ACIT, Chandigarh V. M/s International Institute of Neuro Sciences and Oncology Ltd., Chandigarh

ITA 31/CHANDI/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8553 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-12-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 08-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Depreciation; Tax effect
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.1243/CHD/2012 (ASSESSMENT YEAR : 2006-07) M/S INTERNATIONAL INSTITUTE OF VS. THE D.C.I.T., NEURO SCIENCES & ONCOLOGY LIMITED, CIRCLE 4(1), SCO 18-19, SECTOR 34A, CHANDIGARH. CHANDIGARH. PAN: AAACI3572N AND ITA NO.31/CHD/2013 (ASSESSMENT YEAR : 2006-07) THE D.C.I.T., VS. M/S INTERNATIONAL INSTITUTE OF CIRCLE 4(1), NEURO SCIENCES & ONCOLOGY LIMITED, CHANDIGARH. SCO 18-19, SECTOR 34A, CHANDIGARH. PAN: AAACI3572N (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY JAIN DEPARTMENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 18.12.2015 DATE OF PRONOUNCEMENT : 21.01.2016 O R D E R PER RANO JAIN, A.M . : BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEAL S), 2 CHANDIGARH DATED 18.10.2012 FOR ASSESSMENT YEAR 200 6- 07. ITA NO.1243/CHD/2012 : (ASSESSEES APPEAL) 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD CLAIMED CERTAIN EXPENDITURE BEING PAID BY THE VARIOUS PARTIES THROUGH CREDIT CARD AMOUNTING T O RS.16,19,693/-. THE ASSESSING OFFICER NOTED THAT T HIS EXPENDITURE WAS MADE FOR PURCHASE FROM SHOP LIKE KAPKIDS, SECTOR 17, CHANDIGARH, BEAUTY PARLOURS, SHOWROOMS OF BRANDED CLOTHINGS AND JEWELLERY, ETC., HAVING PERSONAL NATURE, NOT CONNECTED WITH THE BUSI NESS OF THE ASSESSEE. THE ASSESSING OFFICER MADE DISALL OWANCE OF THESE EXPENSES AND INITIATED PENALTY PROCEEDINGS . FURTHER, DURING THE COURSE OF ASSESSMENT PROCEEDING S FOR ASSESSMENT YEAR 2005-06, STATEMENT OF ONE SHRI ROHI T MADAN, DIRECTOR OF M/S KIND REMEDIES WAS RECORDED U NDER SECTION 131 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AND HE ADMITTED THAT HE HAD NOT SUPPLIED ANY MACHINERY TO THE ASSESSEE. HENCE, THE PURCHASE OF MACHINERY AMOUNTING TO RS.10,50,000/- WAS HELD TO B E BOGUS AND IN THIS YEAR, DEPRECIATION OF RS.1,57,500 /- ON THESE PURCHASES AS WELL AS INTEREST CLAIMED OF RS.9 4,500/- FOR MAKING PAYMENT TO M/S KIND REMEDIES WAS DISALLO WED AND PENALTY PROCEEDINGS WERE INITIATED. DURING THE PENALTY PROCEEDINGS, THE ASSESSEE FILED A DETAILED REPLY, BUT REJECTING THE SAME, THE ASSESSING OFFICER LEVIE D PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 3 3. BEFORE THE LEARNED CIT (APPEALS), THE ASSESSEE SUBMITTED AS REGARDS THE CREDIT CARD EXPENSES, THAT THE BILLS/VOUCHERS WERE NOT AVAILABLE AT THE TIME OF TH E ASSESSMENT, THEREFORE, THE DISALLOWANCE HAS BEEN MA DE. THE ACCOUNTS OF THE ASSESSEE ARE AUDITED AND THERE WAS NO REASON TO DISBELIEVE THE GENUINENESS OF EXPENSES. AS REGARDS DISALLOWANCE OF DEPRECIATION AND INTEREST, IT WAS SUBMITTED THAT THE PAYMENTS WERE MADE THROUGH ACCOU NT PAYEE CHEQUES AND THE ACCOUNTS OF THE ASSESSEE ARE AUDITED, HENCE THERE IS NO REASON TO DISBELIEVE THE GENUINENESS OF THE TRANSACTION. THE LEARNED CIT (A PPEALS) REJECTED THE CONTENTION OF THE ASSESSEE AND CONFIRM ED THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTI ON 271(1)(C) OF THE ACT. 4. AGGRIEVED, THE ASSESSEE HAS COME IN APPEAL, RAISING THE FOLLOWING GROUNDS : 1. THAT THE ORDER OF LEARNED C.I.T. (A) IS BAD AND AGAINST THE FACTS & LAW. 2. THAT THE LEARNED CIT(A) HAS ERRED BY CONFIRMING TH E PENALTY UNDER SECTION 271 (1)( C) OF INCOME TAX A CT @117% ON ADDITION OF RS 1871693/- ON DISALLOWANCE OF EXPENSES INCURRED IN ORDINARY COURSE OF BUSINESS. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD AND DISPOSED OFF. 5. THE LEARNED COUNSEL FOR THE ASSESSEE, REITERATE D THE SUBMISSION MADE BEFORE THE LOWER AUTHORITIES AN D 4 FURTHER PLACED RELIANCE ON THE JUDGMENT OF THE HON' BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. DABWALI TRANSPORT CO., ITA NO.872 OF 2010 (O&M), DA TED 15.3.2011 TO THE EFFECT THAT PART OF THE EXPENSES H AVING BEEN ALLOWED, PENALTY CANNOT BE LEVIED FOR SUCH DISALLOWANCE MADE. 6. THE LEARNED D.R. RELIED ON THE ORDER OF THE LOW ER AUTHORITIES. 7. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSES SEE HAS CLAIMED CERTAIN EXPENDITURE THROUGH CREDIT CARD, WH ICH IN PART, IT HAS BEEN ABLE TO EXPLAIN WHILE THE REMAINI NG, HE HAS NOT BEEN ABLE TO EXPLAIN. THE ASSESSING OFFICE R MADE DISALLOWANCE OF THE REMAINING AND LEVIED PENALTY FO R FURNISHING INACCURATE PARTICULARS ON THE SAME. IT IS ALSO SEEN FROM THE PERUSAL OF THE ORDER OF THE ASSESSING OFFICER THAT BELIEVING THE INFORMATION PROVIDED BY THE ASSE SSEE AS REGARDS A PART OF THE EXPENSES, THE ASSESSING OFFIC ER HAD ALLOWED THAT PART. HOWEVER, WHILE MAKING DISALLOWA NCE, THE ASSESSING OFFICER HAS NOT BEEN ABLE TO BRING ON RECORD THE PARTICULARS OF THOSE EXPENSES AND ALSO THE REAS ON FOR DISALLOWANCE. THIS IS NOT A CASE WHERE THE ASSESSE E HAS CONCEALED ANY INCOME OR FURNISHED INACCURATE PARTIC ULARS. THIS IS A CASE WHERE THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE CLAIM OF EXPENSES MADE BY HIM WITH THE 5 HELP OF PROPER DOCUMENTARY EVIDENCES. THIS MAY BE A FIT CASE FOR MAKING DISALLOWANCE, BUT PENALTY UNDER SEC TION 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PART ICULARS CANNOT BE LEVIED ON THE SAME. RELIANCE PLACED BY T HE LEARNED COUNSEL FOR THE ASSESSEE ON THE JUDGMENT OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF DABWALI TRANSPORT CO. (SUPRA) IS NOT OUT OF PLACE, WHEREBY IT HAS BEEN HELD THAT A SUBSTANTIAL PART OF EXPENSES CLAIM ED BEING EXPLAINED BY THE ASSESSEE, NO PENALTY ON DISALLOWANCE OF THE REST OF THE EXPENSES CAN BE LEV IED. 8. AS REGARDS THE DISALLOWANCE OF DEPRECIATION AND INTEREST ON ACCOUNT OF MACHINERY PURCHASED FROM M/S KIND REMEDIES, WHICH HAS BEEN HELD TO BE BOGUS, THE ARGUMENT OF THE ASSESSEE WAS THAT THE PAYMENT TO TH E SAID PARTY WAS MADE THROUGH ACCOUNT PAYEE CHEQUE. THE PAYMENT THROUGH ACCOUNT PAYEE CHEQUE IS NOT SUFFICI ENT TO PROVE THAT THE PURCHASE OF MACHINERY WAS ACTUALLY M ADE. THE ADDITION HAS BEEN CONFIRMED TILL THE LEVEL OF I.T.A.T. THE ASSESSEE HAD DONE THE SAME ACT IN EARLIER YEAR I.E. ASSESSMENT YEAR 2005-06 ALSO. IN THESE CIRCUMSTANC ES, IT IS PROVED BEYOND DOUBT THAT THE ASSESSEE HAD MADE E XCESS CLAIM OF DEPRECIATION AND INTEREST. IN THIS VIEW, WE ARE NOT INCLINED TO DELETE THE PENALTY LEVIED BY THE AS SESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT. HOWEVE R, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE AMOUNT OF PENALTY TO THE EXTENT OF 100% OF TAX SOUGHT TO BE L EVIED, 6 SINCE WE SEE NO REASON FOR THE ASSESSING OFFICER TO LEVY EXCESS PENALTY. 9. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO.31/CHD/2013 : (REVENUES APPEAL) 10. IT IS STATED THAT IN THE PRESENT APPEAL THE TA X EFFECT IS LESS THAN THE PRESCRIBED LIMIT PROVIDED B Y THE RECENT CBDT CIRCULAR. 11. ACCORDING TO CIRCULAR NO.21/2015 DATED 10.12.2015, THE CBDT IN SUPERCESSION OF EARLIER INSTRUCTIONS HAS DIRECTED THAT DEPARTMENTS APPEALS BEFORE ITAT SHALL NOT BE FILED IN CASES WHERE THE TAX EFFE CT DOES NOT EXCEED THE MONETARY LIMIT OF RS.10 LACS. THE T AX WILL NOT INCLUDE ANY INTEREST THEREON. IT IS FURTHER CL ARIFIED THAT IF IN THE CASE OF AN ASSESSEE, DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR, APPEAL CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH T HE TAX EFFECT IN RESPECT OF DISPUTED ISSUES EXCEEDS THE MO NETARY LIMIT SO SPECIFIED. THIS INSTRUCTION WILL APPLY RETROSPECTIVELY TO PENDING APPEALS AND APPEALS TO B E FILED HENCEFORTH BEFORE THE TRIBUNAL. THE PENDING APPEALS BELOW THE SPECIFIED TAX LIMIT MAY BE WITHDRAWN/NOT PRESSE D. 12. ADMITTEDLY, IN THE DEPARTMENTAL APPEAL, THE TA X EFFECT IS LESS THAN RS.10 LACS, THEREFORE, DEPARTME NTAL APPEAL IS NOT MAINTAINABLE. THE LEARNED CIT (APPEA LS) DECIDED THE ISSUE IN DEPARTMENTAL APPEAL ON FACTS A ND THE 7 CASE OF THE REVENUE WOULD NOT FALL IN THE EXCEPTION S PROVIDED IN THE ABOVE CIRCULAR. 13. IN VIEW OF THE ABOVE, LEARNED D.R. STATED THAT SINCE DEPARTMENTAL APPEAL IS FILED AGAINST THE CBDT INSTRUCTIONS, THEREFORE, HE WOULD NOT BE PRESSING DEPARTMENTAL APPEAL. THEREFORE, THE ABOVE DEPARTME NTAL APPEAL IS DISMISSED BEING NOT PRESSED. 14. THE APPEAL OF THE REVENUE IS DISMISSED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I TA NO.1243/CHD/2012 IS PARTLY ALLOWED AND THE APPEAL O F THE REVENUE IN ITA NO.31/CHD/2013 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF JANUARY, 2016. SD/- SD/- (BHAVNESH SAINI) (RANO JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21 ST JANUARY, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 8