Mohan Tiwari, New Delhi V. ACIT, New Delhi

ITA 2500/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53467 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 08-12-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 13-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Assessee Lawyers: S K SAPRA; SACHIN SAPRA
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NO.2500/DEL/2011 ASSESSMENT YEAR : 2004-05 MOHAN TIWARI, CB-173, NARAINA, RING ROAD, NEW DELHI. PAN : AAFPT4970K VS. ACIT, CIRCLE 8 (1), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.K. SAPRA, CA & SHRI SACHIN SAPRA, CA REVENUE BY : SHRI R.S. NEGI, SR. DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT (A) DATED 21 ST FEBRUARY, 2011 FOR ASSESSMENT YEAR 2004-05. THE GROUNDS OF APPEAL READ AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -XI, NEW DELHI HAS ERRED IN SUSTAINING THE PENALTY OF RS.2,07,7 39/- IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. I MPUGNED ORDER IS AGAINST SPECIFIC PROVISIONS OF INCOME TAX A CT AND VARIOUS JUDICIAL ORDERS. 2. CONCEALMENT PENALTY HAS BEEN IMPOSED ON TWO ESTIMAT ED ADDITIONS, NAMELY, (I) ON ACCOUNT OF LOW WITHDRAWALS AN AMOUNT OF ` ITA NO.2500/DEL/2011 2 50,000/- WHICH HAS BEEN ADDED; AND (II) AN ADDITION OF ` 5,79,511/- BY MAKING PART DISALLOWANCE OF DEDUCTION U/S 80HHC. 3. THE ASSESSEE IS A PROPRIETOR OF TWO CONCERNS, NAMELY, M/S NATURAL TEXTILES COLLECTIONS AND M/S PIONEER OVERSEAS EN GAGED IN THE BUSINESS OF EXPORT OF GARMENTS, ETC. FROM THE PROFIT & LOSS ACCOUNT AND BALANCE SHEET IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD SHOWN PROFIT OF ` 27,83,522/- FROM M/S NATUR AL TEXTILES COLLECTIONS AND LOSS OF ` 18,25,577/- FROM M/S PIONEER OVERSEAS. THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80HHC OF ` 8,44,056/- AS PER FORM NO.10CCAAC FILED ALONG WITH THE RETURN OF INCOME AN D WHILE COMPUTING SUCH DEDUCTION U/S 80HHC THE ASSESSEE HAD IGNORED THE LOSS OF ` 18,25,577/- PERTAINING TO M/S PIONEER OVERSEAS. THE A SSESSEE WAS REQUIRED TO EXPLAIN AS TO WHY DEDUCTION U/S 80HHC SHOU LD NOT BE CALCULATED ON THE BASIS OF PROFIT DERIVED FROM EXPORT OF GOODS AND VIDE LETTER DATED 11 TH SEPTEMBER, 2006 IT WAS SUBMITTED THAT BOTH THE UNITS ARE SEPARATE AND DISTINCT BUSINESS AND NOT CONNECTED WI TH EACH OTHER. THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSE SSEE AND FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC HE HAS CO NSIDERED THE LOSS OF THE OTHER UNIT AND THEREBY THE DEDUCTION WAS A LLOWED ONLY TO THE EXTENT OF ` 2,64,545/- AGAINST THE CLAIM OF THE ASSESSEE OF ` 8,44,056/- AND, IN THIS MANNER, AN ADDITION OF ` 5,7 9,511/- WAS MADE. 4. SO FAR AS IT RELATES TO THE ADDITION OF ` 50,000/- , IT HAS BEEN NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD SHOWN WITHDRAWALS OF ` 10,000/- PER MONTH FOR HIS HOUSEHOLDS. THE ASSESSEE WAS REQUIRED TO JUSTIFY THE SAME. VIDE LETTER DATED 5 TH SEPTEMBER, 2006, IT WAS SUBMITTED THAT THE FATHER OF THE ASSESSEE HA D AGRICULTURAL LAND IN VILLAGE PIPRA SHUKLA IN DISTRIT DEORIA (UP) FROM WHICH THERE WAS SUBSTANTIAL