CHARLES CORREA, MUMBAI V. JT CIT RG 11(2), MUMBAI

ITA 3387/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1551 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 26-05-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 22-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K MAHAJAN
• Assessee Lawyers: R C JAIN
• Keywords: Depreciation; Bonafide belief; Wrong claim
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI PRAMOD KUM AR ,(AM) ITA NO.3387/MUM/2009 ASSESSMENT YEAR :2003-04 MR. CHARLES CORREA ENGINEERING CENTRE 9, MATHEW ROAD MUMBAI-400 004. ..( APPELLANT ) P.A. NO. (AAAPC 0002 G) VS. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 11(2) AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. ..( RESPONDENT ) APPELLANT BY : SHRI R.C. JAIN RESPONDENT BY : SHRI K. K. MAHAJAN O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 16.2.2009 PASSED BY THE LD. CIT(A) FOR TH E ASSESSMENT YEAR 2003-04. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN ARCHITECT BY PROFESSION. THE RETURN WAS FILED DECLARING TOTAL INCOME OF RS.1,55,95,210/-. HOWEVER, THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS.2,43,94,329/- INCLUDING THE DISALLOWANCE OF DEDUCTION U/S.80-O RS.48,79,471/-, FOREIGN TRAVEL EXPENSES RS.37,7 5,913/- AND ITA NO.3387/M/09 A.Y:03-04 2 DISALLOWANCE OF COMPUTER EXPENSES RS.80,449/-, VIDE ORDER DATED 23.2.2006 PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT). WHILE COMPLETING THE ASSESSMENT THE ASSESSING OFFICER ALSO IN ITIATED PENALTY PROCEEDING U/S.271(1)(C) OF THE ACT AND ACCORDIN GLY THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY PENALTY U/S.271(1) (C) OF THE ACT SHOULD NOT BE LEVIED. IN THE ABSENCE OF ANY COMP LIANCE BY THE ASSESSEE, THE ASSESSING OFFICER AFTER CONSIDERING THE MATERIAL AVAILABLE ON RECORD WHILE OBSERVING THAT THE ASSESSEE WAS GIVEN SUFFI CIENT OPPORTUNITY TO EXPLAIN HIS POSITION AND NOTHING HAS BE EN MENTIONED AS TO WHAT PREVENTED THE ASSESSEE FROM FILING THE DETAILS, AND KEEPING IN VIEW THAT THE LD. CIT(A) HAS UPHELD THE ADDITIONS MAD E BY THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAS FURNISH ED INACCURATE PARTICULARS OF INCOME ON ALL THE THREE ISSUES WI THIN THE MEANING OF SECTION 271(1)(C) READ WITH EXPLANATION 1 T HERETO AND HENCE, THIS IS A FIT CASE FOR LEVY OF PENALTY U/S.271(1) (C) AND ACCORDINGLY HE IMPOSED PENALTY OF RS.11,89,412/- VIDE ORDER DATED 31.3.2008, PASSED U/S.271(1)(C) OF THE ACT. ON APPEAL T HE LD. CIT(A), WHILE OBSERVING THAT THERE IS MERIT IN THE CONTENTION OF THE APPELLANT THAT COMPUTER EXPENSES IS REVENUE NEUTRAL IN THE LONG RUN AND ALSO IN VIEW OF EARLIER DECISION OF ITAT AND THE SUBSEQUENT AME NDMENT IN THE DEPRECIATION SCHEDULE THERE COULD HAVE BEEN A BONAFIDE ERROR, DELETED THE PENALTY IMPOSED ON DISALLOWANCE OF COMPUTER EXPENSE S. HOWEVER, ITA NO.3387/M/09 A.Y:03-04 3 THE LD. CIT(A) FOLLOWING THE DECISION OF HON'BLE SUPR EME COURT IN UNION OF INDIA VS. DHARAMENDRA TEXTILES PROCESSORS & OT HERS (2008) 306 ITR 277 (SC) UPHELD THE LEVY OF PENALTY ON THE DISALLOWANCE OF FOREIGN TRAVEL EXPENSES AND ACCORDINGLY PARTLY ALLOWED THE APPEAL. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SU STENANCE OF PENALTY ON THE DISALLOWANCE OF FOREIGN TRAVEL EXPENSES. 4. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSE SSEE SUBMITS THAT THE APPELLANT COULD NOT BE VISITED WITH PENALTY MERELY BASED ON DISALLOWANCE OF EXPENSES ON FOREIGN TRAVEL EXPENSES ON AN ESTIMATE. HE FURTHER SUBMITS THAT FOR THE ASSESSMENT YEAR 2002-03 TH E TRIBUNAL IN THE ASSESSEE'S OWN CASE HAS UPHELD THE ORDER OF THE LD. CIT(A) IN REDUCING THE DISALLOWANCE OF FOREIGN TRAVEL EXPENSES. TH E RELIANCE WAS ALSO PLACED ON THE RECENT DECISION IN CIT VS. RELIANCE PET ROPRODUCTS LTD. 322 ITR 158(SC). HE, THEREFORE, SUBMITS THAT THE PENALTY IMPOSED BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) BE DELETED. 5. ON THE OTHER HAND THE LD. DR SUPPORTS THE ORDER OF THE ASSESSING OFFICER AND THE LD. CIT(A). ITA NO.3387/M/09 A.Y:03-04 4 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIN D THAT THERE IS NO DISPUTE THAT THE ASSESSEE HAS DISCLOSED ALL THE DETAILS OF F OREIGN TRAVEL EXPENSES. THE DISALLOWANCE OF RS.37,75,913/- WAS MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE INVOLVEMENT OF PERSONAL EXPENDITURE IS NOT RULED OUT. IN ORDER TO APPLY THE PROVISIONS OF SECTION 271(1)(C), THERE HAS TO BE CONCEALMENT OF PARTICU LARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURN ISHED INACCURATE PARTICULARS OF HIS INCOME. IN THE PRESENT CASE I T IS NOT THE CASE OF THE AO THAT THE ASSESSEE HAS CONCEALED THE PARTICUL ARS OF HIS INCOME. THE AO HAS IMPOSED PENALTY ON THE GROUND THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME. 7. IN A RECENT JUDGMENT OF THE HONBLE APEX COURT IN CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158(SC ) THEIR LORDSHIPS, AFTER CONSIDERING VARIOUS DECISIONS INCLUDING DI LIP N. SHROFF VS. JCIT (2007) 291 ITR 519(SC) AND UNION OF INDIA V S. DHARAMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277(SC) HAVE OBSERVED AND HELD (PAGE 158 HEADNOTES) AS UNDER : A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) O F THE INCOME- TAX ACT, 1961, SUGGESTS THAT IN ORDER T O BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDL Y, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM ITA NO.3387/M/09 A.Y:03-04 5 MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS F OUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN OR DER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING A N INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHI NG WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSE E CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUC H PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILI TY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLI ED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCOR RECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE R ETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 8. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF HONBLE APEX COURT AND KEEPING IN VIEW THAT IT IS NOT THE CASE OF THE RE VENUE THAT THE ASSESSEE HAS NOT FILED COMPLETE PARTICULARS OF HIS INCOME OR IT IS NOT THE CASE OF BONAFIDE BELIEF OR THE EXPLANATION OFFERED BY THE ASSESSEE WAS FOUND TO BE FALSE OR UNTRUE, WE ARE OF THE VIEW T HAT MAKING A WRONG CLAIM IS NOT AT PAR WITH CONCEALMENT OR GIVING OF INACCURATE INFORMATION, WHICH MAY CALL FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. THIS VIEW ALSO FINDS SUPPORT FROM THE RECENT DECISI ONS IN CIT VS. SIDHARTHA ENTERPRISES (2010) 322 ITR 80 (P&H) AND CIT VS. SHAHABAD CO-OP. SUGAR MILLS LTD. (2010) 322 ITR 73(P&H). ACCO RDINGLY THE PENALTY IMPOSED BY THE ASSESSING OFFICER AND SUSTAINED BY T HE LD. ITA NO.3387/M/09 A.Y:03-04 6 CIT(A) IS DELETED. THE GROUNDS TAKEN BY THE ASSESSEE ARE , THEREFORE, ALLOWED. 9. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4.6.2010. SD/- SD/- (PRAMOD KUMAR) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 4.6.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 26.5.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 28.5.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 4.6.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 7.6.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER