INDER SATPAL ARORA, MUMBAI V. DCIT 8(3), MUMBAI

ITA 2528/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7629 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 18-02-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 20-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K ATRI
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Salary income
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI B. RAMAKO TAIAH ,(AM) ITA NO.2528/MUM/2009 ASSESSMENT YEAR : 2005-06 MR. INDER SATPAL AURORA FLAT NO.41, MYKTANGAN CHS SAROJINI NAIDU ROAD SANTACRUZ (W) MUMBAI-400 054. ..( APPELLANT ) P.A. NO. (AADPA 1516 G) VS. DY. COMMISSIONER OF INCOME TAX -8(3) MUMBAI. ..( RESPONDENT ) APPELLANT BY : SHRI K. GOPAL AND SHRI JITENDRA SINGH RESPONDENT BY : SHR I A.K. ATRI O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 13.1.2009 PASSED BY THE LD. CIT(A) FOR TH E ASSESSMENT YEAR 2005-06. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, DERIVES INCOME FROM SALARY, RENT, SALARY/RE MUNERATION AS PARTNER, COMPENSATION AND INCOME FROM OTHER SOURCES. HE F ILED RETURN DECLARING TOTAL INCOME AT RS.15,41,200/-. DURING THE COURSE OF ITA NO.2528/M/09 A.Y:05-06 2 ASSESSMENT IT WAS OBSERVED BY THE AO THAT THE ASSESSEE HAS PURCHASED AUDIO MUSICAL SYSTEM FOR RS.2,21,261/-. THE AO AFTER CONSIDERING ASSESSEE'S REPLY ADDED THE AMOUNT OF RS.2,21,26 1/- AS PERQUISITES IN THE HANDS OF THE ASSESSEE. BESIDES THIS, IT WAS ALSO OBSERVED BY THE AO THAT THE WITHDRAWALS SHOWN BY THE A SSESSEE FOR HOUSEHOLD EXPENSES ARE INADEQUATE. THE AO AFTER CONSID ERING ASSESSEE'S EXPLANATION ADDED RS.3,68,000/- U/S.69 OF THE A CT AND ACCORDINGLY COMPLETED ASSESSMENT AT AN INCOME OF RS.21,30,46 0/- VIDE ORDER DT. 30.11.2007 PASSED U./S.143(3) OF THE IT ACT, 1961 (THE ACT). WHILE MAKING ASSESSMENT THE AO ALSO INITIATED PENA LTY PROCEEDING U/S.271(1)(C) OF THE ACT. ACCORDINGLY THE AO ISSUED NOTICE TO SHOW CAUSE AS TO WHY PENALTY SHOULD NOT BE IMP OSED. IN RESPONSE IT WAS INTERALIA STATED BY THE ASSESSEE THAT THE PAYMENT OF AUDIO MUSICAL SYSTEM WAS MADE BY THE COMPANY AND ACCOUNTED IN THE BOOKS OF THE COMPANY. AT THE TIME OF FILING OF RETUR N OF INCOME IT WAS NOT DECIDED WHETHER ASSESSEE WOULD BACK THE SAME TO THE OF FICE OR NOT. UNDER THESE CIRCUMSTANCES THE ASSESSEE HAS NOT OFFERED T HE SAME AS PERQUISITES IN HIS HANDS. WITH REGARD TO LOW HOU SEHOLD EXPENSES IT WAS EXPLAINED BY THE ASSESSEE THAT THE ADDITI ON WAS MADE ON ACCOUNT OF PURE ASSUMPTION AND THE ASSESSEE HAS NOT INTEN DED TO CONCEAL ANY INCOME AND TO PROVIDE ANY INACCURATE PARTICUL ARS OF INCOME AND HENCE, IT WAS PRAYED TO DROP THE PENALTY. HO WEVER, THE AO ITA NO.2528/M/09 A.Y:05-06 3 DID NOT ACCEPT THE ASSESSEES EXPLANATION. HE WAS OF THE V IEW THAT THE ACT OF THE ASSESSEE WAS NOT BONAFIDE AND HENCE, THE ASSESSEE IS LIABLE TO PENALTY U/S.271(1)(C) OF THE ACT AND ACCORDINGLY HE I MPOSED PENALTY OF RS.1,98,350/- VIDE ORDER DATED 22.5.2008 PASSED U/S. 271(1)(C) OF THE ACT. ON APPEAL, THE LD. CIT(A) WHILE RELYING O N THE RATIO OF THE DECISION IN UNION OF INDIA VS. DHARMENDRA TEXTILE PRO CESSORS (2008) 306 ITR 277(SC) AND ITO VS. R.K. BROTHERS (2003) 187 ITD 649 (ALL.) HELD THAT THE AO WAS JUSTIFIED IN IMPOSING PENALTY U /S.271(1)(C) OF THE ACT AND ACCORDINGLY DISMISSED THE APPEAL. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SU STENANCE OF PENALTY OF RS.1,98,350/- IMPOSED U/S.271(1)(C) OF THE A CT. 4. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSE SSEE WHILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE TH E AO AND THE CIT(A) FURTHER SUBMITS THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS AND ALSO EXPLAINED, DURING THE COURSE OF ASSESSMENT PROCEED ING AS WELL AS PENALTY PROCEEDING, THE JUSTIFICATION FOR NON INCLUSION OF THE EXPENSES INCURRED BY THE COMPANY FOR PURCHASE OF THE MUSICA L SYSTEM AND THE ADDITION FOR LOW WITHDRAWAL HAS BEEN MADE O N ACCOUNT OF PURE CONJECTURES, SURMISES AND SUSPICIONS. HE, THEREFORE, SU BMITS THAT THERE IS NO CONCEALMENT ON THE PART OF THE ASSESSEE A ND HENCE, ITA NO.2528/M/09 A.Y:05-06 4 THE PENALTY IMPOSED BY THE AO AND SUSTAINED BY THE LD . CIT(A) BE DELETED. THE RELIANCE WAS ALSO PLACED IN THE CASE OF CI T VS. HARYANA WAREHOUSING CORPORATION (2009) 314 ITR 215(P&H) AND K ANBAY SOFTWARE INDIA(P.) LTD. VS. DCIT (2009) 31 SOT 153(P UNE). 5. ON THE OTHER HAND THE LD. DR SUPPORTS THE ORDER OF THE AO AND THE LD. CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS SE TTLED LAW THAT PENALTY UNDER SECTION 271(1)(C) IS A CIVIL LIABILITY AN D THE REVENUE IS NOT REQUIRED TO PROVE WILLFUL CONCEALMENT AS HELD BY T HE HONBLE SUPREME COURT IN CASE THE OF UNION OF INDIA VS. DHARM ENDRA TEXTILES AND PROCESSORS (2008) 306 ITR 277(SC). HOWEVER, EACH AND EVERY ADDITION MADE IN THE ASSESSMENT CANNOT AUTOMATICALLY LEAD TO LEVY OF PENALTY FOR CONCEALMENT OF INCOME. A CASE FOR IMPOSITION OF PENALTY HAS TO BE EXAMINED IN TERMS OF THE PROVISIONS OF EXPLAN ATION 1 TO SECTION 271(1)(C). SECONDLY, IT IS ALSO A SETTLED LEGAL POSITION THAT PENALTY PROCEEDINGS ARE DIFFERENT FROM ASSESSMENT PROCEEDI NGS. THE FINDING GIVEN IN THE ASSESSMENT THOUGH IS A GOOD EVIDENCE BUT THE SAME IS NOT CONCLUSIVE IN PENALTY PROCEEDINGS AS HELD BY T HE HONBLE SUPREME COURT IN THE CASE OF ANANTHARAM VEERASINGHAIAH & CO. VS. CIT (1980) 123 ITR 457 (SC). ITA NO.2528/M/09 A.Y:05-06 5 7. IN THE INSTANT CASE WE FIND THAT THERE IS NO DISPUTE THAT THE AO HAS IMPOSED PENALTY ON THE ADDITION OF PURCHASE OF AUD IO MUSICAL SYSTEM FOR RS.2,21,261/- AND ADDITION ON ACCOUNT OF LOW HOUSEHOLD EXPENSES. WITH REGARD TO THE PURCHASE OF AUDIO MUSICAL SY STEM WE FIND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT W AS EXPLAINED BY THE ASSESSEE THAT THE SAME WAS PURCHASED FROM BOSE CORPO RATION INDIA PVT. LTD. ON 26.9.2004 THROUGH CREDIT CARD AND THE PAYMENT OF THE SAME WAS ACCOUNTED FOR IN THE BOOKS OF THE COMPANY. HOWEVER, IT WAS ADDED IN THE ASSESSMENT ON THE GROUND THAT THE SAME I S A PERQUISITE IN THE HANDS OF THE ASSESSEE U/S.17(2)(IV) OF T HE ACT. WITH REGARD TO THE IMPOSITION OF PENALTY IN RESPECT OF LOW HOUSE HOLD EXPENSES WE FIND THAT THERE IS NO DISPUTE THAT THE ADD ITION IN THIS REGARD WAS MADE ON ESTIMATE BASIS WITHOUT BRINGING ANY POSITIVE MATERIAL ON RECORD. IT IS REPEATEDLY HELD BY THE COUR TS THAT WHEN THE FACTS ARE CLEARLY DISCLOSED IN THE RETURN OF INCOME PENAL TY CAN NOT BE LEVIED. MERELY BECAUSE AN AMOUNT IS NOT ALLOWED OR T AXED TO INCOME, IT CANNOT BE SAID THAT THE ASSESSEE HAD FILED INACCURATE PA RTICULARS OR CONCEALED ANY INCOME CHARGEABLE TO TAX. EVEN IF SOME DE DUCTION OR BENEFIT IS CLAIMED BY THE ASSESSEE WRONGLY BUT BONAFIDE AND NO MALAFIDE CAN BE ATTRIBUTED, THE PENALTY WOULD NOT BE LEVIED. THIS BEING SO AND KEEPING IN VIEW THAT THE ASSESSEES EXPLANATION W AS NOT FOUND TO BE FALSE OR UNTRUE, WE RESPECTFULLY FOLLOWING THE R ATIO OF THE ITA NO.2528/M/09 A.Y:05-06 6 DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE H OLD THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THERE IS NO CONCEALM ENT ON THE PART OF THE ASSESSEE AND ACCORDINGLY THE PENALTY IMPOSED B Y THE AO AND CONFIRMED BY THE LD. CIT(A) IS DELETED. THE GROUN DS TAKEN BY THE ASSESSEE ARE, THEREFORE, ALLOWED. 8. IN THE RESULT THE ASSESSEES APPEAL STANDS ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 8.3.2010. SD/- SD/- ( B. RAMAKOTAIAH ) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 8.3.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 2.3.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 3.3.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 8.3.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 9.3.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER