ITO, Faridabad V. Sh. Karamvir Singh, Faridabad

ITA 2387/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98132 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 19-04-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 18-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 142(1); 14A

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E : NEW DELHI BEFORE SHRI H.S.SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER I TA NO. 2387 /DEL/ 2010 (ASSESSMENT YEAR: 2007 - 08 ) ACIT, CIRCLE - 23(1), ROOM NO.1302, 13 TH FLOOR, E - 2, PRATYKSH YA KAR BHAWAN, SHYAMA PRASAD MUKHERJEE CIVIL CENTRE, JAWAHAR LAL NEHRU MARG, MINTO ROAD, NEW DELHI VS. MEE N A T. SINGH, B - 10, TRIVENT SHOPPING COMPLEX, SHEIKH SARAI, PHASE - I, NEW DELHI PAN:ABSPS0866P (APPELLANT) (RESPONDENT) A SSESSEE BY : NONE REVENUE BY : SH. P. DAM KANUNJNA, SR. DR DATE OF HEARING 26.11.2015 DATE OF PRONOUNCEMENT 09 .1 2 .2015 O R D E R PER PRASHANT MAHARISHI , A . M . 01 . THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT ( A) - XXIII , NEW DELHI DATED 31.01.2013 PASSED FOR THE ASSESSMENT YEAR 2007 - 08 . THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN DELETING THE PENALTY AMOUNT TO R S.4,34,975/ - IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT, AS CLAIM OF DEDUCTION OF INADMISSIBLE ITEMS WAS NOT INADVERTENT ERROR. 02 . THE FACTS IN BRIEF OF THE CASE ARE THAT THE ASSESSEE DERIVED INCOME FROM HOUSE PROPERTY, OTHER SOURCES AND BUSINESS OF RUNNI NG A BANQUET HALL IN THE NAME AND STYLE OF PALMS COURT. THE ASSESSEE FILED RETURN INCOME SHOWING LOSS OF RS.26,18,066/ - ON 31.07.2007 AND PROCESSED U/S 143(1) OF THE ACT. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) WAS ISSUED. THE ASSESSING OFFICER NOTICED IN HIS ASSESSMENT THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF EXPLANATION 1 TO THE SUB - SECTION (1) OF THE SECTION 271(1)(C) OF THE ACT. FURTHER HE NOTED THAT THE ASSESSEE WAS A DELIBERATE ACT TO EV ADE TAX AND CONCEALED THE PARTICULARS OF INCOME AND ACIT V MEENA T SINGH ITA NO 2387/DE L/2013 AY 2007 - 08 APPEAL AGAINST PENALTY U/S 271(1) (C) 2 FURNISHED INACCURATE PARTICULARS OF INCOME. THE ASSESSMENT WAS COMPLETED AT A LOSS OF RS.13,25,806/ - AS AGAINST THE RETURN LOSS OF RS.26,18,066/ - . THE ASSESSING OFFICER ADDED RS.12,95,260/ - TO THE INCOME OF THE ASSESSEE AND LEVIED PENALTY @ 100 TO THAT AMOUNT OF RS.4,34,975/ - U/S 271(1)(C) OF THE ACT. 03 . AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS), WHO OBSERVED THAT THE ASSESSING OFFICER HAS NOT BROUGHT ANY M ATERIAL EVIDENCE ON RECORD TO SHOW THAT THE MAKE WAS NOT BONA FIDE. THE ENTIRETY OF CIRCUMSTANCES POINTS TO THE FACT THAT THE CLAIM OF DEDUCTION OF INADMISSIBLE ITEMS WAS ON ACCOUNT OF INADVERTENT ERROR. ACCORDINGLY, THE PENALTY LEVIED BY THE AO WAS CANCEL LED. A GGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFORE US . 