The DCIT, Circle-10, Ahmedabad V. Shri Harsh S.Shah, Ahmedabad

ITA 2368/AHD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0532 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-02-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 22-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Assessee Lawyers: SATISH SHAH
• Section: 143(3); 6; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD A BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER DY. COMMISSIONER OF INCOME-TAX, CIRCLE-10, AHMEDBAD (APPELLANT) VS . SHRI HARSH S. SHAH, AHMEDABAD C/54, SILVER ARC., NR. ELLISBRIDGE RLY. CROSSING, AHMEDABD PAN NO. AFAPS3154G (RESPONDENT) REVENUE BY : SRI RAHUL KUMAR, SR.D.R. ASSESSEE BY : SRI SATISH SHAH, A.R. DATE OF HEARING : 21-02-2013 DATE OF PRONOUNCEMENT : 15-03-2013 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER:- THIS IS THE REVENUEAPPEAL AGAINST THE ORDER OF LD . CIT(A)XVI, AHMEDABAD DATED JULY 12, 2012. 2. THE REVENUE IN THIS APPEAL IS AGGRIEVED BY THE A CTION OF LD. CIT(A) IN DELETING THE PENALTY OF RS. 29,06,990/- LEVIED U /S 271(1)(C) OF THE ACT BY THE A.O. ITA NO. 2368/AHD/2012 A.Y.:-2008-09 I.T.A NO. 2368/ADH/2012 A.Y. 2008-09 PAGE NO. DY. COMMISSIONER OF INCOME-TAX VS. HARSH S. SHAH 2 3. BRIEF FACTS OF THE CASE ARE THAT IN THIS CASE OR DER U/S 143(3) OF THE ACT WAS PASSED BY THE ASSESSING OFFICER DETERMINING TOT AL INCOME OF THE ASSESSEE AT RS.5,14,45,248/- AS AGAINST RETURNED IN COME OF RS.4,26,29,823/-. THE ASSESSING OFFICER HAD MADE AN ADDITION OF RS.86 ,72,132/-BY DISALLOWING CLAIM OF LOSS OF EVEN AMOUNT. AS PER T HE FACTS MENTIONED BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER, THE ASSE SSEE HAD BOUGHT A PIECE OF LAND IN PANVEL MUMBAI. THE ASSESSEE HAD TAKEN MR. HAIDER SINDHI AND OTHERS AS PARTNERS WITHOUT PAYMENT OF ANY CONSIDERA TION. SIMULTANEOUSLY, MR. HAIDER SINDHI AND OTHERS TOOK ASSESSEE AND HIS FAMILY MEMBERS AS PARTNERS IN PROPERTIES BELONGING TO THEM I.E. MR. H AIDER SINDHI AND OTHERS. DURING THE ASSESSMENT PROCEEDINGS ASSESSEE CLAIMED THAT AT ONE POINT OF TIME BOTH THE PARTIES AGREED TO RELINQUISH EACH OTH ERS RIGHTS IN PROPERTIES OF EITHER. THE ASSESSEE FURTHER CONTENDED THAT BY REL INQUISHING ITS RIGHTS IN THE PROPERTIES OF MR. HAIDER SINDHI AND OTHERS WHICH WE RE OF MUCH HIGHER VALUE, THE ASSESSEE HAS SUFFERED A LOSS. THIS LOSS WAS CALCULATED BY ASSESSEE AT RS. 86,72,132 AND WAS CLAIMED IN ITS RETURN OF I NCOME IN THE YEAR UNDER APPEAL. THE ASSESSING OFFICER HOWEVER WAS OF THE V IEW THAT THE AGREEMENTS SIGNED BETWEEN THE PARTIES WERE NOT LEGAL AGREEMENT S AND WERE MERELY INFORMAL ARRANGEMENTS. HE ACCORDINGLY DISALLOWED T HE CLAIM OF THE ASSESSEE TREATING THE SAME AS NOTIONAL LOSSES ONLY AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER ALSO MADE A DISALLOWANCE OF FOREIGN TRAVELING EXPENSES CLAIMED BY THE ASSESSEE AMOUNTIN G TO RS. 85, 591/-. THIS DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER AS HE WAS OF THE VIEW THAT FOREIGN TRAVELING EXPENSES CLAIMED BY THE ASSE SSEE WERE NOT RELATED TO THE ASSESSEES BUSINESS. CONSEQUENTLY, THE ASSESS EE OFFICER INITIATED PENALTY I.T.A NO. 2368/ADH/2012 A.Y. 2008-09 PAGE NO. DY. COMMISSIONER OF INCOME-TAX VS. HARSH S. SHAH 3 PROCEEDINGS U/S 271(1)(C) OF THE ACT AND IMPOSED A PENALTY OF RS. 29,06,990/- EQUIVALENT TO THE TAX SOUGHT TO BE EVAD ED BY HIM. 4. THE ASSESSEE CARRIED THE MATTER TO THE FIRST APP ELLATE AUTHORITY. LD. CIT(A) HAS SUMMARIZED THE SUBMISSION OF THE ASSESSE E AS UNDER:- 2.2 THAT THE ASSESSING OFFICER HAS NOT CONDUCTED A NY INDEPENDENT ENQUIRY IN THE ASSESSMENT PROCEEDINGS OR IN PENALTY PROCEEDINGS BEFORE REJECTING THE CLAIM OF THE APPELLANT. THAT THE CLAIM OF THE APPELLANT HAS BEEN REJECTED O NLY UPON INTERPRETATION OF DOCUMENTS FURNISHED BY HIM. THAT, ACCORDINGLY, THE DECISION OF HONOURABLE SUPRE ME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS IS SQUARELY APPLICA BLE IN APPELLANTS CASE. THAT THE CLAIM OF THE APPELLANT WAS ONLY A NOTIONAL LOSS QUANTIFIED ON THE BASIS OF SOME SELF DEVISED FORMULA. THAT THE ASSESSING OFFICER WAS EXPLAINED THAT IT WA S NOT A CASE OF A NOTIONAL LOSS. THAT WHILE LEVYING THE PENALTY THE ASSESSING OFFICE R HAS PLACED RELIANCE ON HIS FINDINGS GIVEN IN THE ASSESSMENT ORDER FOR D ISALLOWANCE OF THE CLAIM OF THE APPELLANT. THAT THE APPELLANT HAD FILED FULL DETAILS OF TRAVEL ING EXPENSES INCURRED FOR THE PURPOSES OF BUSINESS AND THAT THE MERE FACT THAT THE ASSESSEE DID NOT EARNARY INCOME DURING THE YEAR WOULD NOT MA KE THE TRIP PERSONAL. AFTER TAKING INTO CONSIDERATION THE SUBMISSION OF T HE ASSESSEE AND ANALYZING THE CASE LAWS IN RESPECT OF PENALTY U/S 271(1)(C) O F THE ACT, LD. CIT(A) DELETED THIS PENALTY. I.T.A NO. 2368/ADH/2012 A.Y. 2008-09 PAGE NO. DY. COMMISSIONER OF INCOME-TAX VS. HARSH S. SHAH 4 5. AGGRIEVED BY THIS ACTION OF THE LD. CIT(A) NOW R EVENUE IS IN APPEAL . AT THE TIME OF HEARING LD. D.R. RELIED ON THE OR DER OF LOWER AUTHORITIES. ON THE OTHER HAND LD. A.R. RELIED ON THE ORDER OF LD. CIT(A). 6. AFTER HEARING AND PERUSING THE RECORDS AND THE C ASE LAWS RELIED UPON BY BOTH THE PARTIES, WE FIND THAT IN HIS RETURN OF INCOME ASSESSEE HAS CLAIMED BUSINESS LOSS OF RS. 86,72,132/-. DURING THE COURS E OF ASSESSMENT PROCEEDINGS IN RESPECT OF THIS CLAIM, THE ASSESSEE FILED DETAILS COMPRISING AGREEMENTS BETWEEN THE ASSESSEE AND THE OTHER PARTI ES I.E. MR. HAIDER SINDHI AND OTHERS. HOWEVER ASSESSING OFFICER WAS OF THE V IEW THAT THE EVIDENCE WHICH HAS BEEN PRODUCED BY THE ASSESSEE IN SUPPORT OF HIS CLAIM OF BUSINESS LOSSES OF RS. 86,72,132/- CANNOT BE RELIED UPON TO ALLOW THE CLAIM OF THE ASSESSEE. IN THE OPINION OF THE ASSESSING OFFICER THIS LOSS WAS NOTIONAL LOSS ONLY AND HE THEREFORE ADDED THE SAME TO THE INCOME OF THE ASSESSEE. SIMILARLY, ASSESSEES CLAIM OF FOREIGN TRAVELING EX PENSES AMOUNTING TO RS. 85,591/- WAS HELD TO BE NOT RELATED WITH ASSESSEES BUSINESS BY THE ASSESSING OFFICER AND THE CLAIMED EXPENSES WERE ALSO ADDED BA CK TO THE INCOME OF THE ASSESSEE. ON THESE ADDITIONS ASSESSING OFFICER HA S ALSO LEVIED PENALTY U/S 271(1)(C) OF THE ACT. THE ASSESSEES CASE HAS CONS ISTENTLY BEEN THAT THERE IS NO CONCEALMENT OF INCOME OR FILING OF INACCURATE PA RTICULARS OF INCOME ON THE PART OF THE ASSESSEE AS IN RESPECT OF BOTH THES E ADDITIONS ALL THE RELEVANT DOCUMENTS AND EVIDENCES WERE PRODUCED BEFORE THE AS SESSING OFFICER AND, THEREFORE, IT WAS NOT A FIT CASE FOR LEVYING PENALT Y U/S 271(1)(C) OF THE ACT. WE FIND MERIT IN THE ARGUMENT ADVANCED ON BEHALF OF THE ASSESSEE AS ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE. SIMPLY, BECAUSE ADDITION HAS BEEN MADE, PENALTY CANNOT BE I MPOSED AUTOMATICALLY. I.T.A NO. 2368/ADH/2012 A.Y. 2008-09 PAGE NO. DY. COMMISSIONER OF INCOME-TAX VS. HARSH S. SHAH 5 IN THE INSTANT CASE, THERE IS NO DISPUTE ABOUT THE FACT THAT ASSESSEE DISCLOSED ALL RELEVANT DOCUMENTS IN SUPPORT OF HIS CLAIM OF B USINESS LOSS AND TRAVELING EXPENSES. IN THE ABSENCE OF A FINDING OF THE ASSES SING OFFICER THAT EXPLANATION OFFERED BY THE ASSESSEE IN RESPECT OF B OTH THESE ADDITIONS WAS NOT BONAFIDE, PENALTY U/S 271(1)(C) OF THE ACT CANN OT BE LEVIED IN THIS CASE. THEREFORE THE LD. CIT(A) HAS RIGHTLY DELETED THE PE NALTY IMPOSED BY A.O. AND THE ORDER PASSED BY HIM IS HEREBY UPHELD. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (T.R. MEENA) ( D.K.TYAGI) ACCOUNTANT MEMBER J UDICIAL MEMBER AHMEDABAD : DATED 15/03/2013 AK / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / CONCERNED CIT 4. - / CIT (A) 5. , ! , '# / DR, ITAT, AHMEDABAD 6. $% &' / GUARD FILE. BY ORDER/ , ( / ' ) ! , '# I.T.A NO. 2368/ADH/2012 A.Y. 2008-09 PAGE NO. DY. COMMISSIONER OF INCOME-TAX VS. HARSH S. SHAH 6 STRENGTHENED PREPARATION & DELIVERY OF ORDERS IN TH E ITAT 1) DATE OF TAKING DICTATION 07-03-2013 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE N.A. 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 11-03-2013 4) DATE OF CORRECTION 11-03-2013 5) DATE OF FURTHER CORRECTION XXXX 6) DATE OF INITIAL SIGN BY MEMBERS 13-03-2013 7) ORDER UPLOADED ON 01-04-2013 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) ORDER SENT TO BENCH CLERK 15-03-2013