ACIT, New Delhi V. M/s. Hangal Paper Consultants Pvt. Ltd., New Delhi

ITA 2268/DEL/2012

• Counselvise Citation: 226820114 RSA 2012
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 17-12-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 11-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Assessee Lawyers: B K MUNJANI
• Keywords: Capital asset; Business expenditure; Earning of tax free income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C NEW DELHI BEFORE SHRI I.C.SUDHIR, JM AND SHRI J.SUDHAKAR REDDY, AM ITA NO. 2268/DEL/2012 ASSESSMENT YEAR : 2005-06 ACIT, CIRCLE 12(1) VS. HANGAL PAPER CONSULTATION P .LTD. NEW DELHI A-7, NEW FRIENDS COLONY NEW DELHI 65. PAN: AAACH 2250 C (APPELLANT) (RESPONDENT) APPELLANT BY:- SH.SATPAL SINGH, SR.D.R. RESPONDENT BY:- SH.B.K.MUNJANI, ADV. O R D E R PER J.SUDHAKAR REDDY, AM THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGA INST THE ORDER DT. 27.02.2012 OF THE COMMISSIONER OF INCOME TAX ( APPEALS)-X, NEW DELHI WHEREIN THE FIRST APPELLATE AUTHORITY CANCE LLED THE PENALTY LEVIED BY THE COMMISSIONER OF INCOME TAX (APPEALS) UNDER S ECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. FACTS IN BRIEF :- THE ASSESSEE FILED A RETURN OF INCOME DECLARING INCOME OF RS.1,07,01,385/- ON 31.10.2005. THE ASSE SSEE CLAIMED RS.19,91,050/- AS EXEMPT INCOME BEING TAX FREE INTE REST AND DIVIDEND. A FURTHER CLAIM OF EXEMPTION OF RS.7,91,377/- WAS MAD E ON ACCOUNT OF LONG TERM CAPITAL GAIN (POST 1.10.2004). THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 AS SESSING THE TOTAL INCOME AT RS.1,04,05,086/-. THE ASSESSING OFFICER INVOKED PROVISIONS OF S.14A OF THE INCOME TAX ACT, 1961. THE ASSESSEE HA D IN ITS COMPUTATION OF INCOME DISCLOSED BUSINESS LOSS OF RS.23,75,302/- . THE ASSESSEE HAS NOT CLAIMED THIS EXPENDITURE EITHER AGAINST THE CUR RENT YEARS INCOME, NOR DID IT CARRY FORWARD THIS LOSS AND CLAIMED SET OFF IN THE SUBSEQUENT YEAR. THE AO LEVIED PENALTY UNDER SECTION 271(1)(C ) OF THE INCOME TAX ACT, 1961 ON THE GROUND THAT THE EXPENSES CLAIMED B Y THE ASSESSEE AS BUSINESS EXPENSES WERE NOT ALLOWABLE UNDER SECTION 14A. HE HELD THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF IN COME. ON APPEAL THE FIRST APPELLATE AUTHORITY DELETED THE PENALTY. AGG RIEVED THE REVENUE IS IN APPEAL. 3. WE HAVE HEARD SHRI SATPAL SINGH, THE SR.D.R. ON BEHALF OF THE REVENUE AND SHRI BK MANJANI, THE LD.COUNSEL ON BEHA LF OF THE ASSESSEE. 4. THE FIRST APPELLATE AUTHORITY HAS OBSERVED THAT THE ASSESSEE HAS DISCLOSED ALL PARTICULARS OF INCOME. HE FURTHER OB SERVED THAT THE EXPENDITURE OF RS.23,75,302/- INCURRED BY THE ASSES SEE HAS NEITHER BEEN ADJUSTED AGAINST THE INCOME OF THE ASSESSEE FOR THE CURRENT YEAR, NOR HAS IT BEEN CARRIED FORWARD AND SET OFF IN THE SUBSEQUE NT YEARS. THUS HE SUBMITTED THAT THERE IS NO TAX SOUGHT TO BE EVADED BY THE ASSESSEE. WE AGREE WITH THIS FINDING OF THE LD.CIT(A). 5. THE OTHER REASONS CITED BY THE COMMISSIONER OF I NCOME TAX (APPEALS) FOR DELETING THE PENALTY, IN OUR VIEW, A RE NOT CORRECT FOR THE REASON THAT : A) THE EXPENDITURE IN QUESTION COULD NOT HAVE BEEN CLAIMED AS DEDUCTION FROM CAPITAL GAINS FOR THE REASON THAT, THIS EXPEND ITURE WAS NOT INCURRED IN CONNECTION WITH TRANSFER OF THE CAPITAL ASSET. B)SIMILARLY RULE 8D CANNOT BE APPLIED FOR THE ASSES SMENT YEAR 2005-06. THE TEST THAT HAS TO BE APPLIED IS WHETHER THE ASSE SSEE HAS MADE TRUE AND FULL DISCLOSURE OF ITS PARTICULARS OF INCOME OR NOT. AS IN OUR OPINION, PROPER DISCLOSURE HAS BEEN MADE AND AS THE EXPLANAT ION GIVEN BY THE ASSESSEE IS BONAFIDE, WE UPHOLD THE DELETION OF PEN ALTY BY THE FIRST APPELLATE AUTHORITY. 6. IN THE RESULT APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER,2012. SD/- SD/- (I.C. SUDHIR) (J.SUD HAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: THE 20 TH DECEMBER, 2012 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR; 6.GUARD FILE BY ORDER DY. REGISTRAR 1. DATE OF DICTATION: 2. DRAFT PLACED BEFORE THE AUTHOR ON: 3. DRAFT PROPOSED AND PLACED BEFORE SECOND MEMBER ON: 4. DRAFT DISCUSSED/APPROVED BY THE SECOND MEMBER ON: 5. APPROVED DRAFT CAME TO SR.P.S. ON: 6. DATE OF PRONOUNCEMENT : 7. FILE SENT TO BENCH CLERK ON : 8. DATE ON WHICH FILE GIVEN TO HEAD CLERK ON: 9. DATE OF DISPATCHING THE ORDER ON :