INCOME AND HOUSEHOLD EXPENSES ARE MADE FROM THE SAID INCOME. IN THE ABSENCE OF ANY EVIDENCE FILED IN SUPP ORT OF SUCH ITA NO.2500/DEL/2011 3 CONTENTION AN AFFIDAVIT WAS FILED BY THE ASSESSEE AND W HICH HAS BEEN CONSIDERED BY THE ASSESSING OFFICER AS SELF-SUPPORTING DOCU MENTS. THE ASSESSING OFFICER HAS ADDED A SUM OF ` 50,000/- TO THE IN COME OF THE ASSESSEE. BOTH THESE ADDITIONS HAVE BEEN CONFIRMED IN AP PEAL. 5. DURING THE COURSE OF PENALTY PROCEEDINGS, IT WAS TH E CASE OF THE ASSESSEE THAT THE ASSESSEE HAD SUBMITTED ALL THE PARTICULARS RELATING TO CLAIM U/S 80HHC. ACCORDING TO THE INTERPRETATION OF THE ASSESSEE BOTH THE UNITS WERE DISTINCT AND SEPARATE, THEREFORE, THE L OSS IN ONE UNIT COULD NOT BE CONSIDERED FOR ALLOWABILITY OF DEDUCTIO N U/S 80HHC WITH RESPECT PROFIT OF ANOTHER UNIT. THUS, IT WAS SUBMITTED THAT CONCEALMENT PENALTY CANNOT BE LEVIED. SO AS IT RELATES TO ADDITI ON OF ` 50,000/-, IT WAS SUBMITTED THAT NECESSARY SOURCE OF HOUSEHOLD EXPENSES WERE EXPLAINED. THUS, IT WAS SUBMITTED THAT IT IS NOT A FIT CASE WHERE PENALTY SHOULD BE LEVIED. THE ASSESSING OFFICER HAS TURNED DOWN THE PLEA OF THE ASSESSEE ON THE GROUND THAT DEDUCTION U/S 80HHC CANN OT BE ALLOWED IN RESPECT OF LOSS. HE OBSERVED THAT IN THE CASE OF THE ASSESSEE THERE WERE BROUGHT FORWARD LOSS, BUT THE LOSS WAS TAKEN AT NIL AND DEDUCTION U/S 80HHC WAS CLAIMED. THUS, IT IS A CASE OF TAX PLANNING WHICH LANDS THE CASE OF THE ASSESSEE IN THE TERRITORY OF TAX EVASION. HOWEVER, THE ASSESSING OFFICER DID NOT MAKE ANY OBSERVAT IONS REGARDING THE CONTENTION OF THE ASSESSEE ON THE ADDITIO N MADE ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWALS. 6. LEARNED CIT (A) HAS UPHELD THE PENALTY PROCEEDING S. THE ASSESSEE IS AGGRIEVED, HENCE, IN APPEAL. 7. AFTER NARRATING THE FACTS, IT IS THE CASE OF THE LE ARNED AR THAT IT IS NOT A CASE WHERE THE ASSESSEE HAS CONCEALED THE PARTICULA RS OF HIS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, BUT, IT WAS SUBMITTED THAT THE CLAIM OF THE ASSESSEE WAS BASED ON AUDIT REPORT FURNISHED ALONG WITH THE RETURN OF INCOME. A LL THE NECESSARY ITA NO.2500/DEL/2011 4 FACTS WERE DISCLOSED AND THE PENALTY HAS BEEN IMPOSED SIM PLY FOR THE REASON THAT THE CLAIM OF THE ASSESSEE WAS DENIED ON THE B ASIS OF HONBLE SUPREME COURT DECISION. THUS, IT WAS PLEADED THAT THE PENALTY HAS WRONGLY BEEN CONFIRMED BY THE CIT (A). IT WAS SUB MITTED BY THE LEARNED AR THAT WITH REGARD TO ADDITION OF ` 50,000 /- EVEN THE ASSESSING OFFICER DID NOT COMMENT IN THE PENALTY ORDER AS AGAINST THAT IT IS THE CASE OF THE ASSESSEE THAT HOUSEHOLD EXPENSES OF TH E ASSESSEE WERE FULLY EXPLAINED. TO SUPPORT HIS CONTENTION THE LEARNED AR RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CA SE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (SC) T O CONTEND THAT FOR LEVY OF CONCEALMENT PENALTY ASSESSEE MUST BE FOUND TO HA VE FAILED TO PROVE THAT HIS EXPLANATION IS NOT ONLY BONA FIDE, BUT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS INCOME WERE ALSO NOT DISCLOSED BY HIM. IT WAS FURTHER HELD T HAT THE EXPLANATION MUST BE PROVIDED BY FINDING AS TO HOW AN IN WHAT MANNER THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF HIS I NCOME. HE SUBMITTED THAT LATER ON HONBLE DELHI HIGH COURT ON THIS VERY PROPOSITION IN THE DECISION IN THE CASE CIT VS. SUMANGA L OVERSEAS LTD. DELIVERED ON 18 TH NOVEMBER, 2011 IN ITA NO.174 OF 2011 HAS DELETED THE PENALTY BY FOLLOWING THE AFOREMENTIONED DECISION OF HONBLE SUPREME COURT. HE SUBMITTED THAT COPY OF THIS ORDER IS PACED AT PAGES 63-65 OF THE PAPER BOOK. 8. ON THE OTHER HAND, THE LEARNED DR CONTENDED THAT THE PENALTY HAS RIGHTLY BEEN UPHELD BY THE CIT (A). THE ADDITIO NS WERE UPHELD IN THE APPEALS AND LEARNED DR RELIED UPON THE DECISION O F HONBLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. DHARM ENDRA TEXTILE PROCESSORS AND OTHERS 14 DTR (SC) 114. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. IT IS UNDISPUTED THAT ALL THE PARTICULARS ITA NO.2500/DEL/2011 5 RELATING TO THE CLAIM MADE BY THE ASSESSEE U/S 80HHC WER E FURNISHED BY THE ASSESSEE ALONG WITH THE RETURN ITSELF. THE CLAIM OF THE ASSESSEE WAS SUPPORTED BY THE FORM 10CCAAC FILED ALONG WITH TH E RETURN AND THIS FACT HAS BEEN RECOGNIZED BY THE ASSESSING OFFICER HI MSELF IN THE ASSESSMENT ORDER. IT IS NOT EVEN THE CASE OF THE ASSESSING O FFICER THAT ANY MATERIAL FACT WAS NOT DISCLOSED BY THE ASSESSEE WHICH WAS REQUIRED TO COMPUTE THE INCOME OF THE ASSESSEE. KEEPIN G IN VIEW THIS FACT IN MIND AND THE PROPOSITION OF LAW LAID DOWN IN THE AFOREMENTIONED DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SUMANGAL OVERSEAS LTD. (SUPRA) IN WHICH THEIR LORDSH IPS HAVE RELIED UPON THE DECISION OF CIT VS. RELIANCE PETRO PRODUCTS P VT. LTD. (SUPRA), WE FIND THAT IT IS NOT A FIT CASE WHERE LEVY OF PENAL TY CAN BE HELD JUSTIFIED ON ACCOUNT OF EXCESS CLAIM OF THE ASSESSEE REGAR DING 80HHC. 10. SO AS IT RELATES TO ANOTHER ADDITION OF ` 50,000/ - , WE HAVE CAREFULLY GONE THROUGH THE PENALTY ORDER. IT WAS SUB MITTED TO THE ASSESSING OFFICER THAT THE ASSESSEE HAD EXPLAINED THE ALLEG ED LOW WITHDRAWAL. THE ASSESSING OFFICER DID NOT MAKE ANY COM MENTS ON SUCH SUBMISSION OF THE ASSESSEE. MOREOVER, THIS ADDITION I S MADE ON ESTIMATE BASIS ONLY. THEREFORE, ON THIS ADDITION LEVY OF CONCEALMENT PENALTY IS NOT JUSTIFIED ACCORDING TO THE FACTS OF THE CASE. 11. SO FAR AS IT RELATES TO THE DECISION RELIED UPON B Y THE LEARNED DR, THE SAME HAS NO APPLICATION TO THE FACTS OF THE CASE AS IT HAS BEEN FOUND THAT THE CASE OF THE ASSESSEE DOES NOT FALL WITHIN THE PURVIEW OF SECTION 271(1)(C) AS IT IS NEITHER A CASE OF CONCEALME NT OF PARTICULARS OF INCOME NOR IT IS A CASE WHERE THE ASSESSEE HAS FURNISHED IN ACCURATE PARTICULARS OF HIS INCOME. THEREFORE, THE PROVISIONS O F SECTION 271(1)(C) ARE NOT APPLICABLE AND THE PENALTY SUSTAINE D BY LEARNED CIT (A) IS DELETED. ITA NO.2500/DEL/2011 6 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS AL LOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 16.12.20 11. SD/- SD/- [K.D. RANJAN] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 16.12.2011. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES