Alpex Exports Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 239/DEL/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5786 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 12-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHMA NEB
• Keywords: Depreciation; Additional evidence; Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDEN T & SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.-239/DEL/2015 ( ASSESSMENT YEAR: 2011-12) ALPEX EXPORTS PVT. LTD. B-79, SHIVALIK, NEAR MALVIYA NAGAR BUILDING NEW DELHI PAN : AABCA0842N VS ACIT CIRCLE-1(1) NEW DELHI ASSESSEE BY SH. SUDESH GARG, ADV. REVENUE BY MS. ASHMA NEB, SR. DR ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER DATED 16.10.2014 PASSED BY THE LD. CIT(A)-IV, NEW DELHI F OR ASSESSMENT YEAR 2011-12 WHEREIN, VIDE THE IMPUGNED ORDER, THE LD. CIT(A) HAS CONFIRMED PENALTY OF RS. 3,44,000/- IMPOSED U/S 271 (1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT). 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD SHOWN INCOME FROM RENT OF PROPERTY AT JASOLA, NEW DELHI A S INCOME FROM HOUSE PROPERTY AND HAD CLAIMED DEPRECIATION OF RS. 10,10,103/- AT DATE OF HEARING 28.06.2018 DATE OF PRONOUNCEMENT 28.06.2018 2 ITA N O. 239/DEL/2015 THE RATE OF 10% OF THE WRITTEN DOWN VALUE OF THE HO USE. THE ASSESSEE HAD CLAIMED AND HAD BEEN ALLOWED DEDUCTION U/S 24 O F THE ACT AT THE RATE OF 30% OF THE ANNUAL VALUE. THE CLAIM OF DEPRE CIATION WAS REJECTED BY THE ASSESSING OFFICER AS THE ASSESSEE H AD ALSO CLAIMED DEDUCTION AT THE RATE OF 30% U/S 24 OF THE ACT IN T HE COMPUTATION OF THE INCOME. THE ASSESSEE ACCEPTED THE ASSESSMENT OR DER AND DID NOT FILE ANY APPEAL. THEREAFTER, THE AO IMPOSED THE PEN ALTY OF RS. 3,44,000/- FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE AO NOTED THAT HAD THE ASSESSEES CASE NOT BEEN TAKEN U P FOR SCRUTINY, THERE WOULD HAVE BEEN A REVENUE LOSS FOR THE GOVERN MENT. THE ASSESSEES APPEAL BEFORE THE LD. CIT (A) WAS ALSO R EJECTED. NOW THE ASSESSEE HAS APPROACHED THE ITAT AND HAS CHALLENGED THE CONFIRMATION OF PENALTY BY RAISING THE FOLLOWING GR OUNDS OF APPEAL:- 1. THE LD. CIT(A)-IV, NEW DELHI HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE PENALTY UNDER SECTION 271(1)( C) OF THE INCOME TAX ACT, 1961 OF RS. 3,44,000/-. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT CONSIDERING ALL THE RELEVANT FACTS OF THE MATTER AN D HAS FURTHER ERRED BY INCORRECTLY INTERPRETING EXPLANATI ON-1 OF SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAD CLAIMED DEPRECIATION DUE TO INADVERTENT ERROR A ND THE BONA FIDES OF THE ASSESSEE WERE NOT UNDER DOUBT AT ALL. IT WAS SUBMITTED THAT THE 3 ITA N O. 239/DEL/2015 ASSESSEE WAS NOT LIABLE FOR PENALTY BECAUSE THERE W AS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME AND ALL THE RELEVA NT DETAILS WERE DISCLOSED IN THE COMPUTATION OF INCOME/RETURN OF IN COME. RELIANCE WAS PLACED ON THE JUDGMENT OF THE HONBLE APEX COUR T IN THE CASE OF PRICE WATERHOUSE COOPERS PVT. LTD. REPORTED IN 348 ITR 306 (SC). 4. IN RESPONSE, THE LD. SR. DEPARTMENTAL REPRESENT ATIVE PLACED RELIANCE ON THE CONCURRENT FINDINGS OF BOTH THE LOW ER AUTHORITIES AND SUBMITTED THAT THE ASSESSEE WAS TRYING TO GAIN EXTR A TAX ADVANTAGE BY CLAIMING DOUBLE DEDUCTION. RELIANCE WAS PLACED ON T HE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ZOOM COMMUNICATION PVT. LTD. IN ITA NO. 07/2010 WHEREIN IT WAS HELD BY THE HONBLE DELHI HIGH COURT THAT IN CASE OF FAILUR E OF THE ASSESSEE TO OFFER ANY EXPLANATION OR WHERE THE EXPLANATION FURN ISHED BY HIM IS FOUND FALSE, PENALTY MAY BE IMPOSED. 