Smt. Chandrikaben N.Patel, Anand V. The ACIT,Anand Circle, Anand

ITA 2943/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89237 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-03-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 28-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Assessee Lawyers: SUNIL H TALATI
• Keywords: Business income; Business expenditure; Difference of opinion
• Section: 143(3); 14A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI SHAILENDRA KR. YADAV, J.M. & SHRI ANIL CHATURVEDI, A.M.) I.T. A. NO.2942& 2943/AHD/2011 (ASSESSMENT YE AR: 2001-02 & 2002-03) SMT. CHANDRIKABEN N. PATEL 401 MILESTONE, OPP. ICY SPICY RESTAURANT ANDAND V.V. NAGAR ROAD, ANAND- 388001 V/S ASSTT. COMMISSIONER OF INCOME-TAX, ANAND CIRCLE, ANAND. (APPELLANT) (RESPONDENT) PAN: AENPP3438G APPELLANT BY : SHRI SUNIL H. TALATI, A.R. RESPONDENT BY : SHRI ROOP CHAND, SR. D.R. ( )/ ORDER DATE OF HEARING : 27-03-2015 DATE OF PRONOUNCEMENT : 10 -04-2015 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A). IV, BARODA DATED 07.09.2011 FOR A.YS. 2001-02 & 2002-03. 2. BEFORE US, BOTH THE PARTIES SUBMITTED THAT THOUGH T HE APPEALS OF THE ASSESSEES ARE OF 2 DIFFERENT ASSESSMENT YEARS BUT F ACTS AND CIRCUMSTANCES OF BOTH THE YEARS ARE SIMILAR EXCEPT FOR THE AMOUNTS A ND THE SUBMISSIONS ARE ALSO COMMON FOR BOTH THE APPEALS AND THEREFORE BOTH APPEALS CAN BE HEARD ITA NO 2942 & 2943/AHD/2011 . A.Y. 2001-02 & 2002-03 2 TOGETHER. WE THEREFORE PROCEED TO DISPOSE OF BOTH T HE APPEALS TOGETHER FOR THE SAKE OF CONVENIENCE AND THUS PROCEED WITH THE F ACTS IN A.Y. 2001-02 ( ITA NO. 2942/AHD/2011). 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 4. ASSESSEE IS AN INDIVIDUAL WHO FILED HER RETURN FOR A.Y. 2002-02 ON 30 TH JULY, 2001 DECLARING TOTAL LOSS OF RS. 29,75,720/-. THERE AFTER NOTICE WAS ISSUED U/S. 148 AND SUBSEQUENTLY THE ASSESSMENT WAS FRAMED U/S. 143(3) VIDE ORDER DATED 23.03.2005 AND THE TOTAL INCOME WAS DETERMINE D AT RS. 8,90,740/- BY MAKING DISALLOWANCES U/S. 14A, DISALLOWANCE OF SHOR T TERM CAPITAL LOSS AND DISALLOWANCE OF CLAIM OF LONG TERM CAPITAL LOSS. AG AINST THE QUANTUM ADDITION MADE BY THE A.O, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO GRANTED PARTIAL RELIEF TO THE ASSESSEE BY UPHOLDING THE DISALLOWANCE OF SHORT TERM CAPITAL LOSSES BUT ALLOWED PARTIAL RELIEF ON D ISALLOWANCE U/S. 14A. AGGRIEVED BY THE ORDER OF LD.CIT(A), THE MATTER WAS CARRIED BEFORE TRIBUNAL WHERE THE HONBLE TRIBUNAL UPHELD THE ORDER OF LD. CIT(A) WITH RESPECT TO DELETION OF DISALLOWANCE U/S. 14A BUT SET ASIDE THE ISSUE OF DISALLOWANCE OF CAPITAL GAINS TO THE FILE OF LD. CIT(A). ON THE DIS ALLOWANCES WHICH WERE CONFIRMED BY LD. CIT(A), A.O VIDE ORDER DATED 18.02 .2011 LEVIED PENALTY OF RS. 6,52,267/- U/S. 271(1)(C) OF THE ACT. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO V IDE ORDER DATED 07.09.2011 DISMISSED THE APPEAL OF THE ASSESSEE. AG GRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), ASSESSES IS NOW IN APPEAL BEFO RE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LEARNED C.I.T. (APPEALS) HAS ERRED IN CONFIRMIN G THE VIEW AND ACTION OF THE A.C.I.T. IN LEVYING PENALTY OF RS.6,52,267/- INASMU CH AS THE APPELLANT HAS NEITHER ITA NO 2942 & 2943/AHD/2011 . A.Y. 2001-02 & 2002-03 3 FILED INACCURATE PARTICULARS OF INCOME NOR CONCEALE D THE INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 RE AD WITH EXPLANATION THERETO. 2. THE LEARNED C.I.T. (APPEALS) HAS ERRED IN CONFIRMIN G THE DECISION OF A.C.I.T. THAT DISALLOWANCE OF LEGITIMATE BUSINESS EXPENDITURE IN FORM OF BANK INTEREST WHICH IS ACTUALLY PAID, IS A CONCEALMENT OF INCOME BY FURNIS HING INACCURATE PARTICULARS OF INCOME. THE LEGITIMATE BUSINESS EXPENDITURE IF DISA LLOWED DOES NOT AMOUNT TO CONCEALMENT. 3. THE LEARNED C.I.T. (APPEALS) HAS ERRED IN CONFIRMIN G THE VIEW AND ACTION OF THE A.C.I.T. THAT DIFFERENCE OF OPINION ABOUT CERTAIN I NCOME WHETHER, SHORT-TERM OR LONG- TERM LOSS AMOUNT TO CONCEALMENT OF INCOME OR FURNIS HING INACCURATE PARTICULARS OF INCOME. 4. THE LEARNED C.I.T. (APPEALS) HAS ERRED IN NOT ACCEP TING PREVIOUS YEAR ORDER OF C.I.T. (APPEALS), BARODA IN APPELLANT'S OWN CASE ON THE GR OUND THAT EACH ASSESSMENT YEAR UNDER THE ACT IS SEPARATE ASSESSMENT PERIOD AND DEC ISION IN ONE ASSESSMENT DOES NOT HOLD GOOD IN RESPECT OF THE MATTER DECIDED IN SUBSE QUENT YEAR. IT IS SUBMITTED THAT THE APPELLANT IS SAME, FACT IS SAME, SYSTEM OF WORKING IS SAME AND ALL FACTS ARE SIMILAR OF BOTH YEAR THEN THE ORDER OF PREVIOUS YEAR MUST BE T AKEN IN TO CONSIDERATION. 5. WITHOUT PREJUDICE TO THE ABOVE, THE PENALTY CALCULA TED AT 100% OF TAX EVADED IS NOT CORRECT. 6. ON THE FACTS AND LEGAL MATTER ABOVE STATED IT IS PR AYED THAT THE PENALTY ORDER BE CANCELLED AND THE APPEAL SHOULD BE ALLOWED. 7. THE ORDER PASSED BY LD. CIT(A) IS BAD IN LAW AND CO NTRARY TO THE PROVISIONS OF LAW AND FACTS. IT IS SUBMITTED THAT THE SAME BE HELD SO NOW. 5. BEFORE US, LD. A.R. SUBMITTED THAT THOUGH THE ASSES SEE HAS RAISED VARIOUS GROUNDS BUT THE ONLY ISSUE IS WITH RESPECT TO LEVY OF PENALTY U/S. 271(1)(C). 6. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND FURTHER SUBMITTED THAT ASSESSEE HAD FILE D COMPLETE DETAILS ALONG WITH THE RETURN OF INCOME IN RESPECT OF BOTH THE CL AIMS AND ALSO FILED THE ITA NO 2942 & 2943/AHD/2011 . A.Y. 2001-02 & 2002-03 4 NECESSARY DETAILS WHENEVER ASKED FOR. HE FURTHER SU BMITTED THAT THE ADDITION HAVE BEEN SUSTAINED ONLY DUE TO THE DIFFERENCE OF O PINION BETWEEN THE ASSESSEE AND THE REVENUE DEPARTMENT AND THEREFORE I T CANNOT BE TERMED AS EITHER CONCEALMENT OF INCOME OR FURNISHING INACCURA TE PARTICULARS OF INCOME AS CONTEMPLATED U/S. 271(1)(C) OF THE ACT. HE FURTH ER PLACED RELIANCE ON THE DECISION OF DELHI HIGH COURT IN THE CASE OF ACIT VS . JINDAL EQUIPMENT LEASING AND CONSULTANCY SERVICES (2011) 11 TAXMAN.C OM 309 (DEL). WITH RESPECT TO THE LONG TERM CAPITAL LOSS WHICH WAS CON SIDERED AS SHORT TERM CAPITAL LOSS BY THE DEPARTMENT, HE SUBMITTED THAT W HEN THERE IS DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE REVENUE AUTHOR ITIES IN RESPECT OF CHANGE OF HEAD OF INCOME NO PENALTY CAN BE LEVIED U /S. 271(1)(C) OF THE ACT AS IT STRICTLY NEITHER CONCEALMENT OF INCOME NOR FU RNISHING INACCURATE PARTICULARS OF INCOME. HE ALSO PLACED RELIANCE ON T HE DECISION IN THE CASE OF CIT VS. ANANT OVERSEAS PVT. LTD. (2015) 54 TAXMAN.C OM 211 (DEL) AND IN THE CASE OF CIT VS. SMT. NEENU DUTTA (2013) 35 TAXM AN.COM 454 AND THE DECISION IN THE CASE OF CIT VS. AMIT JAIN (2013) 33 TAXMAN.COM 178 (DEL). HE ALSO PLACED ON RECORD THE COPY OF THE AFORESAID DECISION. HE THEREFORE SUBMITTED THAT CONSIDERING ALL THE FACTS THE PENALT Y BE DELETED. LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O AND LD. C IT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT PENALTY U/S. 271(1)(C) HAS BEEN LEVIED ON TWO COUNTS (I) ON DISALLOWANCE U/S. 14A AND (II) ON ACCOUNT OF DISALL OWANCE OF CAPITAL LOSS. IT IS ALSO A FACT THAT DISALLOWANCE ON ACCOUNT OF SHOR T TERM CAPITAL LOSS WAS SET ASIDE BY THE CO-ORDINATE BENCH OF TRIBUNAL TO THE F ILE OF LD. CIT(A) TO DECIDE THE ISSUE AFRESH. WITH RESPECT TO THE LEVY O F PENALTY ON THE DISALLOWANCE MADE U/S. 14A, WE FIND THAT THE CO-ORD INATE BENCH OF TRIBUNAL ITA NO 2942 & 2943/AHD/2011 . A.Y. 2001-02 & 2002-03 5 IN THE CASE OF ACIT VS. JINDAL EQUIPMENT LEASING (S UPRA) HAS HELD THAT THE ALLOCATION OF EXPENSES U/S. 14A IS BESET WITH LOT O F PROBLEMS AND THE ISSUE WAS LED TO REST BY INTRODUCTION OF RULE 8D IN THE Y EAR 2008. THEREFORE EVEN IN THE ABSENCE OF ANY ATTEMPT ON THE PART OF ASSESS EE TO SEGREGATE THE EXPENDITURE, IT COULD BE SAID THAT THE QUESTION OF DISALLOWANCE AND ITS QUANTIFICATION WAS CONTENTIOUS WHICH LED TO THE INF ERENCE THAT THE DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE AUTHORITIES WAS BONA FIDE AND THEREFORE IT WAS HELD THAT LD. CIT(A) WAS RIGHT IN DELETING THE PENALTY. WITH RESPECT TO THE CHANGE IN HEAD OF INCOME WE FIND THA T IN THE CASE OF CIT VS. ANANT OVERSEAS PVT. LTD. (SUPRA), THE HONBLE HIGH COURT HAS HELD THAT WHERE ASSESSEE HAS DISCLOSED ALL PARTICULARS RELATI NG TO CAPITAL GAIN, NO PENALTY COULD BE LEVIED U/S. 271(1)(C) MERELY BECAU SE A.O TREATED SUCH CAPITAL GAIN AS BUSINESS INCOME OF THE ASSESSEE. T HE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. AMIT JAIN (SUPRA) HAS HELD THAT WHERE ASSESSEE RETURNS OF INCOME IN QUESTION AS SHORT TERM CAPITAL GAIN BUT A.O ASSESSED THE SAID INCOME AS INCOME FROM BUSINESS, PENALTY U/S. 2 71(1)(C) WAS NOT LEVIABLE. WE FURTHER FIND THAT HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. GUJARAT INSECTICIDES LTD. (2013) 35 TAXMAN.COM 313 (GUJ) HAS HELD THAT IN THE ABSENCE OF EITHER CONCEALMENT OR NON FURNISH ING PARTICULARS OF INCOME MERE FACT THAT CERTAIN ADDITIONS WERE MADE REJECTIN G ASSESSEES CLAIM IN THE COURSE OF ASSESSMENT PROCEEDINGS WOULD NOT LEAD TO IMPOSITION OF PENALTY IN THE PRESENT CASE. THE SUBMISSION OF THE ASSESSEE TH AT IT HAS FILED ALL THE DETAILS WITH RESPECT TO EXPENDITURE BEFORE THE A.O HAS NOT BEEN CONTROVERTED BY THE LD. D.R. FURTHER, FOR LEVY OF PENALTY THERE HAS TO BE EVIDENCE OR MATERIAL TO SHOW THAT THE ASSESSEE HAS DELIBERATELY FURNISHED INACCURATE PARTICULARS OF INCOME. IT ALSO A SETTLED LAW THAT P ENALTY PROCEEDINGS ARE ENTIRELY DISTINCT FROM ASSESSMENT PROCEEDINGS AND H OWSOEVER RELEVANT AND ITA NO 2942 & 2943/AHD/2011 . A.Y. 2001-02 & 2002-03 6 GOOD THE FINDINGS IN ASSESSMENT PROCEEDINGS MAY BE, THEY ARE NOT CONCLUSIVE AS FAR AS PENALTY PROCEEDINGS ARE CONSIDERED. IT I S ALSO WELL SETTLED THAT THE PARAMETERS OF JUDGING THE JUSTIFICATION FOR ADDITIO N MADE IN ASSESSMENT CASE OF AN ASSESSEE IS DIFFERENT FROM THE PENALTY IMPOSE D ON ACCOUNT OF CONCEALMENT OF INCOME OR FILING INACCURATE PARTICUL AR OF INCOME AND THAT CERTAIN DISALLOWANCES/ADDITIONS COULD LEGALLY BE MA DE IN ASSESSMENT PROCEEDINGS ON THE PREPONDERANCE OF PROBABILITIES B UT NO PENALTY COULD BE IMPOSED U/S. 271(1)(C) OF THE ACT ON THE PREPONDERA NCE OF PROBABILITIES AND THE REVENUE HAS TO PROVE THAT THE CLAIM MADE BY THE ASSESSEE WAS NOT GENUINE. IN VIEW OF THE AFORESAID FACTS AND CONSIDE RING THE DECISIONS CITED HEREINABOVE, WE ARE OF THE VIEW THAT NO PENALTY CAN BE LEVIED IN THE PRESENT CASE, WE THEREFORE DIRECT ITS DELETION. 8. IN THE RESULT, THUS THE GROUNDS OF ASSESSEE IS ALLO WED. 9. THUS THE APPEAL OF ASSESSEE IS ALLOWED. ITA NO. 2943/AHD/2011 FOR A.Y. 2002-03 . 10. IN THE PRESENT CASES, SINCE BOTH THE PARTIES HAVE A DMITTED BEFORE US THAT SINCE THE FACTS AND CIRCUMSTANCES OF THE CASE ARE IDENTIC AL TO THAT IN A.Y. 2001-02 IN ITA NO. 2942/AHD/2011, WE THEREFORE FOR THE REAS ONS STATED HEREINABOVE WHILE DECIDING THE APPEAL FOR A.Y. 2001-02 IN ITA N O. 2942/AHD/2011 (SUPRA) AND FOR SIMILAR REASONS ALLOW THE GROUNDS O F ASSESSEE IN THE PRESENT APPEAL. ITA NO 2942 & 2943/AHD/2011 . A.Y. 2001-02 & 2002-03 7 11. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE ALL OWED . ORDER PRONOUNCED IN OPEN COURT ON 10 - 04 - 2015. SD/- SD/- (SHAILENDRA KR. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH 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