The DCIT, Circle-1, Surat V. M/s. Himson International Pvt.Ltd., Surat

ITA 2493/AHD/2009

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6969 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-12-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 28-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: M K PATEL
• Keywords: Depreciation; Difference of opinion; Revenue expenditure; Capital expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD 0 0 , 0 0 , BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI N.S. SAINI , ACCOUN TANT MEMBER ./ ITA NO . 2243 /AHD/ 20 09 [ [ / ASSESSMENT YEAR : 2004 - 05 HIMSON INTERNATIONAL PVT LTD 701 - 706, CENTRE POINT, RING ROAD, SURAT PAN : AAACN 7828 A VS THE DCIT, CIRCLE - 1, SURAT ./ ITA NO . 2493 /AHD/ 2009 [ [ / ASSESSMENT YEAR : 2004 - 05 THE D CIT, CIRCLE - 1, SURAT VS HIMSON INTERNATIONAL PVT LTD PAN : AAACN 7828 A / (APPELLANT) / (RESPONDENT) ASSESSEE(S) BY : SHRI M.K. PATEL , AR REVENUE BY : SMT. SONIA KUMAR, SR. DR. / DATE OF HEARING : 01 / 12 /2014 / DATE OF PRONOUNCEMENT: 12 / 12 /2014 / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) - I, SURAT DATED 3 0 .0 6 .200 9 IN ASSESSMENT YEAR 2004 - 05. ITA NOS. 2243 & 2493 /AHD/20 09 HIMSON INTERNATIONAL P LTD - AY 2004 - 05 (PENALTY) - 2 - 2. WE FIRST TAKE UP THE ASSESSEES APPEAL. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C) ON CONF IRMATION OF DISALLOWANCE OUT OF FOREIGN TRAVELLING EXPENDITURE OF RS.9,73,072/ - . 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, IN THE RELEVANT ASSESSMENT YEAR, THE ASSESSING OFFICER DISALLOWED RS.19,46,144/ - CLAIMED BY THE ASSESSEE ON ACCOUNT OF FOREIGN TRAVELING EXPENDITURE FOR WANT OF TICKETS AND OTHER RELEVANT VOUCHERS. 4. IN THE QUANTUM APPEAL, THE CIT(A) REDUCED THE DISALLOWANCE TO RS.9,73,072/ - AND DELET ED THE BALANCE DISALLOWANCE OF RS.9,73,072/ - . THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) IN RESPECT OF DISALLOWANCE CONFIRMED BY THE CIT(A) OF RS.9,73,072/ - . 5. ON APPEAL, AGAINST THE SAID PENALTY ORDER, THE CIT(A) CONFIRMED THE LEVY OF PENALTY U/S 271(1)(C) ON THE GROUND THAT NECESSARY SUPPORTING BILLS AND VOUCHERS COULD NOT BE PRODUCED BY THE ASSESSEE AND THE EXPENDITURE FOR BUSINESS COULD HAVE BEEN LESSER AMOUNT. 6. THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFORE US AGAINST THE ABOVE CONFIR MATION OF LEVY OF PENALTY. 7. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE CONTENDED BEFORE US THAT THE GENUINENESS OF FOREIGN TRAVEL EXPENDITURE IS SUBSTANTIATED BY THE PASSPORT OF THE DIRECTORS WHO UNDERTOOK THE TRAVEL AND FOR PURCHASE OF FOREIGN CUR RENCY THE RELEVANT MATERIALS WERE PRODUCED BEFORE THE LOWER AUTHORITIES. THE DISALLOWANCE IN THE ITA NOS. 2243 & 2493 /AHD/20 09 HIMSON INTERNATIONAL P LTD - AY 2004 - 05 (PENALTY) - 3 - QUANTUM APPEAL WAS MADE MERELY BECAUSE OF ABSENCE OF VOUCHERS AND THEREFORE, THE LEVY OF PENALTY U/S 271(1)(C) WAS NOT JUSTIFIED. 8. WE FIND THAT THE DISALL OWANCE OF EXPENDITURE IN QUESTION WAS MADE BECAUSE OF INABILITY OF THE ASSESSEE TO SUBSTANTIATE ITS CLAIM BY PRODUCING NECESSARY SUPPORTING VOUCHERS. HOWEVER, THE GENUINENESS OF FOREIGN TRAVEL EXPENDITURE IS NOT IN DOUBT AND IT IS ALSO NOT IN DOUBT THAT FO REIGN TRAVEL EXPENDITURE S WERE UNDERTAKEN TO THE COUNTRIES WITH WHICH THE ASSESSEE HAD BUSINESS TRANSACTIONS. 