Shri Shivratan S. Gandhi, Nagpur V. Income tax Officer, Ward 4(4), Nagpur

ITA 230/NAG/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84683 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2014
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 19-06-2012
• Court: TRIBUNAL
• Department Lawyers: NADRENDRA KANE
• Assessee Lawyers: R V LOYA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . ITA NO.230/NAG/2012 ( AY: 2004 - 2005 ) SHRI SHIVRAT AN S. GANDHI, C/O. M/S. LOYA BAGRI & CO, CHARTERED ACCOUNTANTS, GANDHIBAG, NAGPUR. / VS. INCOME TAX OFFICER, WARD 4(4), NAGPUR. ./ PAN: AAZPG 6677 Q ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI R.V. LOYA / RESPONDENT BY : SHRI NADRENDRA KANE, SR. DR / DATE OF HEARING : 10.09.2014 / DATE OF PRONOUNCEMENT : 11 .09.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 19.6.2012 IS AGAINST THE ORDER OF THE CIT (A) - II, NAGPUR DATED 10.01.2012 FOR THE ASSESSMENT YEAR 2004 - 2005. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THAT THE PENALTY ORDER U/S 271(1)(C) OF THE AO IS BAD IN LAW AND THE LD CIT (A) ERRED IN CONFIRMING THE SAME. ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE ACTION OF THE LD CIT (A) IS UNJUSTIFIED. 2. THAT THE AO ERRED IN LAW AND ON FACTS IN LEVYING PENALTY OF RS. 2,12,817/ - U/S 271(1)(C) A ND THE LD CIT (A) ERRED IN CONFIRMING THE ACTION OF THE AO TO THE EXTENT OF PENALTY AMOUNT ON ADDITION UPHELD BY THE HONBLE ITAT. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ACTION OF THE LD CIT (A) IS NOT JUSTIFIED. 3. THAT THE LD CIT (A) ERRED IN LAW AND ON THE FACTS IN HOLDING THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE CLAIM BY PROPER EVIDENCE BEFORE THE AO. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE HAS SUBMITTED PROPER EXPLANATION AND NO PENALTY IS ATTRACTED. 3. T HE ONLY ISSUED IN THIS APPEAL IS THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT. AO MADE ADDITION OF RS. 3 LAKHS , WHICH IS CLAIMED TO HAVE BEEN SPENT ON ACCOUNT OF IMPROVEMENT ON THE TRANSFERRED ASSET. MATTER TRAVELLED UP TO THE TRIBUNAL ON ESTIMATION BASIS , WHEREIN 50% OF THE ADDITION WAS SUSTAINED. THIS IS THE SUBJECT MATTER OF PENALTY. IN THIS REGARD, IT IS THE ARGUMENT OF THE LD COUNSEL, SHRI 2 R.V. LOYA, THAT THE ADDITION IS SUSTAINED BASING ON THE AD - HOC ISM. O THERWISE, AO HAS NOT BROUG HT ANY INCRIMINATING MATERIAL ON RECORD AGAINST THE ASSESSEES CLAIM OF EXPENDITURE ON IMPROVEMENT OF THE ASSET. 4. ON THE OTHER HAND, LD DR ARGUED STATING THAT THE SAID EXPENDITURE WAS CLAIMED AS INCURRED IN CONNECTION WITH THE IMPROVEMENTS O F THE ASSET A ND THERE IS NO CREDIBLE EVIDENCE IN SUPPORT OF THE CLAIM. DURING THE REBUTTAL TIME, LD COUNSEL ARGUED STATING THAT THE CREDIBILITY OF THE EVIDENCE IS A MATTER OF DISPUTE AND HE RELIED ON THE COPY OF THE BILL FOR THE AMOUNT OF RS. 3 LAKHS. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL ON RECORD. ON HEARING BOTH THE PARTIES, WE FIND THE ASSESSEE MADE A CLAIM AND SOME EVIDENCE WAS FURNISHED BY THE ASSESSEE IN SUPPORT OF THE SAID CLAIM FOR RS. 3 LAKHS. CREDIBILITY OF THE SAID EVIDENCES WAS QUESTIONED, OTHERWISE THE EXISTENCE OF THE EVIDENCES IS NOT DEBATED UPON. THUS, WE FIND AO HAS NOT BROUGHT ANY ADVERSE MATERIAL TO SUGGEST THAT THE SAID AMOUNT OF RS. 3 LAKHS WAS NOT SPENT ON IMPROVEMENT OF THE ASSET. AS SUCH, THE TRIBUNALS FINDING THAT 50% OF THE CLAIM IS SUSTAINABLE BASED ON THE AD - HOC ESTIMATION. IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE CIT (A)S DECISION IN CONFIRMING THE PENALTY TO THE EXTENT CONFIRMED BY THE TRIBUNAL IS NOT FAIR AND SUSTAINABLE IN LAW. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUN CED IN THE OPEN COURT ON 11 TH SEPTEMBER, 2014. SD/ - SD/ - (VIVEK VARMA) (D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER NAGPUR ; 11 /09/2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , NAGPUR / DR, 3 ITAT, NAGPUR. 6. / GUARD FILE . //TRUE COPY// / BY ORDER, (SR. PRIVATE SECRETARY) ITAT, NAGPUR