04 . THE BRIEF FACTS OF THE CASE IS THAT IN THE RETURN FILED BY THE ASSESSEE, BUSINESS LOSS WAS CLAIMED AT RS.31,39,212/ - AND GROSS TOTAL INCOME WAS SHOWN AT A LOSS OF RS.26,18,066/ - . DURING THE CO URSE OF ASSESSMENT PROCEEDINGS THE COUNSEL OF THE ASSESSEE FOUND THAT CERTAIN EXPENSES DEBITED IN P&L ACCOUNT WERE INADMISSIBLE UNDER THE ACT AND ACCORDINGLY, VIDE LETTER DATED 14.7.2009 FILED A REVISED COMPUTATION OF INCOME DECLARING THEREIN BUSINESS LOSS AT RS.18,78,094/ - AND GROSS TOTAL LOSS AT RS. 13,56,948/ - . IN ASSESSMENT AS PER ORDER U/S 143(3), BUSINESS LOSS HAS BEEN ASSESSED AT RS.18,46,952/ - AND GROSS TOTAL LOSS HAS BEEN ASSESSED AT RS.13,25,806/ - . IT IS IMPORTANT TO NOTE THAT THE SAID REVISED R ETURN WAS FILED VOLUNTARILY SUO MOTO BY THE ASSESSEE. BREAKUP OF DIFFERENCE BETWEEN ASSESSED AND RETURNED LOSS IS AS UNDER: 1) DEPRECIATION DIFFERENCE 150000 2) INCOME TAX DEBITED TO P&L ACCOUNT 900222 3) STAMP DUTY FOR LEASE DEED DEBITED TO P&L ACC OUNT 25750 4) WEALTH TAX DEBITED TO P&L ACCOUNT 87051 5) HOUSE TAX 2835 6) DOCUMENTATION FEE 28500 7) DISALLOWANCE U/S 40(A) 66060 8) MEMBERSHIP FEE 13294 9) LOCKER RENT 8250 10) DISALLOWANCE U/S 14A 9558 ACIT V MEENA T SINGH ITA NO 2387/DE L/2013 AY 2007 - 08 APPEAL AGAINST PENALTY U/S 271(1) (C) 3 05 . DESPITE NOTICE N ONE APPEARED FOR THE ASSESSEE. THEREFORE APPELLANTS SUBMISSION BEFORE LD CIT (A) WAS CONSIDERED. 06 . FOR ABOVE DISALLOWANCE APPELLANT SUBMITTED BEFORE CIT (A) THAT THE ASSESSEE IS AN INDIVIDUAL LADY WHO IS NOT CONVERSANT WITH TAX MATTERS. THE RETURN WAS PR EPARED BY HER ACCOUNTANT WHO WAS NOT CONVERSANT WITH THE PROVISIONS OF THE ACT AND ACCORDINGLY DID NOT ADD THE SAID EXPENSES DEBITED IN P&L ACCOUNT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHILE SCRUTINIZING THE DETAILS AND INFORMATION TO BE FILED, THE COUNSEL OF THE ASSESSEE FOUND THAT CERTAIN EXPENSES DEBITED IN P&L ACCOUNT WERE INADMISSIBLE UNDER THE ACT. ACCORDINGLY, WHILE FILING THE INITIAL DETAILS LIKE COPY OF ITR, COMPUTATION OF INCOME AND AUDITED ACCOUNTS VIDE LETTER DATED 14.7.2009 ALSO FILED A REVISED COMPUTATION OF INCOME ON THE SAME DAY WHEREIN MOST OF THE EXPENSES DISALLOWED BY THE LD. AO WERE ADDED BACK. ALL EXPENSES ADDED BACK IN THE COMPUTATION WERE SPECIFICALLY EVIDENT IN THE AUDITED P&L ACCOUNT AND AS SUCH THERE WAS NEITHER ANY CONCEALM ENT OF INCOME NOR ANY INACCURATE PARTICULARS WERE FURNISHED. THE SAME WERE LEFT TO BE ADDED BACK MERELY BECAUSE OF INADVERTENT MISTAKE OF THE ACCOUNTANT. SOME OF THE ITEMS ARE EVIDENTLY REQUIRED TO BE ADDED BACK SUCH AS INCOME TAX AND WEALTH TAX DEBITED AS SUCH IN P&L ACCOUNT. SOME OTHER ITEMS ARE OF DEBATABLE NATURE AND HAVE BEEN ACCEPTED AS ADDED BACK TO AVOID DISPUTE AND SHOW ITS COOPERATION. REGARDING OTHER PETTY ADDITIONS SUCH AS U/S 14A, CLUB EXPENSES AND LOCKER RENT ETC. IT IS SUBMITTED THAT THE SAME INVOLVE DIFFERENCE OF VIEW AND THERE BEING ULTIMATE ASSESSED LOSS, WERE NOT DISPUTED BY THE ASSESSEE. AS SUCH THE SAME ALSO DO NOT INVOLVE ANY CONCEALMENT ELEMENT. REGARDING DISALLOWANCE U/S 14A IT IS SUBMITTED THAT THE SAID DISALLOWANCE HAS BEEN MADE ON ESTIMATE BASIS BY APPLYING PROVISIONS OF SECTION 14A READ WITH RULE 8D. THE ISSUE OF ESTIMATED DISALLOWANCE U/S 14A AND ALSO THE RETROSPECTIVE APPLICABILITY OF RULE 8D IS A HIGHLY DEBATABLE LEGAL ISSUE AS IS EVIDENT FROM NUMEROUS JUDGMENTS OF DIFFERENT COU RTS. MOREOVER THE DISALLOWANCE AS MADE IS BASED ON ESTIMATES, OUT OF EXPENSES ADMITTEDLY INCURRED BY THE ASSESSEE IN THE COURSE OF ITS BUSINESS. RULE 8D DOES NOT APPLY TO ASSESSMENT YEAR 2007 - 08. IT WAS FURTHER ACIT V MEENA T SINGH ITA NO 2387/DE L/2013 AY 2007 - 08 APPEAL AGAINST PENALTY U/S 271(1) (C) 4 CONTENDED THAT ALL MATERIAL FACTS ARE BORNE O UT FROM THE RECORD. ALL RELEVANT DETAILS WERE FILED BY THE ASSESSEE VOLUNTARILY AND SUO MOTO. NO INACCURATE PARTICULARS WERE INVOLVED. ACCOUNTS OF THE ASSESSEE ARE DULY AUDITED. THE ADDITION RELATES TO BONA FIDE MISTAKES WHICH THE ASSESSEE SUO MOTO AND VOL UNTARILY DISCLOSED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS FURTHER SUBMITTED THAT ASSESSEE MADE A COMPUTATION ERROR IN HER RETURN OF INCOME. INADVERTENT BONA FIDE MISTAKE INVOLVED IS BORNE OUT FROM THE RECORD. THE FACT THAT THE EXPENSES ADDE D BY THE ASSESSEE IN THE REVISE D COMPUTATION OF INCOME WERE SPECIFICALLY MENTIONED IN THE P&L ACCOUNT INDICATED THAT THE ASSESSEE MADE A COMPUTATION OR INADVERTENT ERROR IN ITS RETURN OF INCOME. THESE FACTS SUGGEST THAT THERE WAS NO QUESTION OF THE ASSESSE E CONCEALING ITS INCOME OR OF THE ASSESSEE FURNISHING ANY INACCURATE PARTICULARS . THEREFORE PENALTY IS RIGHTLY DELETED BY CIT (A). 07 . LD DR SUBMITTED THAT THE DISALLOWANCE ARE THOUGH MADE IN REVISED COMPUTATION BUT THE DISALLOWANCE ARE APPARENTLY NOT AD MISSIBLE AS DEDUCTION AND THEREFORE HE RELIED ON THE ORDER OF AO IN LEVYING PENALTY U/S 271(1) (C) OF THE ACT. 08 . WE HAVE CAREFULLY CONSIDERED THE CONNECTIONS OF THE REVENUE AS WELL AS THE SUBMISSION OF THE ASSESSEE INCORPORATED BY CIT (A) IN HIS ORDE R . WHILE DELETING THE PENALTY CIT (A) HAS HELD AS UNDER : - {4} THE ABOVE WRITTEN SUBMISSIONS HAVE BEEN CAREFULLY CONSIDERED. IT HAS BEEN SUBMITTED THAT THE ACCOUNTS OF THE APPELLANT'S BUSINESS HAD BEEN AUDITED BY A CHARTERED ACCOUNTANT, BUT THE RETURN WAS FILED BY THE ACCOUNTANT OF HER BUSINESS, WHO WAS NOT CONVERSANT WITH THE PROVISIONS OF INCOME TAX ACT. IT WAS SUBMITTED THAT THE EXPENSES DEBITED TO THE PROFIT & LOSS ACCOUNT WHICH WERE INADMISSIBLE WERE NOTICED BY THE COUNSEL FOR THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS, AND REVISED COMPUTATION WAS IMMEDIATELY FURNISHED. IT WAS STATED THAT THE REVISED COMPUTATION DATED 14.07.2009 WAS FILED IN RESPONSE TO THE FIRST NOTICE UNDER SECTION 142(1) WITH QUESTIONNAIRE WHICH WAS ISSUED ON 12.06.2009. IT IS ALSO POINTED OUT THAT THE ITEMS WHICH REQUIRED DISALLOWANCE WERE EVIDENT FROM THE PROFIT