Dhanlabh Trading Pvt. Ltd, Ahmedabad V. The ACIT, Central Circle 1(1), Ahmedabad

ITA 2673/AHD/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4095 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 01-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Unexplained expenditure; Deemed to accrue or arise in india
• Section: 271(1)(c); 143(3); 115JB; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SHRI AMARJIT SINGH , ACCOUNTANT MEMBER AND MS. MADHUMITA ROY , JUDICIAL MEMBER DHANLABH TRADING PVT. LTD. 11, LOVE KUSH CO - OP. SOCIETY LTD. B/H YOGASHRAM SOCIETY, MANEKBAG, AHMEDABAD PAN: AACCD5948B (APPELLANT) VS THE ACIT, CIRCLE - 1 (1) , AHMEDABAD (RESPONDENT) REVENUE BY : S H RI MUDIT NAGPAL , SR. D . R. ASSESSEE BY: SHRI S.N. DIVETIA, A.R. DATE OF HEARING : 08 - 03 - 2 019 DATE OF PRONOUNCEMENT : 13 - 03 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCOUNTAN T MEMBER : - THE SOLITARY GROUND OF APPEAL OF THE ASSESSEE IS AGAINST THE DECISION OF LD. CIT(A) - 11, AHMEDABAD DATED 28 TH SEP, 2017 IN CONFIRMING THE PENALTY OF RS. 9 , 49 , 260/ - IMPOSED U/S. 271(1)(C) OF THE ACT BY THE ASSESSING OFFICER. I T A NO . 2673 / A HD/20 17 A SS ESSMENT YEAR 2011 - 12 I.T.A NO. 2673 /AHD/20 17 A.Y. 2011 - 12 PAGE NO DHANLABH TRADING PVT. LTD. VS. ACIT 2 2. THE FACT IN BR IEF IS THAT ASSESSEE HAS FILED RETURN OF INCOME ON 30 TH SEP, 2011 AND DECLARED TOTAL INCOME AT RS. 4 , 30 , 24 , 5 2 0/ - . ASSESSMENT U/S. 143(3) R.W.S 147 OF THE ACT COMPLETED ON 30 TH MAY, 2014 AND TOTAL INCOME WAS COMPUTED AT RS. 4 , 60 , 00 ,180/ - AF TER MAKING FOLL OWING ADDITIONS : - I. DISALLOWANCE OF INTEREST U/S 36(L)(III) RS. 23,37,615/ - II. DISALLOWANCE U/S I4A OF I.T. ACT RS. 1,25,046/ - III. UNEXPLAINED EXPENDITURE RS. 5,13,000/ - THE ASSESSING OFFICER HAS ALSO IN ITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT IN RESPECT OF ADDITION OF DISALLOWANCE OF INTEREST U/S. 36(1)(III) OF RS. 23,37,615/ - AND IN RESPECT OF UNEXPLAINED EXPENDITURE OF RS. 5,13,000/ - , T HE ASSESSING OFFICER HAS STATED THAT INTEREST EXPENSES CLAIMED BY THE ASSSESSEE WERE NOT FOR THE B U SINES S PURPOSE. T HE ASSESSING OFFICER HAS FURTHER STATED THAT ASSESSEE WAS UNABLE TO PROVE THAT GENUINENESS OF TH E S E EXPENDITURE, THEREFORE PENALTY U/S. 271(1)(C) WAS LEVIED TO THE AMOUNT OF RS. 9 , 49 , 260/ - . 3. AGGRIEVED ASSESSEE HAS FILED APPEAL BE FORE THE LD. CIT(A). THE LD. CIT(A) HAS SUSTAINED THE PENALTY LEVIED BY THE ASSESSING OFFICER . DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, LD. COUNSEL HAS SUBMITTED THAT REGULAR ASSESSMENT HAS BEEN FINALIZED ON THE BASIS OF BOOK PROFIT, THEREF ORE, NO PENALTY U/S. 271(1)(C) WAS ATTRACTED IN RESPECT OF ADDITION/DISALLOWANCE MADE IN NORMAL COMPUTATION OF INCOME AND HE HAS PLACED RELIANCE ON THE JUDICIAL PRONOUNCEMENT IN THE CASE OF CIT VS. VIJAY MISTRY CONSTRUCTION AND RAJKAMAL BUILDERS PVT. LTD. T AX APPEAL NO. 2224 OF 2009 DATED 23 - 03 - 2011 I.T.A NO. 2673 /AHD/20 17 A.Y. 2011 - 12 PAGE NO DHANLABH TRADING PVT. LTD. VS. ACIT 3 AND ITA NO. 2330/AHD/2015 IN THE CASE OF DCIT VS. GUJARAT URJA VIKAS NIGAM LTD. DATED 28/02/2019. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE HAS PLACED RELIANCE ON THE ORDER OF LOWER AUTHORITIES. 4. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED THE MATERIAL ON RECORD CAREFULLY. IT IS ADMITTED FACT THAT ASSESSMENT IN THE CASE OF THE ASSESSEE WAS FINALIZED ON THE BASIS OF BOOK PROFIT U/S. 115JB WHICH WAS DETERMINED AT RS. 12 , 28 , 31 , 033/ - AS AGAINST ASS ESSED INCOME 4 , 60 , 00 , 018/ - DETERMINED U/S. 1 4 3(3) R.W.S. 147 OF THE ACT. WITH THE ASSISTANCE OF LD. REPRESENTATIVES, WE HAVE GONE THROUGH THE DECISION OF JURISDICTIONAL H IGH COURT IN THE CASE OF VIJAY MISTRY CONSTRUCTION AND RAJKAMAL BUILDERS PVT. LTD WH E REIN THE DECISION OF THE ITAT I N D ELETING THE PENALTY U/S. 271(1)( C) OF THE ACT WAS UPHELD ON THE GROUND THAT THERE WAS NO IMPACT ON THE TAX LIABILITY OF THE ASSESSEE U/S. 115JB OF THE ACT. FURTHER , WE HAVE ALSO PERUSED THE DECISION OF CO - ORDINATE BENCH OF THE ITAT VIDE ITA NO. 2330/AHD/2015 IN THE CASE OF DCIT VS. GUJARAT URJA VIKAS NIGAM LTD. WHERE ON IDENTICAL FACTS THE CO - ORDINATE BENCH HAS DELETED THE PENALTY IMPOSED UNDER NORMAL PROVISION WHEN THE TAX LIABILITY HAS BEEN ASSESSED UNDER THE SPECIAL P ROVISION OF SECTION 115 OF THE ACT. THE RELEVANT PART OF THE DECISION OF CO - ORDINATE BENCH OF THE ITAT IS REPRODUCED AS UNDER: - 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. THE SHORT CONTROVERSY IN ISSUE IS WHETHER UNDER S.271(L)(C) OF THE ACT CAN BE IMPOSED ON THE ALLEGED CONCEALMENT OF INCOME BY THE ASSESSEE QUANTIFIED WITH REFERENCE TO THE AMOUNT OF TAX SOUGHT TO BE EVADED AS PER THE NORMAL PROVISIONS OF THE ACT WHERE THE TAX LIABILITY HAS ULTIMATELY ARISEN ON THE ASSESSEE AT 'DEEMED INCOME' AS PER THE SPECIAL PROVISIONS OF SECTION 115JB OF THE ACT. A REFERENCE TO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF NAIWA SONS INVESTMENTS LTD. (SUPRA) HAS BEEN MADE ON BEHALF OF THE ASSESSEE WHICH SQUARELY COVERS THE ISSUE IN FAVOUR OF T HE ASSESSEE. THE SUBSEQUENT AMENDMENT TO THE EXPLANATION (4) OF SECTION 271(L)(C) ALSO SUGGESTS THE PURPORT OF THE EXISTING PROVISIONS AS APPLICABLE IN THE RELEVANT ASSESSMENT YEAR. THEREFORE, WE FIND MERIT WITH THE APPEAL OF THE ASSESSEE. THE AO IS ACCORD INGLY DIRECTED TO DELETE THE PENALTY IMPOSED UNDER NORMAL PROVISION WHEN THE TAX LIABILITY HAS BEEN FASTENED ON THE ASSESSEE UNDER THE SPECIAL PROVISI ONS OF SECTION 115JB OF THE ACT I.T.A NO. 2673 /AHD/20 17 A.Y. 2011 - 12 PAGE NO DHANLABH TRADING PVT. LTD. VS. ACIT 4 RESPECTFULLY FOLLOWING THE DECISION OF CO - ORDINATE BENCH OF THE ITAT ON SI MILAR I SSUE AND IDENTICAL FACTS AS CITED ABOVE, WE ARE NOT INCLINED WITH THE DECISION OF LD. CIT(A), THEREFORE, THE APPEAL OF THE ASSESSEE IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C O URT ON 13 - 03 - 201 9 SD/ - SD/ - ( MADHUMITA ROY ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 13 /03 /2019 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,