West-Inn Limited, Ahmedabad V. The DCIT.,Circle-4(1)(1), Ahmedabad

ITA 2430/AHD/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1470 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 17-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S SHUKLA
• Assessee Lawyers: K C THAKOR
• Keywords: Wrong claim; Capital expenditure; Set aside
• Section: 271(1)(c)

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, VICE-PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO.2430/AHD/2018 / ASSTT. YEAR: 2011-12 WEST INN LTD HOTEL FORTUNE LANDMARK USHMANPURA, ASHRAM ROAD AHMEDABAD 380013. PAN : AAACW 3363 P VS. DCIT, C.C.4(1)(1) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI K.C. THAKOR, AR REVENUE BY : SHRI S.S.SHUKLA, SR.DR ! / DATE OF HEARING : 30/06/2021 '#$ ! / DATE OF PRONOUNCEMENT: 05/07/2021 %& / O R D E R PER RAJPAL YADAV, VICE-PRESIDENT ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A)-8, AHMEDABAD DATED 3.10.2018 PASSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 FOR THE ASSTT .YEAR 2011-12. 2. ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CI T(A) HAS ERRED IN CONFIRMING PENALTY OF RS.99,653/- IMPOSED BY THE LD.AO UNDER SECTION 271(1)(C) OF THE ACT. ITA NO.2430/AHD/2018 2 3. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD AND PERUSED THE IMPUGNED ORDER. AS THE FACTS EMERGE, IN A SCRUTINY ASSESSMENT UNDER SECTION 143( 3) OF THE ACT, THE LD.AO MADE VARIOUS ADDITIONS INCLUDING ADDITION ON ACCOUNT OF DISALLOWANCE OF SHARE CAPITAL EXPENSES. THIS ACTIO N OF THE LD.AO IN MAKING THE ADDITIONS WAS CHALLENGED BEFORE THE FIRS T APPELLATE AUTHORITY, WHO DELETED THE SAME EXCEPT DISALLOWANCE ON ACCOUNT OF SHARE CAPITAL EXPENSES INCURRED BY THE ASSESSEE FOR INCREASE OF AUTHORISED SHARE CAPITAL. THE REASON FOR DISALLOW ANCE ON ACCOUNT OF SHARE CAPITAL EXPENSES WAS THAT, THE ASSESSEE TR EATED SHARE CAPITAL EXPENDITURE AS REVENUE AND DEBITED THE SAME TO THE PROFIT & LOSS ACCOUNT. ACCORDING TO THE LD.AO THIS EXPEND ITURE WAS NOT ALLOWABLE AS PER THE PROVISIONS OF LAW, AS THE SAME WAS CAPITAL IN NATURE. THIS ADDITION WAS CONFIRMED BY THE ASSESSE E LD.CIT(A). THE LD.AO INITIATED PENALTY UNDER SECTION 271(1)(C) OF THE ACT QUA THE SHARE CAPITAL EXPENDITURE, FOR FURNISHING INACC URATE PARTICULARS OF INCOME AND IMPOSED PENALTY OF RS.99,653/- BEING 100% OF TAX SOUGHT TO BE EVADED. THIS WAS CONFIRMED BY THE FI RST APPELLATE AUTHORITY BY HOLDING THAT THE ASSESSEE HAS MADE PAT ENTLY A WRONG CLAIM, WHICH COULD NOT BE SAID TO BE A BONA FIDE MISTAKE. AGGRIEVED ASSESSEE IS NOW BEFORE THE TRIBUNAL. 4. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES OF THE CASE, WE FIND THAT THE ISSUE ON HAND IS ABOUT TREAT MENT OF THE EXPENDITURE AS TO WHETHER REVENUE OR CAPITAL. THE ASSESSEE HAS GIVEN ALL THE MATERIAL FACTS TO THE COMPUTATION OF TOTAL INCOME, AND FURNISHED DETAILS AND EXPLANATION WITH REGARD T O THE CLAIM OF EXPENDITURE INCURRED FOR INCREASE OF SHARE CAPITAL, AND NOTHING WAS CONCEALED OR FURNISHED INACCURATE. IT IS SETTL ED LAW THAT ITA NO.2430/AHD/2018 3 MERELY BECAUSE ASSESSEE CLAIMED EXPENDITURE AS REVE NUE, WHICH WAS HELD AS CAPITAL BY THE ASSESSING OFFICER, PENAL TY FOR CONCEALMENT COULD NOT BE IMPOSED, MORE SO WHEN THER E IS NO FINDING BY THE REVENUE AUTHORITIES THAT THERE IS A CONSCIOUS AND DELIBERATE ATTEMPT BY THE ASSESSEE EITHER BY CONCEA LMENT OF INCOME OR BY FURNISHING INACCURATE PARTICULARS OF I NCOME FOR EVADING TAXES. THE DETAILS AND EXPLANATION GIVEN B Y THE ASSESSEE BONA FIDE, BUT WAS NOT APPRECIATED BY THE REVENUE AUTHORITIES . SIMPLY BECAUSE A PARTICULAR AMOUNT OF EXPENDITURE I S NOT ALLOWABLE, THE SAME CANNOT BE SAID THAT INACCURATE PARTICULARS HAD BEEN FILED SO AS TO VISIT THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. NO MALA FIDE CAN BE ATTRIBUTABLE TO THE ASSESSEE IN TREATING THE IMPUGNED EXPENDITURE AS REVENUE INSTEAD OF CAPITAL IN NATURE. THEREFORE, WE ARE OF THE VIEW THAT THIS IS NOT A FIT CASE WHERE T HE PROVISIONS OF SECTION 271(1)(C) IS ATTRACTED FOR LE VY OF PENALTY, AND THUS WE DELETE THE IMPUGNED PENALTY, AND SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES PASSED UNDER SECTION 271(1) (C) OF THE ACT. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 5 TH JULY, 2021. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) VICE-PRESIDENT AHMEDABAD; DATED 05/07/2021 %& '() *%)$ / COPY OF THE ORDER FORWARDED TO :