AND LOSS ACCOUNT, COMPRISING SUCH OBVIOUS ITEMS AS INCOME TAX OF RS.9,00,222/ - AND WEALTH TAX OF RS.87,051/ - . CERTAIN ITEMS DISALLOWED BY THE ASSESSING OFFICER SUC H AS CLUB EXPENSES OF RS.13,294/ - , AND DISALLOWANCE UNDER SECTION 14A OF RS. 9,558/ - WERE OF A DEBATABLE NATURE, NOT ATTRACTING LEVY OF PENALTY FOR CONCEALMENT OF INCOME. THE APPELLANT'S RELIANCE ON THE JUDGEMENT OF THE APEX COURT IN THE CASE OF PRICE WATE R HOUSE COOPERS PVT LTD VS CIT 348 ITR 306, IS CONSIDERED PARTICULARLY APT WHEREIN THE COURT HELD THAT PENALTY WAS NOT LEVIABLE UNDER SECTION 271(L)(C) FOR AN INADVERTENT 'SILLY' MISTAKE. THE COURT HELD THAT EVEN IN THE CASE OF A REPUTED COMPANY, WHERE THE AUDITED ACIT V MEENA T SINGH ITA NO 2387/DE L/2013 AY 2007 - 08 APPEAL AGAINST PENALTY U/S 271(1) (C) 5 ACCOUNTS FILED ALONG WITH THE RETURN CLEARLY SHOWED THAT DEDUCTION WAS NOT ALLOWABLE, BUT THE DEDUCTION WAS CLAIMED IN THE RETURN THROUGH A BONA FIDE AND INADVERTENT ERROR, THE ABSENCE OF DUE CARE DID NOT MEAN THAT THE ASSESSEE WAS GUILTY OF FURNI SHING INACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. {5} THE APPELLANT HAS FURTHER SUBMITTED THAT EVEN AFTER REVISION OF THE COMPUTATION OF INCOME, THE RESULT WAS A TOTAL LOSS, AND HENCE THERE WAS NO LOSS OF REVENUE. THE APPELLANT HAS FILED TH E COPY OF RETURN FOR THE ASSESSMENT YEAR 2009 - 10 FILED ON 31.03.2010 WHEREIN THE LOSS DETERMINED BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2007 - 08 OF RS.13,25,806/ - , COMPRISING UNABSORBED DEPRECIATION OF RS. 9,67,818/ - AND UNABSORBED BUSINESS LOSS O F RS. 3,57,988/ - HAS BEEN CARRIED FORWARD TO SUBSEQUENT YEARS AND HAS NOT BEEN SET OFF EVEN SUBSEQUENTLY, AS THE BUSINESS WAS DISCONTINUED. AFTER CONSIDERING THE ABOVE FACTS, IT IS HELD THAT THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL EVIDENCE ON RE CORD TO SHOW THAT THE MISTAKE WAS NOT BONA FIDE. THE ENTIRETY OF CIRCUMSTANCES POINTS TO THE FACT THAT THE CLAIM OF DEDUCTION OF INADMISSIBLE ITEMS WAS ON ACCOUNT OF INADVERTENT ERROR. MOREOVER, THE ITEMS OF ADDITIONS/DISALLOWANCES WERE EVIDENT FROM THE PR OFIT & LOSS ACCOUNT, AND REVISED COMPUTATION OF INCOME WAS FILED AT THE BEGINNING OF THE ASSESSMENT PROCEEDINGS. ACCORDINGLY, THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF RS. 4,34,975/ - STANDS CANCELLED. 09 . IN THIS CASE CIT (A) HAS DELETED THE PENALTY U/S 271(1) (C) OF THE ACT FOLLOWING THE DECISION OF HONOURABLE SUPREME COURT IN CASE OF PRICE WATER HOUSE COPPERS PRIVATE LIMITED V CIT [2012] 348 ITR 306 (SC) . THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT (A) IN DELETING THE PENALTY U/S 271(1 ) ( C) OF THE ACT. HENCE WE CONFIRM THE ORDER OF CIT (A). 10 . IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 . 1 2 . 2015 . - SD/ - - SD/ - (H.S.SIDHU) (PRASHA NT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 09 /1 2 / 2015 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI