M/s. Abinav Engineers Pvt. Ltd, New Delhi V. ITO, New Delhi

ITA 2824/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9716 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 1996-1997
• Appeal Filed On: 11-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRATIMA KAUSHIKSR
• Assessee Lawyers: M L VASHIST
• Keywords: Depreciation; Additional evidence
• Section: 271(1)(c); 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `B : NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NOS.2824 & 2825/DEL./2009 (ASSESSMENT YEARS : 1996-97 & 99-2000) M/S ABHINAV ENGINEERS PVT. LTD., VS. ITO, WARD 1( 1), FLAT NO.B(GF), G-17E, NEW DELHI. SOUTH EXTENSION, PART-II, NEW DELHI. (PAN/GIR NO.AAACA2138A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M.L. VASHIST REVENUE BY : MS. PRATIMA KAUSHIK,SR.DR ORDER PER K.D. RANJAN: AM THESE APPEALS BY THE ASSESSEE FOR ASSESSMENT YEA RS 1996-97 & 1999-2000, ARISE OUT OF SEPARATE ORDERS OF CIT(A)-IV, NEW DELHI. TH ESE APPEALS WERE HEARD TOGETHER AND FOR THE SAKE OF CONVENIENCE ARE DISPOSE BY THIS CO MMON ORDER. I.T.A.NO.2824/DEL./2009 2. THE ONLY ISSUE FOR CONSIDERATION IN THIS APPEAL RELATES TO CONFIRMING THE PENALTY OF RS.40,000 U/S 271(1)(C) ON ACCOUNT OF DISALLOWANCE OF RS.1 LAKH RELATING TO CONSULTANCY CHARGES PAID TO SHRI J.N. CHAUDHARY DURING THE FINA NCIAL YEAR ENDED ON 31.3.1996. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE ORDE R U/S 143(3) READ WITH SECTION 147 WAS PASSED BY THE ASSESSING OFFICER ON 31.3.2004. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD NOT PERFORMED ANY BUSINESS ACTIVITY. THE ONLY SOURCE O F INCOME AS PER P&L A/C WAS IN NATURE OF OTHER INCOME. THE ASSESSEE CLAIM EXPENSE S OF RS.6,34,296. ACCORDING TO ASSESSING OFFICER, THE ASSESSEE WAS ASKED TO PRODUC E BOOKS OF ACCOUNT ALONG WITH SUPPORTING BILLS AND VOUCHERS FOR VERIFICATION AND WAS ALSO ASKED TO FURNISH BANK STATEMENT. BUT, THE ASSESSEE HAS NOT BEEN ABLE TO COMPLY WITH THE REQUIREMENT OF I.T.A. NOS.2824 & 2825/DEL./2009 (A.YS. : 1996-97 & 1999-2000) 2 PRODUCING BOOKS OF ACCOUNT ALONG WITH THE SUPPORTIN G BILLS AND VOUCHERS AND FAILED TO FURNISH THE BANK STATEMENT FOR THE RELEVANT PERIOD. THE ASSESSING OFFICER, THEREFORE, DISALLOWED THE CLAIM OF RS.6,34,296 ON THE GROUND T HAT THE ASSESSEE HAD FAILED TO PRODUCE THE BILLS AND VOUCHERS IN SUPPORT OF THE EXPENSES A ND ALSO THE BANK STATEMENT FOR THE RELEVANT PERIOD. THE ASSESSEE CHALLENGED THE ADDIT IONS BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS). THE COMMISSIONER OF INCOME-T AX (APPEALS) IN VIEW OF THE FACT THAT ASSESSEE HAD DISCONTINUED THE BUSINESS, IT WAS NOT ENTITLED FOR DEPRECIATION. HE ACCORDINGLY ENHANCED THE INCOME ASSESSED BY THE ASS ESSING OFFICER. ON FURTHER APPEAL BEFORE THE TRIBUNAL, THE APPEAL FILED BY THE ASSESS EE WAS DISMISSED VIDE ORDER DATED 29.7.2005. 3. DURING THE COURSE OF PENALTY PROCEEDINGS, SHOW C AUSE NOTICE WAS ISSUED TO THE ASSESSEE. IT WAS SUBMITTED BY THE ASSESSEE THAT MI SCELLANEOUS APPLICATION BEFORE THE TRIBUNAL WAS FILED WHICH WAS PENDING AND, THEREFORE , THE ASSESSING OFFICER WAS REQUESTED TO KEEP THE PENALTY PROCEEDINGS IN ABSENC E TILL THE DISPOSAL OF M.A.. THIS CONTENTION OF THE ASSESSEE WAS REJECTED. THE ASSES SING OFFICER, THEREFORE, PROCEEDED TO IMPOSE PENALTY ON AN AMOUNT OF RS.6,34,290, SOUGHT TO BE EVADED. 4. ON APPEAL, THE COMMISSIONER OF INCOME-TAX (APPE ALS) NOTED THAT OUT OF THE CLAIM OF RS.6,34,296, THE DEPRECIATION OF RS.87,152 WAS DEBITED IN THE BOOKS OF ACCOUNT. THEREFORE, THE DISALLOWANCE OF EXPENSES WAS ONLY IN RESPECT OF RS.5,47,144. SINCE THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNT, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS HELD TO BE JUSTIFIED. AT THE TIME OF P ENALTY PROCEEDINGS, THE ASSESSEE HAD NOT FURNISHED ANY EXPLANATION AS TO WHY PENALTY SHOULD NOT BE IMPOSED. THE COMMISSIONER OF INCOME-TAX (APPEALS) FURTHER NOTED THAT DURING T HE COURSE OF MISCELLANEOUS PROCEEDINGS, ADDITIONAL EVIDENCE WAS MOVED BY THE A SSESSEE TO PROVE THAT AFTER LULL PERIOD OF ABOUT SIX YEARS, ASSESSEE CARRIED ON BUSINESS AN D EARNED PROFIT OF RS.1,21,250. THE ITAT ADMITTED ADDITIONAL EVIDENCE AND RESTORED THE MATTER BACK TO THE FILE OF COMMISSIONER OF INCOME-TAX (APPEALS) WITH THE DIREC TIONS TO HEAR THE ASSESSEE AND ITO ON ADDITIONAL EVIDENCE AND PASS A FRESH ORDER IN AC CORDANCE WITH LAW. 5. THE COMMISSIONER OF INCOME-TAX (APPEALS) THEREA FTER EXAMINED THE ISSUE IN THE LIGHT OF DIRECTIONS OF ITAT. THE COMMISSIONER OF I NCOME-TAX (APPEALS) ACCEPTED THE I.T.A. NOS.2824 & 2825/DEL./2009 (A.YS. : 1996-97 & 1999-2000) 3 CLAIM OF THE ASSESSEE THAT BUSINESS WAS NOT DISCONT INUED AND IT WAS ONLY TEMPORARY LULL. ACCORDINGLY, IT WAS HELD THAT DEPRECIATION HAD TO B E ALLOWED. THEREFORE, THE ACTION OF THE ASSESSING OFFICER IN ALLOWING THE DEPRECIATION WAS FOUND CORRECT IN PRINCIPLE IN CHANGED CIRCUMSTANCES IN VIEW OF NEW EVIDENCES OF CONTINUAN CE OF BUSINESS HAVING BEEN FILED. AS REGARDS NEW ASSET ADDED DURING THE YEAR WHEN BUS INESS WAS UNDER TEMPORARY LULL, THE DEPRECIATION COULD NOT BE ALLOWED ON THIS ADDITION AS NO BUSINESS HAD BEEN CONDUCTED DURING THE YEAR. THE ASSESSING OFFICER WAS ACCORDI NGLY DIRECTED TO VERIFY THE DEPRECIATION CLAIMED AND ALLOW THE DEPRECATION AS P ER LAW. AS REGARDS THE EXPENSES OF RS.5,47,144, IT WAS FOUND THAT EXCEPT CONSULTANCY C HARGES OF RS.1 LAKH, THE ASSESSEE COULD JUSTIFY THE LIABILITY OF THE CLAIM. ACCORDIN GLY, THE AMOUNT OF RS.1 LAKH WAS HELD NOT ALLOWABLE. 6. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E LD.CIT(A), IT WAS SUBMITTED THAT ASSESSING OFFICER HAD IMPOSED PENALTY ON QUANT UM DISALLOWANCE OF RS.6,34,296 ON THE GROUND THAT NO EXPLANATION WAS FURNISHED BY THE ASSESSEE. HOWEVER, THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS OF THE VIE W THAT CLAIM OF EXPENDITURE OF RS.1 LAKH WAS NOT ALLOWABLE AND HAS NOT FURNISHED ANY EX PLANATION AND, HENCE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME TO THE E XTENT OF CLAIM OF RS.1 LAKH. THE COMMISSIONER OF INCOME-TAX (APPEALS), THEREFORE, CO NFIRMED THE PENALTY ON INCOME OF RS.1 LAKH. 7. BEFORE US, LD.AR OF THE ASSESSEE SUBMITTED THAT THE CONSULTANCY CHARGES WERE PAID TO SHRI J.N. CHAUDHARY AND, THEREFORE, THE PEN ALTY WAS NOT IMPOSABLE. ON THE OTHER HAND, LD.SR.DR SUPPORTED THE ORDER OF THE COMMISSI ONER OF INCOME-TAX (APPEALS). 8. WE HAVE HEARD BOTH THE PARTIES AND HAVE GONE THR OUGH THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER HAS IMPOSED THE PENA LTY ON THE ENTIRE AMOUNT OF ADDITION OF RS.6,34,296. THE DISALLOWANCE OF RS.6,34,296 WA S MADE ON THE GROUND THAT NO BUSINESS WAS CARRIED ON BY THE ASSESSEE. HOWEVER, ADDITIONAL EVIDENCE FILED BEFORE THE TRIBUNAL WAS ADMITTED AND ON EXAMINATION OF THE AD DITIONAL EVIDENCE, THE COMMISSIONER OF INCOME-TAX (APPEALS) HAD FOUND THAT IT WAS A TEM PORARY LULL. THEREFORE, THE EXPENDITURE WAS ALLOWABLE EXCEPT THE PAYMENT MADE T O SHRI J.N. CHAUDHARY AT RS.1 LAKH ON ACCOUNT OF CONSULTANCY CHARGES. THE DISALLOWANC E OF RS.1 LAKH PAID AS CONSULTANCY I.T.A. NOS.2824 & 2825/DEL./2009 (A.YS. : 1996-97 & 1999-2000) 4 CHARGES WAS MADE ON THE GROUND THAT NO BUSINESS ACT IVITY WAS CARRIED OUT BY THE ASSESSEE. THE ASSESSEE HAD NOT GIVEN ANY EXPLANATION AS TO WH Y THE PAYMENT HAS MADE AND NO EXPLANATION AT ALL WAS FURNISHED DURING THE COURSE OF PENALTY PROCEEDINGS. THEREFORE, THE CLAIM MADE BY THE ASSESSEE IS NOT BONA FIDE AND HAS NOT BEEN ABLE TO SUBSTANTIATE WITH EVIDENCE. ACCORDINGLY, IN OUR CONSIDERED OPINION, THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS JUSTIFIED IN UPHOLDING THE PENALTY IN RESPECT OF CONSULTANCY CHARGES PAID BY THE ASSESSEE. I.T.A. NO.2825/DEL./2009 9. AS REGARDS THIS APPEAL FOR ASSESSMENT YEAR 1999- 2000, THE FACTS ARE IDENTICAL TO THE FACTS OF THE ASSESSMENT YEAR 1996-97. IN THIS YEAR, THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS UPHELD THE PENALTY IN RESPECT OF DISA LLOWANCE OF CONSULTANCY CHARGES PAID AT RS.29,321. SINCE THE FACTS OF THE CASE ARE IDEN TICAL TO THE FACTS FOR ASSESSMENT YEAR 1996-97 AND SINCE THE ASSESSEE HAS NOT JUSTIFIED TH E CLAIM OF DEDUCTION ON ACCOUNT OF PROFESSIONAL FEES, IN OUR CONSIDERED OPINION, THE C OMMISSIONER OF INCOME-TAX (APPEALS) WAS JUSTIFIED IN UPHOLDING THE PENALTY IN THIS YEAR ALSO. HENCE, NO INTERFERENCE IN THE ORDER OF LD.CIT(A) IS CALLED FOR. 10. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E FOR BOTH THE YEARS ARE DISMISSED. 11. ORDER PRONOUNCED IN OPEN COURT ON 18.09.2009. (RAJPAL YADAV) (K.D. RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: SEP. 19 , 2009. *SKB* COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A)-III, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. AR/ITAT