9. IN OUR CONSIDERED VIEW, THE CONSIDERATIONS WHICH APPLY IN A PENALTY PROCEEDING ARE QUITE DISTINCT AND DIFFERENT FROM THE CONSIDERATIONS WHICH APPLY IN AN ASSESSMENT PROCEEDINGS. THE DISALLOWANCE OF EXPENDITURE MAY BE JUSTIFIED BECAUSE OF INABILITY OF THE ASSESSEE TO SUBSTANTIATE THE SAME BUT THAT ITSELF DOES NOT EMPOWER THE REVENUE TO LEVY PENALTY U/S 271(1)(C) UNLESS IT IS SHOWN THAT THE EXPLA NATION FURNISHED BY THE ASSESSEE WAS UNTRUE OR NOT BONA FIDE. 10. WE FIND THAT IN THE INSTANT CASE, NO POSITIVE MATERIAL WAS BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE EXPENDITURE CLAIMED WAS ACTUALLY FALSE OR BOGUS. PENALTY U/S 271(1)(C) CANNOT B E LEVIED ONLY ON THE BASIS OF PROBABILITY. THEREFORE, THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING PENALTY U/S 271(1)(C) IN RESPECT OF DISALLOWANCE OF RS.9,73,072/ - ON THE GROUND THAT THE EXPENDITURE FOR BUSINESS PURPOSES COULD HAVE BEEN LESSER. OUR VIEW FI NDS SUPPORT FROM THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD., [2010] 322 ITR 158 (SC), WHEREIN IT WAS HELD THAT WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOU ND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY U/S 271(1)(C). A ITA NOS. 2243 & 2493 /AHD/20 09 HIMSON INTERNATIONAL P LTD - AY 2004 - 05 (PENALTY) - 4 - MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSE SSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. THEREFORE, WE DELETE THE LEVY OF PENALTY U/S 271(1)(C) IN RESPECT OF DISALLOWANCE OF EXPENSES OUT OF FOREIGN TRAVEL EXPENDITURE. THEREFORE, THE APPEAL OF THE ASSESS EE IS ALLOWED. 11. NOW WE TAKE UP THE REVENUES APPEAL. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE CIT(A) ERRED IN DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) ON DISALLOWANCE OF TECHNICAL CONSULTANCY CHARGES OF RS.34,16,25 0/ - . 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE CIT(A) DELETED THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT IN RESPECT OF DISALLOWANCE OF TECHNIC AL CONSULTANCY CHARGES OF RS.34,16,250/ - ON THE GROUND THAT THE SAID EXPENDITURE WHETHER REVENUE OR CAPITAL IN NATURE WAS A MATTER OF DIFFERENCE OF OPINION ONLY. 13. THE DEPARTMENTAL REPRESENTATIVE, BEFORE US, ARGUED THAT AS THE CAPITAL EXPENDITURE WAS CLAIMED AS REVENUE EXPENDITURE AND THEREFORE, LEVY OF PENALTY U/S 271(1)(C) OUGHT NOT TO HAVE BEEN DELETED. 14. WE FIND THAT THE GENUINENESS OF THE EXPENDITURE IS NOT IN DOUBT. NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE ASSESSEE HAS CONCEALE D ANY PARTICULARS OF INCOME OR HAS FURNISHED ANY INACCURATE PARTICULARS OF INCOME IN THIS RESPECT. ON THE BASIS OF PARTICULARS FURNISHED IN RESPECT OF EXPENSE IN QUESTION, IT WAS ITA NOS. 2243 & 2493 /AHD/20 09 HIMSON INTERNATIONAL P LTD - AY 2004 - 05 (PENALTY) - 5 - INFERRED THAT THE SAME WAS CAPITAL IN NATURE AND ONLY DEPRECIATION WAS ALLOWA BLE TO THE ASSESSEE. 15. THE CLAIM OF THE ASSESSEE WAS THAT IT WAS A REVENUE EXPENDITURE AS NO TANGIBLE ASSET WAS ACQUIRED BY THE ASSESSEE BY INCURRING THE SAID EXPENDITURE. 16. IN THE ABOVE FACTS, IN OUR CONSIDERED VIEW, THE OPINION OF CIT(A) THAT THE DISALLOWANCE WAS BECAUSE OF DIFFERENCE OF OPINION AND THEREFORE, PENALTY U/S 271(1)(C) CANNOT BE SUSTAINED IS JUSTIFIED. WE, THEREFORE, CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY , THE 12 TH OF DECEMBER , 2014 AT AHMEDABAD. SD/ - SD/ - ( G.C. GUPTA ) VICE PRESIDENT ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 12 / 12 /2014 * BIJU T , PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - I, SURAT 5. , , / DR, ITAT, AHMEDABAD 6. [ / GUARD FILE . / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD