Mina Ashit Patel, Baroda V. The ACIT.,Circle-2(1), Baroda

ITA 2584/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9236 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 03-03-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 19-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Keywords: Bonafide belief; Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, A HMEDABAD , (BEFORE SHRI ANIL CHATURVEDI, A.M. & SHRI KUL BHARA T, J.M.) ( , !'# $ , ! %& ) ITA NO. 2584/AHD/2011 (ASSESSM ENT YEAR: 2002-03) MINA ASHIT PATEL CHANDAN METAL COMPOUND, NEAR BIDC, GORWA, BARODA 390023 VS. THE ACIT, CIRCLE 2 (1), AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA PAN NO. ADBPP3869J (APPELLANT) (RESPONDENT) APPELLANT BY : WRITTEN SUBMISSION RESPONDENT BY : SMT. SONIA KUMAR, SR. D.R. DATE OF HEARING : 03 -03-2 016 DATE OF PRONOUNCEMENT : 09 -03-2016 ( )/ ORDER PER ANIL CHATURVEDI, ACCOUNTANT MEMBER THIS APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER OF CIT(A)-III, BARODA, DATED 10.08.2011 FOR THE ASSESSMENT YEAR 2002-03 . 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER: ITA NO.2584/AHD/11 A.Y. 2002-03 (MINA ASHIT PATEL VS. ACIT) 2 3. ASSESSEE IS AN INDIVIDUAL STATED TO BE A PARTNER IN A PARTNERSHIP FIRM AND ALSO DERIVING INCOME BY WAY OF LEASE CHARGES, MAINT ENANCE CHARGES AND INCOME FROM OTHER SOURCES. ASSESSEE FILED HER RETURN OF I NCOME FOR A.Y. 2002-03 ON 28 TH OCTOBER, 2002 DECLARING TOTAL INCOME AT RS.10,44,30 0/- AND AGRICULTURE INCOME OF RS.3,699/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER, ASSESSMENT WAS FRAMED U/S.143(3) OF THE ACT VIDE ORDER DATED 21.02 .2005 AND THE TOTAL INCOME WAS DETERMINED AT RS. 12,34,036/-, INTER ALIA, BY D ISALLOWING THE PAYMENT OF LEASE CHARGES OF RS.36,000/- AS BEING NOT ALLOWABLE U/S.2 4 OF THE ACT. ON THE AFORESAID DISALLOWANCE, A.O. VIDE ORDER DATED 12.03.2007 CONC LUDED THAT ASSESSEE HAD MADE A WRONG CLAIM OF DEDUCTION AND THEREBY HAD FILED IN ACCURATE PARTICULARS OF INCOME AND THUS COMMITTED A DEFAULT WHICH ATTRACTS PENALT Y U/S.271(1)(C) OF THE ACT. HE, ACCORDINGLY, LEVIED PENALTY OF RS.18,000/- U/S.271( 1)(C) OF THE ACT. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFO RE THE LD. CIT(A) WHO VIDE ORDER DATED 10.08.2011 (IN APPEAL NO. CAB/III-193/0 9-10) UPHELD THE LEVY OF PENALTY BY HOLDING AS UNDER: 4.2 I HAVE CONSIDERED THE CONTENTIONS OF THE A.O. AND THE SUBMISSIONS MADE BY THE APPELLANT. SO FAR AS THE SITUATION INVOLVING A WHOL LY UNJUSTIFIABLE AND LEGALLY UNSUSTAINABLE CLAIM OF DEDUCTION MADE BY THE APPELL ANT IS CONCERNED, PENALTY U/S 271(1)(C) MAY BE IMPOSABLE IF THE APPELLANT DOES NO T FILE ANY EXPLANATION FOR MAKING SUCH CLAIM OR OFFERS EXPLANATION WHICH IS FOUND BY THE A.O. TO BE FALSE OR WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SU CH EXPLANATION IS BONAFIDE. IN THESE CIRCUMSTANCES, THE AMOUNT DISALLOWED IN COMPUTING T HE TOTAL INCOME IS TO BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. 4.3 IN THE PRESENT CASE, ON THE BASIS OF ABOVE FACT S, IT IS EVIDENT THAT THE APPELLANT HAS MADE CLAIM OF DEDUCTION OF AN EXPENDITURE WHICH IS TOTALLY UNJUSTIFIABLE AND LEGALLY UNSUSTAINABLE AND AT THE SAME TIME, THE APPELLANT H AS NOT FILED ANY EXPLANATION AS TO WHY SUCH TYPES OF CLAIMS WERE MADE BY IT IN ITS RET URN OF INCOME. THE FACT THAT THE EXPENDITURE CLAIMED BY THE APPELLANT IS NOT ALLOWAB LE UNDER ANY CIRCUMSTANCES IS BEYOND DOUBT. HENCE, THE PENALTY IMPOSED BY A.O. U/ S 271(1)(C) IS CORRECT. THIS IS AS PER THE RATIO LAID DOWN IN THE FOLLOWING DECISIONS: ITA NO.2584/AHD/11 A.Y. 2002-03 (MINA ASHIT PATEL VS. ACIT) 3 (A) DECISION OF HON'BLE DELHI HIGH COURT IN THE CA SE OF ZOOM COMMUNICATION PVT. LTD. [191 TAXMAN 179(DELHI)] (B) DECISION OF ITAT, AHMEDABAD IN THE CASE OF GUJ ARAT STATE FINANCE CORPORATION LTD 39 SOT 570(AHD). IN BOTH THE DECISIONS, IT HAS BEEN HELD THAT WHEN A N APPELLANT MAKES A LEGALLY UNTENABLE AND UNSUSTAINABLE CLAIM, OF DEDUCTION, TH EN, PENALTY U/S.271(1)(C) CAN BE IMPOSED. 4. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED FOLLOWING GROUNDS: 1.0 ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING PENALTY OF RS.18,000/- IMPOSED ON DISALL OWANCE OF LEASE CHARGES TO THE TUNE OF RS.36,000/- CLAIMED AS DEDUCTION FROM HOUSE PROP ERTY INCOME. 2.0 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING FACT DETAILS AND REASONS FOR CLAIMING DEDUCTION OF CLAIM OF LEASE CHARGES WERE FURNISHING RIGHT FROM THE STAGE OF FILLING RET URN OF INCOME AND HENCE, THERE IS NEITHER CONCEALMENT OF INCOME NOR FURNISHING INACCU RATE PARTICULARS OF INCOME. 3.0 YOUR APPELLANT FURTHER SAYS AND SUBMITS THAT TH E LD. CIT(A) HAS ERRED IN NOT RELYING UPON DECISION IN CASE OF HONBLE SUPREME COURT IN THE CASE OF CIT, AHMEDABAD V/S RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158. 4.1 ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE BUT, HOWEVER, ASSESSEE HAS FILED WRITTEN SUBMISSIONS VID E LETTER DATED 25.02.2016 WITH A REQUEST TO ADJUDICATE THE MATTER ON THE BASIS OF WRITTEN SUBMISSIONS. WE, THEREFORE, PROCEED TO DISPOSE OF THE APPEAL EX PART E QUA THE ASSESSEE AND ON THE BASIS OF WRITTEN SUBMISSIONS AND MATERIAL AVAILABLE ON RECORD. 4.2 BEFORE US, LD. D.R. SUPPORTED THE ORDER OF ASSE SSING OFFICER AND LD. CIT(A). ITA NO.2584/AHD/11 A.Y. 2002-03 (MINA ASHIT PATEL VS. ACIT) 4 5. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATER IAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO LEVY OF PENA LTY U/S.271(1)(C) OF THE ACT ON THE DISALLOWANCE OF LEASE CHARGES AMOUNTING TO RS.3 6,000/- U/S.24 OF THE ACT. BEFORE US, THE ASSESSEE IN THE WRITTEN SUBMISSION I NTER ALIA SUBMITTED THAT THE CLAIM OF DEDUCTION WAS MADE UNDER BONAFIDE BELIEF T HAT SHE WAS ELIGIBLE FOR DEDUCTION OF LEASE RENT AND THAT THE CLAIM OF DEDUC TION WAS NOT WITH AN INTENTION TO AVOID TAXES AS COULD BE SEEN FROM THE FACT THAT ASSESSEE HAD DECLARED TOTAL INCOME OF RS.10,44,300/- WHILE THE AMOUNT THAT HAS BEEN DISALLOWED IS MERELY RS.36,000/-. IT WAS FURTHER SUBMITTED THAT BEFORE LD. CIT(A), ASSESSEE HAD SUBMITTED THE EXPLANATIONS WITH RESPECT TO CLAIMING OF DEDUCTION AND HAD ALSO DISCLOSED ALL THE MATERIAL FACTS AND THERE WAS NO C ONCEALMENT OF INCOME ON HER PART. THE AFORESAID FACTS HAVE NOT BEEN CONTROVERT ED BY REVENUE. FURTHER, IT IS SETTLED LAW THAT PENALTY PROCEEDINGS AND ASSESSMENT PROCEEDINGS ARE TWO INDEPENDENT PROCEEDINGS AND THE PENALTY ORDER CANNO T BE SOLELY BASED ON THE REASONS GIVEN IN THE ORIGINAL ORDER OF ASSESSMENT. FURTHER APART FROM THE FALSITY OF THE EXPLANATION GIVEN BY THE ASSESSEE, THE DEPARTME NT MUST HAVE BEFORE IT, BEFORE LEVYING THE PENALTY, COGENT MATERIAL OR EVIDENCE FR OM WHICH IT COULD BE INFERRED THAT ASSESSEE HAS CONSCIOUSLY CONCEALED THE PARTICU LARS OF HIS INCOME OR HAD DELIBERATELY FURNISHED INACCURATE PARTICULARS OF IN COME. IT IS WELL SETTLED THAT THE PARAMETERS OF JUDGING THE JUSTIFICATION FOR ADDITIO N MADE IN THE ASSESSMENT CASE OF THE ASSSESSEE IS DIFFERENT FROM THE PENALTY IMPOSED ON ACCOUNT OF CONCEALMENT OF INCOME OR FILING INACCURATE PARTICULARS OF INCOME A ND THAT CERTAIN DISALLOWANCE/ADDITION COULD LEGALLY BE MADE IN THE ASSESSMENT PROCEEDINGS ON THE PREPONDERANCE OF PROBABILITIES BUT NO PENALTY COULD BE IMPOSED U/S. 271(1)(C) OF THE ACT ON THE PREPONDERANCE OF PROBABILITIES AND R EVENUE HAS TO PROVE THAT THE CLAIM OF EXPENSES BY THE ASSESSEE WAS NOT GENUINE O R WAS INFLATED TO REDUCE ITS TAX LIABILITY. CONSIDERING THE AFORESAID FACTS AND PEC ULIAR FACTS OF THE CASE, WE ARE OF ITA NO.2584/AHD/11 A.Y. 2002-03 (MINA ASHIT PATEL VS. ACIT) 5 THE VIEW THAT IN THE PRESENT CASE NO CASE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT HAS BEEN MADE OUT. WE THUS DIRECT THE DELETION OF PENALTY U/S. 271(1)(C) OF THE ACT. THUS, THE GROUND OF ASSESSEE IS ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN OPEN COURT ON 09 - 03 - 2016 . SD- SD/- (KUL BHARAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 09/03/2016 TRUE COPY S K SINHA COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD