Adani Properties Pvt.Ltd., Ahmedabad V. Dy.Commissioner of Income Tax,Circle-1, Ahmedabad

ITA 2518/AHD/2015

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9888 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 27-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 271(1)(c)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA.NO.2518/AHD/2015 / ASSTT. YEAR: 2008-2009 ADANI PROPERTIES P.LTD. 8 TH FLOOR, SHIKHAR NR.MITHKHALI SIX ROADS NAVRANGPURA AHMEDABAD 380 009. PAN : ABCA 3182 H VS. DCIT, CIR.1 AHMEDABAD. ( APPLICANT ) ( RESPONENT ) ASSESSEE BY : SHRI VARTIK CHOKSHI, AR REVENUE BY : SHRI KAMLESH MAKWANA, SR.DR / DATE OF HEARING : 05/12/2018 / DATE OF PRONOUNCEMENT: 10/12/2018 +,/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF LD.CIT(A)-1, AHMEDABAD DATED 31.7.2015 PASSED THE ASSTT.YEAR 200 8-09. 2. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CI T(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS.2,22,750/- WHICH WAS I MPOSED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 30.8.2008 DECLARING TOTAL LOSS AT RS.(-)30,60,97 8/-. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE H AS DEBITED A SUM OF RS.6,75,000/- ON ACCOUNT OF PAYMENT TO M/S.ADANI PO RT INFRASTRUCTURE P.LTD., ITA NO.2518/AHD/2015 2 (APIPL FOR SHORT). THE LD.AO HAS CONFRONTED THE ASSESSEE WITH REGARD TO THE ABOVE EXPENDITURE. IN RESPONSE TO THE QUERY OF THE AO, THE ASSESSEE HAS SUBMITTED REPLY VIDE LETTER DATED 17.12.2010 AND CO NTENDED THAT THE ASSESSEE WAS SHAREHOLDER OF ADANI ENTERPRISES LTD. (AEL FO R SHORT) YEARS AGO. THERE WERE CERTAIN ISSUES PENDING WITH SEBI AND AP IPL HAD INCURRED CERTAIN EXPENDITURE FOR PROFESSIONAL SERVICES RENDE RED IN THIS CONNECTION. IT RAISED A DEBIT NOTE BY THE ASSESSEE, AND ACCORDINGL Y THE ASSESSEE REIMBURSED EXPENDITURE. THE CLAIM OF THE ASSESSEE WAS NOT ALL OWED. THE AO HAS INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)( C) OF THE ACT. THE AO HAS OBSERVED THAT NO SHARES OF APIPL WERE HELD BY THE ASSESSEE IN THIS YEAR, THEREFORE, THE ASSESSEE FURNISHED INACCURATE PARTIC ULARS OF INCOME. HE FURTHER OBSERVED THAT HAD THE ASSESSMENT BEEN NOT SELECTED FOR SCRUTINY ASSESSMENT, THEN THE ASSESSEE WOULD HAVE AVOIDED PAYMENT OF TAX ON THIS AMOUNT. ACCORDINGLY, HE IMPOSED PENALTY OF RS.2,22,750/-. ON APPEAL, THE LD.CIT(A) HAS CONFIRMED PENALTY BY OBSERVING THAT THE ASSESSE E HAS FAILED TO ESTABLISH ITS CLAIM OF PROFESSIONAL SERVICES RENDERED BY APIPL WITH COGENT REASONS. 4. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. BOTH THE REVENUE AUTHORITIES HAV E RECORDED A CONTRADICTORY FINDING. THE AO HAS OBSERVED THAT SINCE THE ASSESS EE WAS NOT HOLDING SHARES OF APIPL, THEREFORE, THERE WAS NO NECESSITY TO IN CUR THIS EXPENDITURE, AND THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS. THE ASSESSEE NEVER PLEADED THAT IT WAS HOLDING SHARES OF APIPL, RATHER IT WA S HOLDING SHARES OF AEL AND DISPUTE WAS PENDING WITH REGARD TO THESE SHARES BEFORE THE SEBI. THIS WAS LOOKED AFTER BY APIPL AND THE ASSESSEE HAS RE IMBURSED EXPENSES INCURRED TOWARDS PROFESSIONAL SERVICES. NOW THE AO HAS DOUBTED THE COMPETENCY OF APIPL FOR RENDERING ANY PROFESSIONA L SERVICES IN THIS CONNECTION, BECAUSE IT WAS ENGAGED IN THE BUSINESS OF INFRASTRUCTURE ACTIVITY AND PROJECT. WHATEVER MAY BE THE SITUATION, WHERE IS QUESTION OF INACCURATE ITA NO.2518/AHD/2015 3 PARTICULARS ? THE AO MIGHT NOT CONCUR WITH THE ASSE SSEE ABOUT GENUINENESS OF THE CLAIM FOR THE REASONS THAT APIPL COULD NOT G IVE SUCH TYPE OF CONSULTANCY SERVICES. CLAIM OF THE ASSESSEE WAS TH AT THE ASSESSEE HAS MADE PAYMENT TO APIPL FOR PROFESSIONAL SERVICES IN CON NECTION WITH DISPUTE PENDING BEFORE THE SEBI. IT IS ALSO PERTINENT TO N OTE THAT THE ASSESSEE HAS DECLARED A LOSS OF RS.30 LAKHS. PENALTY IS BEING I MPOSED FOR REDUCTION OF LOSS. TO OUR MIND THE AO COULD NOT ASSIGN REASONS FOR VIS ITING THE ASSESSEE PENALTY. THE ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTI CULARS. THIS CLAIM WAS DISALLOWED FOR OTHER REASONS AND NOT ON THE GROUND THAT IT WAS MADE FALSELY. THEREFORE, WE ALLOW THIS GROUND OF APPEAL AND DELET E PENALTY. 5. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 10 TH DECEMBER, 2018 AT AHMEDABAD. S D / - (AMARJIT SINGH) ACCOUNTANT MEMBER S D / - (RAJPAL YADAV) JUDICIAL MEMBER