SMT. ABOLI JOGLEKAR, Indore V. THE ACIT 2(1), Indore

ITA 306/IND/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6155 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 08-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: N D PATWA
• Section: 143(3); 142(1); 115JB

Judgement Text

SMT. ABOLI JOGLEKAR ITA NO. 206/IND/2015 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO.306/IND/2015 A.Y.2009-10 SMT. ABOLI JOGLEKAR INDORE PAN ADRPJ 3762E ::: APPELLANT VS ASSTT.COMMR. OF INCOME TAX 2(1) INDORE ::: RESPONDENT APPELLANT BY SHRI ASHISH GOYAL AND SHRI N.D. PATWA RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 21.4.2016 DATE OF PRONOUNCEMENT 18.5.2016 O R D E R PER SHRI B.C. MEENA, AM THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LEARNED CIT(A)-I, INDORE, DATED 20.1 .2015. SMT. ABOLI JOGLEKAR ITA NO. 206/IND/2015 2 2. THE ONLY GROUND TAKEN BY THE ASSESSEE IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE PE NALTY IMPOSED U/S 271(1)(C) OF THE ACT AMOUNTING TO RS.4,92,210/-. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE INDIVIDUAL HAS FILED RETURN OF INCOME ON 30.9.2009 DECLARING TOTAL INCOME AT RS.1,39,367/-. THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS. ACCORDINGLY, NO TICE U/S 143(2) OF THE ACT FIXING THE DATE OF HEARING ON 24.9. 2010 WAS ISSUED WHICH WAS DULY SERVED UPON THE ASSESSEE BUT THE ASSESSEE SOUGHT ADJOURNMENT. AGAIN A NOTICE U/S 142(1) WAS ISSUED BUT ADJOURNMENT WAS SOUGHT. AGAIN THE CASE WAS FIXED FOR HEARING ON 5.9.2011 ON WHICH DATE TH ERE WAS NO COMPLIANCE. HOWEVER, ON 12.9.2011 THE ASSESSEE ALONG WITH SHRI VIMAL KABRA ATTENDED THE CASE AND FILED PART REPLY ALONG WITH BOOKS OF ACCOUNTS WHICH WERE TES T CHECKED. AFTER EXAMINING THE BOOKS OF ACCOUNTS SMT. ABOLI JOGLEKAR ITA NO. 206/IND/2015 3 THOROUGHLY, THE ASSESSING OFFICER MADE ADDITIONS ON ACCOUNT OF EXCESSIVE COMMISSION PAYMENTS TO RELATIVES COVERED U/S 40A(2)(B), ON ACCOUNT OF LABOUR PAYMENT AN D SUPERVISION AND INSPECTION CHARGES. THE ASSESSMENT WAS ACCORDINGLY COMPLETED BY THE ASSESSING OFFICER U/S 1 43(3) OF THE ACT ASSESSING TOTAL INCOME AT RS.39,53,500/-. O N THE BASIS OF SUCH DISALLOWANCE, THE ASSESSING OFFICER INIT IATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. THE AS SESSEE FILED WRITTEN SUBMISSIONS IN SUPPORT OF HIS CLAIM. A FTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASS ESSING OFFICER WAS OF THE VIEW THAT CONCEALMENT OF RS.14,48,1 04/- ON ACCOUNT OF EXCESSIVE COMMISSION PAYMENTS TO RELATI VES, EXCESSIVE PAYMENT FOR LABOUR, SUPERVISION AND INSPECT ION CHARGES IS ESTABLISHED. THE ASSESSING OFFICER, THEREF ORE, IMPOSED PENALTY OF RS. 4,92,210/- U/S 271(1)(C) OF T HE ACT BEING THE SUM WHICH IS NOT LESS THAN THE AMOUNT OF TA X SOUGHT TO BE EVADED BY REASON OF CONCEALMENT OF INCOM E. SMT. ABOLI JOGLEKAR ITA NO. 206/IND/2015 4 3. BEING AGGRIEVED BY THE IMPOSITION OF PENALTY, THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A) WHO CONFIRMED THE PENALTY. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PENALTY HAS BEEN LEVIED BY THE ASSESSING OFFICER ON THE DISALLOWANCE MADE U/S 40A(2)( B) OF THE ACT AND ON ESTIMATE NO PENALTY COULD BE LEVIED. IN SUPPORT OF HIS CONTENTION, THE LEARNED COUNSEL FOR T HE ASSESSEE RELIED UPON THE DECISION OF THE INDORE BENC H OF THE TRIBUNAL IN THE CASE OF M/S RUCHI FABRICS LIMITED VS. DCIT; ITA NO. 499/IND/2009 ORDER DATED 29.3.2011. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE ORDERS O F THE AUTHORITIES BELOW. 5. WE HAVE HEARD BOTH THE SIDES. AFTER GOING THROUGH THE SUBMISSIONS OF THE PARTIES, WE FIND THAT THE INDORE B ENCH OF THE TRIBUNAL IN THE CASE OF M/S RUCHI FABRICS LIMI TED SMT. ABOLI JOGLEKAR ITA NO. 206/IND/2015 5 VS. DCIT; ITA NO. 499/IND/2009 VIDE ORDER DATED 29.3.2011 OBSERVED AS UNDER :- 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. BRIEF FACTS ARE THAT THE ASSES SEE IS ENGAGED IN MANUFACTURING OF COTTON, BELTING, CANVAS S CLOTHS DISCLOSED NIL INCOME IN ITS RETURN FILED ON 27.11.2 003 AFTER SETTING OFF BROUGHT FORWARD LOSSES OF RS.4,81,757/- . THE ASSESSEE DISCLOSED TOTAL INCOME OF RS.2,58,389/- UN DER THE MAT PROVISIONS OF SEC. 115JB OF THE ACT. THE LD. AS SESSING OFFICER COMPLETED THE ASSESSMENT VIDE ORDER DATED 7 .3.2006, FRAMED U/S 143(3) OF THE ACT AT A TOTAL INCOME AT N IL, AS RETURNED BY THE ASSESSEE, AFTER SETTING OFF OF BROU GHT FORWARD LOSSES OF RS.12,02,576/-. SUBSEQUENTLY, THE ASSESSE E COMPANY PREFERRED APPEAL BEFORE THE LD. CIT(A) WHER E IT WAS PARTLY ALLOWED ON VEHICLE HIRE CHARGES, VEHICLE EXP ENSES AND TELEPHONE EXPENSES ETC. AND FULL RELIEF IN JOB WORK WAS EXTENDED TO THE ASSESSEE. THE SECOND APPEAL WAS PRE FERRED BEFORE THE TRIBUNAL. DURING THE PENDENCY OF THE APP EAL, THE LD. ASSESSING OFFICER IMPOSED PENALTY OF RS.1,10,000/- VIDE ORDER DATED 28.3.2008 WHICH IS UNDER APPEAL BEFORE THIS T RIBUNAL. THE CASE OF THE ASSESSEE IS THAT SINCE THE DISALLOW ANCE 3 WAS MADE U/S 40A(2)(B), THEREFORE, IN THE ABSENCE OF AN Y CONCEALMENT OF INCOME, NO PENALTY CAN BE LEVIED U/S 271(1)(C). UNDER THE FACTS NARRATED ABOVE, WE FIND THAT THE ASSESSEE DECLARED NIL INCOME AFTER CLAIMING CERTAIN ALLOWANCES ETC. HOWEVER, THE LD. ASSESSING OFFICER MADE CERTAIN DISALLOWANCES OUT OF THE CLAIM MADE BY THE ASSESSEE. IN SUCH A SITUATION, WE ARE OF THE VIEW THAT SINCE THE ASSESSEE NEITHER CONCEALED ITS INCOME NOR FURNISHED INACCURA TE PARTICULARS OF ITS INCOME, THEREFORE, MERELY ON THE BASIS OF DISALLOWANCE MADE U/S 40A(2)(B), NO PENALTY IS LEVI ABLE. THE ASSESSEE IS FORTIFIED BY THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE JHAVAR PROPERTIES P. LTD. (SUPRA). IT IS NOT THE CASE THAT THE ASSESSEE CONCEALED ANYTHING O R FURNISHED INACCURATE PARTICULARS. DISALLOWANCE OF E XPENSES WILL NOT PER SE TANTAMOUNT TO FURNISHING INACCURATE PARTICULAR OF SMT. ABOLI JOGLEKAR ITA NO. 206/IND/2015 6 INCOME AND MERE CLAIM OF EXPENDITURE, EVEN IF NOT A CCEPTATION TO THE REVENUE, IN ITSELF WOULD NOT ATTRACT PENALTY U/S 271(1)(C). OUR PROPOSITION IS FORTIFIED BY THE DECISION IN CIT VS. RELIANCE PETRO PRODUCTS P. LTD. (CIVIL APPEAL NO.2463 OF 201 0 DATED 17.3.2010) (SC) AND CIT VS. AJAYAB SINGH & COMPANY (253 ITR 630) (P & H). THE RATIO LAID DOWN IN HARIGOPAL SINGH VS. CIT (258 ITR 85) (P & H) FURTHER FORTIFIES THE CASE OF THE ASSESSEE. IN THE PRESENT APPEAL, THE GENUINENESS OF THE EXPENDITURE WAS NOT DOUBTED BY THE ASSESSING OFFICE R RATHER THE AMOUNT SO PAID/CLAIMED WAS RESTRICTED BY INVOKI NG THE PROVISIONS OF SEC. 40A(2)(B) OF THE ACT. THE 4 RATI O LAID DOWN IN SHANKAR GHOSH (214 ITR 349) (CAL) FURTHER FORTIFIES THE CASE OF THE ASSESSEE. THE PROVISIONS OF SEC. 40A(2) OF T HE ACT, BY ITS VERY NATURE, IS SOMETHING WHICH THE ASSESSING O FFICER HAS TO DETERMINE BY USING ITS DISCRETION, SUBJECT TO TH E LIMITATION LAID DOWN IN THE PROVISION. IT IS ALWAYS NOT POSSIB LE FOR AN ASSESSEE TO ANTICIPATE WHETHER THE ASSESSING OFFICE R WOULD INVOKE HIS DISCRETION AND SHALL MAKE A DISALLOWANCE UNDER THE SAID PROVISION. IN THE PRESENT APPEAL, NEITHER THER E IS CONCEALMENT OF INCOME NOR FURNISHING INACCURATE OF PARTICULARS, THEREFORE, NO PENALTY IS LEVIABLE U/S 271(1)(C). WE FIND THAT THE ASSESSING OFFICER HAS LEVIED THE PEN ALTY ON THE AMOUNT DISALLOWED BY HIM ON ESTIMATE. THE ASSESSI NG OFFICER HAS NOT PIN POINTED ANY SPECIFIC DISALLOWANCE PERMISSIBLE UNDER THE LAW BUT SIMPLY DISALLOWED THE SAME ON THE BASIS OF ESTIMATE. IT IS A SETTLED LAW THAT ON ESTIMATE, NO PENALTY U/S 271(1)(C) COULD BE IMPOSED. WE, THERE FORE, DELETE THE PENALTY. SMT. ABOLI JOGLEKAR ITA NO. 206/IND/2015 7 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. PRONOUNCED IN OPEN COURT ON 18 TH MAY, 2016 SD SD (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 18 TH MAY, 2016 DN/- SMT. ABOLI JOGLEKAR ITA NO. 206/IND/2015 8