MANJU GOYAL, Jaipur V. ITO, Jaipur

ITA 350/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4981 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 08-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DR DHK
• Keywords: Wrong claim; Bonafide mistake; Borrowed satisfaction
• Section: 143(3); 10(14)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 350/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2010-11 SMT. MANJU GOYAL F-29, E-78, LAL BAHADUR NAGAR JLN MARG,JAIPUR CUKE VS. THE ITO WARD- 6(2) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ACFPG 0244 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI MANISH AGARWAL, CA JKTLO DH VKSJ LS@ REVENUE BY :SHRI R.A. VERMA, ADDL. CIT-. DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 04/10/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 27/10/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST ORDER OF T HE LD. CIT(A)- 2,JAIPUR DATED 01-01-2016 FOR THE ASSESSMENT YEAR 2010-11 RAISING THEREIN FOLLOWING GROUNDS OF APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE PENALTY OF RS. 44,362/- IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT, ARBITRARILY AND WITHOUT CONS IDERING THE WELL ESTABLISHED LAW THAT MERE DISALLOWANCE OF BONA-FIDE CLAIM OF AS SESSEE DOES NOT AMOUNT TO CONCEALMENT OF INCOME, AND THUS NO PENALTY U/S 271( 1)(C) OF THE ACT COULD HAVE BEEN LEVIED IN THE FACTS OF THE CASE. 1. 1 THAT THE LD. CIT(A) HAS GROSSLY ERRED IN CONFI RMING THE PENALTY LEVIED ON ACCOUNT OF DISALLOWANCE OF PERQUISITES WI THOUT APPRECIATING THE FACT THAT THE EXPENDITURE HAS BEEN MADE FOR PERFORMING T HE DUTIES AND THE INFORMATION ITA NO. 350/JP/2016 SMT. MANJU GOYAL VS. ITO, WARD- 6 (2), JAIPUR . 2 OF THE SAME WAS AVAILABLE IN THE FORM NO. 16 ISSUED BY THE EMPLOYER COMPANY. HENCE THE PENALTY SO LEVIED DESERVES TO BE DELETED IN TOTO. 1.2 THAT THE LD. CIT(A) HAS FURTHER ERRED IN CONFIR MING THE PENALTY LEVIED ON ACCOUNT OF DISALLOWANCE OF EXPENSES CLAIM ED U/S 57(III) OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE FACT THAT TH E INTEREST WAS PAID FOR THE FUNDS BORROWED FOR MAKING INVESTMENT AND THE INCOME RECEIVED FROM SUCH INVESTMENT HAVE ALREADY BEEN DISCLOSED IN THE RETUR N OF INCOME THUS THE PENALTY SO LEVIED DESERVES TO BE DELETED IN TOTO. 1.3 THAT THE LD. CIT(A) HAS FURTHER ERRED IN PASSI NG THE IMPUGNED ORDER BY IGNORING THAT NO MALA FIDE INTENTION OF TH E ASSESSEE WAS APPARENT IN THE CIRCUMSTANCES OF THE CASE AND BY IGNORING THE FACT THAT EVERY SINGLE DETAIL AS ASKED FOR HAD BEEN PROVIDED BY THE ASSESSEE AND NOT HING HAS BEEN CONCEALED NOR ANY INACCURATE PARTICULARS HAS BEEN FURNISHED, THUS THE PENALTY SUSTAINED AT RS. 44,362/- FOR CONCEALMENT OF INCOME DESERVES TO BE D ELETED. 1.4 THAT THE HAS FURTHER ERRED IN SOLELY RELYING UP ON THE CONCLUSION DRAWN IN ASSESSMENT PROCEEDINGS WITHOUT MAKING INDE PENDENT ENQUIRIES IN PENALTY PROCEEDINGS WHEN THE PENALTY PROCEEDINGS AR E SEPARATE AND INDEPENDENT PROCEEDINGS, THUS THE AO HAS MISERABLY FAILED TO DI SCHARGED THE ONUS LIES UPON HIM AND THE CONSEQUENT ORDER OF LEVY OF PENALTY IS ILLEGAL AND BAD IN LAW. FURTHER THERE IS NO FINDING THAT DETAIL SUPPLIED IN THE RET URN WAS INCORRECT OR ERRONEOUS OR FALSE. 