Chanson Impex India Pvt. Ltd, New Delhi V. ITO, New Delhi

ITA 3351/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0440 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-02-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 08-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Keywords: Wrong claim
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `B: NEW DELHI BEFORE SHRI C.L.SETHI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T. A. NO.3351/DEL/2010 ASSESSMENT YEAR: 2005-06 CHASON IMPEX INDIA PVT. LTD., ASSESSING OFFICER, J-161/2, GAUTAM NAGAR, VS. WARD 3(3), NEW DEL HI. NEW DELHI. PAN: AACCC0619C (APPELLANT) (RESPONDENT) APPELLANT BY: NONE. RESPONDENT BY: SHRI H.K. LAL, SR. DR. O R D E R PER C.L. SETHI, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL AGAINST THE ORDER DATED 0 7.04.2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) CO NFIRMING THE PENALTY AMOUNTING TO RS.81,208/- LEVIED BY THE ASSESSING OF FICER UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 (THE ACT) FOR THE ASSESSMENT YEAR 2005-06. 2. IN THIS CASE, THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 31.08.2007 AT `NIL INCOME AS AGAINST RETURNED LOSS OF RS.2,21 ,927/-. 3. THE ASSESSEE COMPANY WAS INCORPORATED ON 24 TH AUGUST, 2002 WITH THE OBJECT TO CARRY OUT THE BUSINESS OF TRADING OF DIFFERENT COMMODITIES. 2 ACCORDING TO THE AO, NO BUSINESS ACTIVITIES WERE CA RRIED OUT YET. THE AO THEREFORE, DISALLOWED THE VARIOUS EXPENSES DEBITED IN THE PROFIT & LOSS ACCOUNT AMOUNTING TO RS.2,21,927/- AND IN RESPECT T HEREOF PENALTY PROCEEDINGS U/S 271(1)(C ) WERE ALSO INITIATED. TH E AO ULTIMATELY LEVIED PENALTY U/S 271(1)(C ) AMOUNTING TO RS.81,208/- BEI NG 100% OF THE TAX SOUGHT TO BE EVADED ON EXPENSES DISALLOWED OF RS.2, 21,927/-. 4. ON AN APPEAL, THE LEARNED CIT(A) CONFIRMED THE P ENALTY BY SAYING THAT THE EXPENSES WERE DISALLOWED BY THE AO ON THE GROUND THAT THE ASSESSEE DID NOT START ITS BUSINESS ACTIVITIES AND UNDOUBTED LY SUCH EXPENSES WERE NOT ALLOWABLE AND FALSE CLAIM WAS MADE IN THE RETURN OF INCOME. 5. HENCE, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENT ATIVE. NONE FOR THE ASSESSEE WAS PRESENT. IN THIS CASE, IT IS NOT IN DISPUTE THAT THE EXPENSES WERE ACTUALLY INCURRED BY THE ASSESSEE. IT IS NOT THE CASE WHERE FALSE EXPENSES WERE BOOKED IN THE PROFIT & LOSS ACCOUNT. THE EXPENSES CLAIMED BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT HAVE B EEN DISALLOWED MERELY ON THE GROUND THAT THE ASSESSEE WAS NOT DOING ANY BUSI NESS. HOWEVER, THE ASSESSEE STATED THAT IT HAD ALREADY PURCHASED A LAN D IN RESPECT OF WHICH LEASE RENT WAS PAID TO THE LESSOR. THIS LAND WAS A VACAN T COMMERCIAL PLOT FOR PARKING PENDING CONSTRUCTION OF BUILDING. IT IS WE LL SETTLED THAT REVENUE 3 EXPENDITURES ARE ALLOWABLE EVEN AFTER THE BUSINESS IS SET UP. IN THIS CASE, THE ASSESSEE WAS INCORPORATED ON 27 TH AUGUST, 2002 WITH THE OBJECT TO CARRY OUT THE BUSINESS OF TRADING IN DIFFERENT COMMODITIES. THE ASSESSEE HAS ACQUIRED A PLOT AT NOIDA FOR COMMENCEMENT OF THE BUSINESS OF READY-MADE GARMENTS. THE PLOT AT NOIDA IS A LEASE-HOLD LAND A ND THE ASSESSEE HAS TO PAY EVERY YEAR THE FIXED LEASE RENT TO NOIDA AUTHOR ITIES. THE LEASE RENTAL AND OTHER EXPENSES WERE DEBITED TO THE PROFIT & LOS S ACCOUNT. THEREFORE, IT WAS A BONA FIDE BELIEF OF THE ASSESSEE TO CLAIM ALL THE EXPENSES AS REVENUE AND FILED THE RETURN AT NEGATIVE FIGURE. THE CONDU CT OF THE ASSESSEE CANNOT BE SAID TO BE MALA FIDE. THE ASSESSEES CLAIM HAS BEE N MERELY DISALLOWED UNDER THE PROVISION OF LAW AND NOT ON THE BASIS THAT THER E WAS A FALSE CLAIM OF THE EXPENSES MADE BY THE ASSESSEE. WE THEREFORE, DELE TE THE PENALTY AND ALLOW THIS APPEAL. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 8. THIS DECISION IS PRONOUNCED IN THE OPEN COURT ON 18 TH FEBRUARY, 2011. SD/- SD/- (SHAMIM YAHYA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18 TH FEBRUARY, 2011. ITA NO.3351/DEL/2010 4 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.