELIEF OF THE ASSESSEE CONSTITUTES REASONA BLE CAUSE, THEREFORE, PENALTY LEVIED U/S 271(1)(C) BE CANCELLED. 6. ON THE OTHER HAND, SHRI GOVIND SINGHAL, LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT THE TRUCK WAS GIVEN ON HIRE. RENT WAS ACCRUED TO THE ASSESSEE. THERE IS NO WHIS PER IN THE RETURN OF INCOME THAT WHY THE ASSESSEE IS NOT DECLARING INCOM E FROM THE TRUCK. THE ASSESSING OFFICER MADE ADDITION OF RS. 90,000/- WHI CH WAS FINALLY RESTRICTED BY THE TRIBUNAL TO RS. 57,385/-. ON THIS AMOUNT, ASSESSING OFFICER LEVIED THE PENALTY AND LEARNED CIT(A) HAS GIVEN COGENT REASONS FOR UPHOLDING THE SAME, THEREFORE, VIEW TAKEN BY LEARNED CIT(A) BE UPHELD. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT ASSESSEE IS A PHYSICALLY HANDICAP. NO INCOME FROM THE TRUCK WAS RECEIVED BY THE ASSESSEE IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEA R IN APPEAL. ASSESSING 4 OFFICER BROUGHT TO TAX RS. 90,000/- ON ESTIMATE BAS IS. PRIMAFACIE IT APPEARS THAT ASSESSEE WAS OF THE BONAFIDE BELIEF THAT INCOM E FROM TRUCK IS ASSESSABLE UNDER THE HEAD OTHER SOURCES AS PER METHOD OF ACC OUNTING FOLLOWED. ACCORDING TO HIM, THE INCOME IS TO BE DECLARED AS A ND WHEN IT IS RECEIVED. THIS BONAFIDE BELIEF, IN OUR OPINION, CONSTITUTES R EASONABLE CAUSE AND SAME CANNOT BE LEGALLY BRUSHED ASIDE. WE, THEREFORE, A RE OF THE VIEW THAT THIS IS NOT A FIT CASE FOR LEVYING PENALTY U/S 271(1)(C) O F THE ACT. IN VIEW OF THIS THE PENALTY OF RS. 22,725/- LEVIED BY ASSESSING OFFICER U/S 271(1)(C) IS CANCELLED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 11.9.2009 SD/- SD/- (D.C.AGRAWAL) (T.K.SHARMA) ACCOUNTNT MEMBER JUDICIAL MEMBER DATED: 11 TH SEPT 2009 RKK COPY FORWARDED TO :- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT (A). 4. THE CIT 5. DR 6. GUARD FILE BY ORDER TRUE COPY DY./ASSTT. REGISTRAR, ITAT, AHMEDABAD.