5. WE HAVE HEARD THE RIVAL SUBMISSION AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. THE FACTS OF THE CASE ARE NOT I N DISPUTE. THE HONBLE SUPREME COURT, IN THE CASE OF HINDUSTAN STE EL LTD. V. STATE OF ORISSA 83 ITR 26 (SC), HAD LAID DOWN THE POSITION O F LAW BY HOLDING THAT THE ASSESSING OFFICER IS NOT BOUND TO LEVY PEN ALTY AUTOMATICALLY SIMPLY BECAUSE THE QUANTUM ADDITION HAS BEEN SUSTAI NED. ALSO IN CASE OF CIT V. KHODAY ESWARA (83 ITR 369) (SC), INC IDENTALLY REPORTED IN SAME ITR VOLUME, IT IS HELD THAT PENALTY CANNOT BE LEVIED SOLELY ON 4 ITA N O. 239/DEL/2015 BASIS OF REASONS GIVEN IN ORIGINAL ORDER OF ASSESSM ENT. THE HONBLE SUPREME COURT HAS REITERATED THE LAW IN CASE OF DI LIP N. SHROFF V. JT. CIT [2007] 291 ITR 519 BY HOLDING IN PARA 62 THAT F INDING IN ASSESSMENT PROCEEDINGS CANNOT AUTOMATICALLY BE ADOP TED IN PENALTY PROCEEDINGS AND THE AUTHORITIES HAVE TO CONSIDER TH E MATTER AFRESH FROM DIFFERENT ANGLE. THE STATUTE REQUIRES A SATIS FACTION ON THE PART OF THE ASSESSING OFFICER. HE IS REQUIRED TO ARRIVE AT A SATISFACTION SO AS TO SHOW THAT CONCEALED THE AMOUNT OR FURNISHED INACCUR ATE PARTICULARS AND THIS ONUS IS TO BE DISCHARGED BY THE DEPARTMENT . WHILE CONSIDERING WHETHER THE ASSESSEE HAS BEEN ABLE TO D ISCHARGE HIS BURDEN THE ASSESSING OFFICER SHOULD NOT BEGIN WITH THE PRESUMPTION THAT HE IS GUILTY. SINCE THE BURDEN OF PROOF IN PEN ALTY PROCEEDINGS VARIES FROM THAT IN THE ASSESSMENT PROCEEDINGS, A F INDING IN THE ASSESSMENT PROCEEDINGS THAT A PARTICULAR RECEIPT IS INCOME CANNOT AUTOMATICALLY BE ADOPTED, THOUGH A FINDING IN THE A SSESSMENT PROCEEDINGS CONSTITUTES GOOD EVIDENCE IN THE PENALT Y PROCEEDINGS. IN THE PENALTY PROCEEDINGS THE AUTHORITIES MUST CONSID ER THE MATTER AFRESH AS THE QUESTION HAS TO BE CONSIDERED FROM A DIFFERENT ANGLE. IT IS IMPORTANT TO KEEP IN MIND THE FUNDAMENTAL LEGAL PROPOSITION THAT ASSESSMENT PROCEEDINGS ARE NOT CONCLUSIVE. ASSESSME NT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT. FINDINGS IN ASSESSMENT PROCEEDINGS DONT OPERATE AS RES JUDICATA IN PENALTY 5 ITA N O. 239/DEL/2015 PROCEEDINGS. FOR THIS PROPOSITION RELIANCE IS PLACE D ON THE DECISION IN CIT VS. DHARAMCHAND L. SHAH (1993) 204 ITR 462 (BOM ). IN VIJAY POWER GENERATORS LTD VS. ITO (2008)6 DTR 64 (DEL) I T WAS HELD THAT IT IS WELL SETTLED THAT THOUGH THEY CONSTITUTE GOOD EV IDENCE DO NOT CONSTITUTE CONCLUSIVE EVIDENCE IN PENALTY PROCEEDIN GS. DURING PENALTY PROCEEDINGS, THERE HAS TO BE REAPPRAISAL OF THE VER Y SAME MATERIAL ON THE BASIS OF WHICH THE ADDITION WAS MADE AND IF FUR THER MATERIAL IS ADDUCED BY THE ASSESSEE IN THE COURSE OF THE PENALT Y PROCEEDINGS, IT IS ALL THE MORE NECESSARY THAT SUCH FURTHER MATERIAL S HOULD ALSO BE EXAMINED IN AN ATTEMPT TO ASCERTAIN WHETHER THE ASS ESSEE CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS. THU S, UNDER PENALTY PROCEEDINGS ASSESSEE CAN DISCHARGE HIS BURDEN BY RE LYING ON THE SAME MATERIAL ON THE BASIS OF WHICH ASSESSMENT IS M ADE BY CONTENDING THAT ALL NECESSARY DISCLOSURES WERE MADE AND THAT ON THE BASIS OF MATERIAL DISCLOSED THERE CANNOT BE A CASE OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME. FURTHER IF THERE IS ANY MATERIAL OR ADDITIONAL EVIDENCE WHICH WAS NOT PRODUCED DURING ASSESSMENT PROCEEDINGS SAME CAN BE PRODUCED IN PENALTY PROCEEDINGS AS BOTH ASSESSMENT AND PENALTY PROCEEDI NGS ARE DISTINCT AND SEPARATE. IN CIT VS. M/S SIDHARTHA ENTERPRISES (2009) 184 TAXMAN 460 (P&H)(HC) IT WAS HELD THAT THE JUDGMENT IN DHARMENDRA TEXTILE CANNOT BE READ AS LAYING DOWN THAT IN EVERY CASE WHERE 6 ITA N O. 239/DEL/2015 PARTICULARS OF INCOME ARE INACCURATE, PENALTY MUST FOLLOW. EVEN SO, THE CONCEPT OF PENALTY HAS NOT UNDERGONE CHANGE BY VIRTUE OF THE SAID JUDGMENT. PENALTY IS IMPOSED ONLY WHEN THERE IS SOM E ELEMENT OF DELIBERATE DEFAULT. 5.1 REVERTING TO THE FACTS OF THE PRESENT CASE, THE PENALTY ORDER IS WOEFULLY SILENT ON THE ISSUE AS TO HOW THIS SATISFA CTION OF CONCEALMENT WAS ARRIVED AT. THE QUANTUM ADDITION ON WHICH THE P ENALTY HAS BEEN IMPOSED PERTAINS CLAIM OF DEPRECIATION ON BUILDING ON WHICH 30% DEDUCTION HAD ALSO BEEN U/S 24. THE LD. CIT (A) HAS ALSO NOT EXAMINED THE ISSUE IN DETAIL BUT HAS SIMPLY CONFIRM ED THE PENALTY BY RELYING ON THE FINDINGS OF THE AO. HOWEVER, THERE I S NO FINDING BY THE AUTHORITIES BELOW ON THE ISSUE AS TO HOW THE FURNI SHING OF INACCURATE PARTICULARS OF INCOME HAS COME TO BE ESTABLISHED S O AS TO WARRANT IMPOSITION OF PENALTY. IN THE INSTANT CASE IT CANNO T BE SAID THAT THE ASSESSEE WITHHELD ANY RELEVANT INFORMATION REGARDIN G THE CLAIM OF DEPRECIATION FROM THE AO. THE AMOUNT OF DEPRECIATIO N DISALLOWED WAS THE AMOUNT DISCLOSED BY THE ASSESSEE ITSELF. WITH R EGARD TO THE PROVISIONS OF SECTION 271(1)(C ) OF THE ACT PERTAIN ING TO PENALTY, THE HONBLE APEX COURT HAS AUTHORITATIVELY LAID DOWN TH AT MAKING OF A CLAIM BY THE ASSESSEE WHICH IS NOT SUSTAINABLE WILL NOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. IN CIT VS. RELIA NCE PETROPRODUCTS 7 ITA N O. 239/DEL/2015 PVT. LTD. 322 ITR 158 (SC), THE HONBLE APEX COURT HAS HELD AS FOLLOWS: 1. A GLANCE AT THIS PROVISION WOULD SUGGEST THAT IN ORDER TO BE COVERED, THERE HAS TO BE CONCEALMENT OF PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY , THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE PRESENT IS NOT A CASE OF CONCEALMENT OF INCOME. THAT IS NOT THE CASE OF THE REVENUE EITHER. HOWEVER , THE LD. COUNSEL FOR THE REVENUE SUGGESTED THAT BY MAKIN G INCORRECT CLAIM FOR THE EXPENDITURE ON INTEREST, TH E ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. AS PER LAW LEXICON, THE MEANING OF THE WORD 'PARTICULAR' IS A DETAIL OR DETAILS (IN PLURAL SENSE); THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACCOUNT. THEREFORE, THE WORD 'PARTICULARS' USED IN THE SECTION 271 (1) (C) WOULD EMBRACE THE MEANING OF THE DETAILS OF THE CLAIM MADE. IT IS AN ADMITTED POSITION IN THE PRESENT CASE THAT NO INFOR MATION GIVEN IN THE RETURN WAS FOUND TO BE INCORRECT OR IN ACCURATE. IT IS NOT AS IF ANY STATEMENT MADE OR ANY DETAIL SU PPLIED WAS FOUND TO BE FACTUALLY INCORRECT. HENCE, AT LEAS T, PRIMA FACIE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNIS HING INACCURATE PARTICULARS. THE LEARNED COUNSEL ARGUED THAT 'SUBMITTING AN INCORRECT CLAIM IN LAW FOR THE EXPEN DITURE ON INTEREST WOULD AMOUNT TO GIVING INACCURATE PARTICUL ARS OF SUCH INCOME.' WE DO NOT THINK THAT SUCH CAN BE THE INTERPRETATION OF THE CONCERNED WORDS. THE WORDS AR E PLAIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESSEE TO THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO N, THE PENALTY PROVISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNO T TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. 5.2 ALTHOUGH, BOTH THE LOWER AUTHORITIES HAVE HELD THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS, ON A CONSIDER ATION ON THE FACTS, SUCH A VIEW IS NOT TENABLE IS THE PRESENT APPEAL. T HEREFORE, 8 ITA N O. 239/DEL/2015 RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) WE DELETE THE PENALTY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.06.2018 SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRI VASTAVA) PRESIDENT JUDICIAL ME MBER DATED: 28.06.2018 *BR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT, NEW DELHI