2.1 BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HAD F ILED THE RETURN OF INCOME DECLARING TOTAL INCOME AT RS. 11,33,590/-. T HE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY THE ASSES SMENT U/S 143(3) WAS COMPLETED BY THE AO AT AN INCOME OF RS. 12,81,460/- ON 01.08.2012 BY MAKING DISALLOWANCE OF PERQUISITES CLAIMED AS EXEMP T RS. 1,26,000/- AND DISALLOWANCE OF INTEREST CLAIMED AT RS. 21,875/- AN D THUS THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. IN PE NALTY PROCEEDINGS, THE AO CONCLUSIVELY IMPOSED THE PENALTY OF RS. 44,362/- U/S 271(1)(C) OF THE ITA NO. 350/JP/2016 SMT. MANJU GOYAL VS. ITO, WARD- 6 (2), JAIPUR . 3 ACT VIDE PENALTY ORDER DATED 31.03.2013 BY OBSERVIN G THAT THE ASSESSEE HAD MADE WRONG CLAIM OF EXPENSES AND FAILED TO SUBS TANTIATE THE SAME. 2.2 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL BEFORE THE LD. CIT(A) WHO VIDE HER ORDER DATED 01.01.2016 CONFIRMED THE P ENALTY AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE THIS BENCH . 2.3 DURING THE COURSE HEARING, THE LD. AR OF THE AS SESSEE PRAYED FOR THE DELETION OF THE PENALTY OF RS. 44,362/- CONFIRMED B Y LD. CIT(A) U/S 271(1)(C) OF THE ACT IN RESPECT OF ADDITION OF RS. 1,47,875/- FOR WHICH THE LD. AR OF THE ASSESSEE FILED THE FOLLOWING WRITTEN SUBMISSION: BRIEF FACTS PERTAINING TO THESE GROUNDS OF APPEAL ARE THAT THE ASSESSEE HAD IN HER RETURN OF INCOME CLAIMED AS EXEMPTED THE PERQUISITES RECEIVED BY HER FROM HER EMPLOYER ON ACCOUNT OF CONVEYANCE AL LOWANCE, TRANSPORT ALLOWANCE, WASHING ALLOWANCE AND UNIFORM ALLOWANCE, TOTALING TO RS. 1,32,400/-. HOWEVER, THE LD. AO ALLOWED EXEMPTION O NLY TO THE EXTENT OF RS. 6,400/- PERTAINING TO THE TRANSPORT ALLOWANCE AND R EST OF THE PERQUISITES WERE HELD BY HIM AS NON-EXEMPT ON THE GROUND THAT ASSESS EE IS NOT AN ORDINARY EMPLOYEE BUT HOLDS SENIOR MANAGEMENT POSITION AND T HUS, IT WAS CONSIDERED UNLIKELY BY LD. AO FOR ASSESSEE RECEIVING SUCH PERQ UISITES. FURTHER, IT WAS ALLEGED THAT EXEMPTION FOR PERQUISITES U/S 10(14) C AN BE ALLOWED ONLY TO THE EXTENT OF EXPENDITURE ACTUALLY INCURRED AND ACCORDI NGLY, HE DISALLOWED THE CLAIM OF ASSESSEE TO THE EXTENT OF RS. 1,26,000/-. IN THE ASSESSMENT ORDER, THE LD. AO HAD FURTHER MAD E A DISALLOWANCE OF INTEREST EXPENDITURE CLAIMED BY ASSESSEE U/S 57( III) AT RS. 21,875/- ON THE GROUND THAT THE INTEREST PAID BY ASSESSEE WAS NOT I NCURRED FOR THE PURPOSE OF EARNING INCOME FROM OTHER SOURCES (I.E. INTEREST IN COME FROM FDR IN THIS CASE). AS STATED ABOVE, DISALLOWANCES WERE ACCEPTED MERELY TO AVOID LITIGATION AND NOT BECAUSE ASSESSEE HAD ACCEPTED TH E ASSESSMENT ORDER PASSED BY LD. AO. HOWEVER, THE LD. AO PASSED THE IMPUGNED PENALTY ORDER U/S 271(1)(C) BY ARBITRARILY HOLDING THAT THE ASSESSEE HAS CONCEALED HER INCOME TO THE EXTENT OF DISALLOWANCES MADE AND WHICH WAS CONF IRMED BY LD. CIT(A). ITA NO. 350/JP/2016 SMT. MANJU GOYAL VS. ITO, WARD- 6 (2), JAIPUR . 4 IN THIS REGARD IT IS SUBMITTED THAT FULL PARTICULAR S REGARDING PERQUISITES RECEIVED BY ASSESSEE WERE DECLARED IN THE RETURN OF INCOME AND WERE AVAILABLE ON THE FORM NO. 16 ISSUED BY THE ASSESSEES EMPLOYE R COMPANY. THEREFORE, COMPLETE INFORMATION / DETAILS / PARTICULARS WERE F URNISHED BY ASSESSEE WITH RETURN OF INCOME ITSELF AND WERE AVAILABLE ON RECOR D WHICH, HAVE NOT BEEN ALLEGED BY THE LD. AO AS INACCURATE. NO FACT OR INC OME WHATSOEVER WAS CONCEALED BY ASSESSEE, NOR IS THERE ANY ALLEGATION TO SUCH EFFECT EITHER IN THE ASSESSMENT ORDER OR IN THE IMPUGNED PENALTY ORDER. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF ANY INACCURATE PARTICULARS OF INCOME HAS BEEN ES TABLISHED BY THE LD. AO. WITH REGARD TO THE DISALLOWANCE OF INTEREST OF RS. 21,875/- CLAIMED U/S 57(III) IT IS SUBMITTED THAT, THIS AMOUNT OF INTERE ST WAS PAID ON THE FUNDS BORROWED FOR THE PURPOSE OF MAKING INVESTMENT AND T HE INCOME RECEIVED FROM SUCH INVESTMENTS ALREADY STANDS DECLARED IN THE RET URN OF INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. THUS, SINCE THE I NTEREST EXPENDITURE HAS BEEN INCURRED IN RESPECT OF EARNING THE INCOME FROM OTHER SOURCES, THEREFORE, THE SAME DESERVED TO BE ALLOWED U/S 57(III) OF THE ACT. HOWEVER, THE SAME HAS BEEN DISALLOWED BY THE LD. AO WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE NATURE OF EXPENDI TURE. FURTHER, ASSESSEE BEING INDIVIDUAL, HAVING COMMON POOL OF FUNDS AND H AVING NO INCOME FROM BUSINESS & PROFESSION, NO BOOKS OF ACCOUNTS ARE MAI NTAINED BY ASSESSEE AND THUS IT IS NOT POSSIBLE TO PROVE NEXUS BETWEEN BORR OWED FUNDS AND INVESTMENT MADE IN PROPERTY. EVEN IF THE SAME IS HELD NOT TO B E INCURRED MAKING INVESTMENT, THE SAME WOULD AT THE MOST AMOUNT TO A WRONG CLAIM MADE BY ASSESSEE AND NO CONCEALMENT /INACCURATE PARTICULARS , THUS THE IMPOSITION OF PENALTY U/S 271(1)(C) BY ALLEGING THE AMOUNT OF SUC H DISALLOWANCE AS CONCEALED INCOME IS NOT CORRECT. IT IS FURTHER SUBMITTED THAT THE CLAIM OF ASSESSEE WAS COMPLETELY BONA- FIDE AND HAS NOT RESULTED INTO ANY CONCEALMENT OF I NCOME. MERELY BECAUSE THE CLAIM OF ASSESSEE WAS CONSIDERED BY LD. AO AS NON-T ENABLE DOES NOT IN ANY MANNER LEAD TO THE CONCLUSION OF CONCEALMENT OF INC OME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. WHILE IMPOSING IM PUGNED PENALTY, THE LD. AO HAS FAILED TO CONSIDER THE WELL ESTABLISHED LAW THAT MERE MAKING OF A CLAIM WHICH MAY NOT BE SUSTAINABLE IN LAW, BY ITSELF, WIL L NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME SO AS TO ATTRACT PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. FURTHER, THE LD. AO HAS FAILED TO RECORD INDEPENDEN T SATISFACTION WITH REGARD TO CONCEALMENT OF INCOME OR FURNISHING OF IN ACCURATE PARTICULARS OF INCOME AND HAS MERELY BORROWED THE OBSERVATIONS MAD E IN THE ASSESSMENT ORDER AND AHS LEVIED PENALTY SOLELY ON THE BASIS OF SUCH BORROWED SATISFACTION. IT IS WELL ESTABLISHED LAW THAT THE QUANTUM PROCEED INGS AND PENALTY PROCEEDINGS ARE TWO DISTINCT AND SEPARATE PROCEEDIN GS AND THE OBSERVATIONS MADE IN QUANTUM PROCEEDINGS CANNOT BE BORROWED AND PENALTY CANNOT BE IMPOSED MERELY ON THE BASIS OF ADDITIONS MADE IN TH E QUANTUM PROCEEDINGS. ITA NO. 350/JP/2016 SMT. MANJU GOYAL VS. ITO, WARD- 6 (2), JAIPUR . 5 HONBLE APEX COURT IN THE CASE OF EILLY LILLY & COM PANY REPORTED IN 312 ITR 225 HAS HELD THAT THE PENALTY PROCEEDINGS I S NOT AN AUTOMATIC OR MANDATORY FALLOUT OF THE ADDITION MADE DURING THE A SSESSMENT PROCEEDINGS, THEREFORE, THE SAME SHOULD NOT BE LEVIED IN ROUTINE MANNER. THEREFORE, IT IS SUBMITTED THAT NO PENALTY WAS LEVI ABLE U/S 271(1)(C) IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDINGL Y, IT IS PRAYED THAT THE PENALTY OF RS. 44,362/- DESERVES TO BE DELETED. TH E LD. AR OF THE ASSESSEE PLACED FOLLOWING CASE LAWS. 1. PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT (SC) 348 ITR 306 2. SANTOSH NARAIN KAPOOR VS DEPUTY COMMISSIONER OF INCOME TAX (2008) 115 TTJ LUCK 402 3. HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V. M.P. NARAYANAN (1998) 149 CTR MAD 1 4. NARANGS INTERNATIONAL HOTELS (P) LTD. V/S. DCIT, CIRCLE 1 (2), MUMBAI 137 ITD 53: 5. GOSWAMI SMT. CHANDRALATA 125 ITR 700 (RAJ.). 6. CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. [322 IT R 158 (SC)] 7. 291 ITR 520 DILIP N. SHROFF V. JOINT CIT (SC) 8. 20-TW-76/77/78 RAMSARAN GUPTA VS. ACIT, ITAT, JAIPUR BENCH 2.4 DURING THE COURSE OF HEARING, THE LD. DR RELIED ON THE ORDER OF THE LD. CIT(A). 2.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOTED BY THE AO THAT ASS ESSEE CLAIMED PERQUISITES AS EXEMPTED FOR WHICH SHE WAS NOT ELIGI BLE AS THEY ARE SPECIAL ALLOWANCE GIVEN TO MEET OUT THE EXPENSES WHOLLY AND EXCLUSIVELY INCURRED IN THE PERFORMANCE OF THE OFFICIAL DUTIES. THE ASSESSEE HAD FAILED ITA NO. 350/JP/2016 SMT. MANJU GOYAL VS. ITO, WARD- 6 (2), JAIPUR . 6 TO FURNISH ANY EVIDENCE REGARDING THE EXPENDITURE A CTUALLY INCURRED. FURTHER INTEREST HAD BEEN CLAIMED OUT OF FDR INTERE ST FOR WHICH ASSESSEE HAD NOT BEEN ABLE TO SUBSTANTIATE THE CLAIM. THE LD . AR OF THE ASSESSEE SUBMITTED THAT IN THE YEAR UNDER APPEAL THE ASSESSE E HAD CLAIMED THE PERQUISITES AS EXEMPT, HOWEVER NO SUCH CLAIM WAS MA DE IN ANY PRECEDING ASSESSMENT YEAR NOR IN SUBSEQUENT ASSESSMENT YEAR A ND IT WAS A BONAFIDE MISTAKE DONE WHILE FILING THE RETURN OF INCOME WHIC H WAS FILED BY THE STAFF OF THE COMPANY WHERE THE ASSESSEE WAS WORKING AND HAVING SALARY. IT APPEARS FROM THE CONSPECTUS OF THE CASE THAT THE LOWER AUTHORITIES HAVE NOT TAKEN INTO CONSIDERATION THESE FACTS AND THE MA TERIAL FACTS AVAILABLE BEFORE THEM BEFORE DRAWING ANY CONCLUSION THAT THE ASSESSEE HAD CONCEALED THE INCOME. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. ELLI LILLY & CO., (2009) 312 ITR 225 HELD THAT THE PENALTY PROCEEDINGS IS NOT AUTOMATIC OR MANDATORY FOR LAW OF THE ADDITION MADE DURING THE ASSESSMENT PROCEEDINGS. THEREFORE, THE SAME SHOULD NOT BE LEVIED IN ROUTINE MANNER. THE HONBLE SUPREME COURT IN THE CA SE OF PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT 348 ITR 306 HE LD THAT BONAFIDE AND INADVERTENT ERROR MADE IN ABSENCE OF DUE CARE D OES NOT MEAN THAT THE ASSESSEE IS GUILTY OF EITHER FURNISHING INACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. IN VIEW OF THE ABOVE FACTS A ND CIRCUMSTANCES OF THE ITA NO. 350/JP/2016 SMT. MANJU GOYAL VS. ITO, WARD- 6 (2), JAIPUR . 7 CASE AS WELL AS THE CASE LAWS CITED (SUPRA), IT DOE S NOT ATTRACT THE CONFIRMATION OF IMPOSITION OF THE PENALTY OF RS. 44 ,362/- BY THE LD. CIT(A) U/S 271(1)(C) OF THE ACT IN RESPECT OF THE D ISALLOWANCES OF RS. 1,47,875/-. HENCE THE PENALTY CONFIRMED BY THE LD. CIT(A) U/S 271(1)(C) OF THE ACT AT RS. 44,362/- IS DELETED. THUS THE APP EAL OF THE ASSESSEE IS ALLOWED. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/10/20 16 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27 /10/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SMT. MANJU GOYAL, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 6 (2), JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 350/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR