M/s. Tefal India Household Appliances Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 3728/DEL/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5872 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 08-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAILESH KUMAR
• Keywords: Business income; Business expenditure
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER & SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.-3728/DEL/2017 ( ASSESSMENT YEAR: 2008-09) TEFAL INDIA HOUSEHOLD APPLIANCES PVT. LTD. A-25, 1 ST FLOOR, REAR TOWER, MOHAN COOPERATIVE INDUSTRIAL ESTATE, MATHURA ROAD NEW DELHI PAN : AAACT2568D VS ITO WARD-16(2) NEW DELHI ASSESSEE BY SHRI PRADIP DINODIA, CA, SH. R.K. KAPOOR, CA REVENUE BY SHRI SHAILESH KUMAR , SR . DR ORDER PER N.S.SAINI, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-9, NEW DELH I DATED 06.03.2017 FOR ASSESSMENT YEAR 2008-09. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT T HE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE LEVY OF PENALTY OF RS. 27,65,750/- U/S 271(1)(C) OF THE ACT. DATE OF HEARING 12.12.2018 DATE OF PRONOUNCEMENT 17.12.2018 2 ITA N O. 3728/DEL/2017 3. THE FACTS OF THE CASE ARE THAT IN AN ASSESSMENT MADE U/S 143(3) OF THE ACT THE ASSESSING OFFICER MADE AN ADD ITION TO THE INCOME OF THE ASSESSEE OF RS. 83,34,206/- BY DISALL OWING THE ENTIRE EXPENSES CLAIMED BY THE ASSESSEE ON THE GROU ND THAT THE ASSESSEE HAD NO BUSINESS ACTIVITY DURING THE YE AR UNDER CONSIDERATION AND DETERMINED THE INCOME OF THE ASSE SSEE AT RS. 89,50,620/- AGAINST BUSINESS INCOME OF RS. 6,16 ,410/- SHOWN BY THE ASSESSEE. IN THIS WAY, HE COMPUTED THE INCOME OF THE ASSESSEE AT A FIGURE OF RS. 89,50,620/-. 4. THEREAFTER, THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) OF THE ACT ON RS. 89,50,620/- FOR CONCEAL MENT OF INCOME BY THE ASSESSEE AT RS. 27,65,750/-. 5. THE ASSESSEE APPEALED AGAINST THE SAID ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIO NER OF INCOME TAX (APPEALS) OBSERVED THAT IN THE QUANTUM A PPEAL FILED BY THE ASSESSED, THE COMMISSIONER OF INCOME T AX (APPEALS) HAS DELETED THE ADDITION OF RS. 1,12,360/ - ON ACCOUNT OF AUDIT FEE CLAIMED AS AN EXPENDITURE BY T HE ASSESSEE AND CONFIRMED THE BALANCE ADDITION OF RS. 82,21,846/-. HE, THEREFORE, DIRECTED THE ASSESSING OFFICER TO LEVY PENALTY ON RS. 82,21,846/- U/S 271(1)(C) OF TH E ACT. 6. BEING STILL AGGRIEVED BY THE SAID ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE IS NOW IN APPEAL BEFORE US. THE AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD NO BUSINESS ACTIVITY DURING THE YEAR. THE 3 ITA N O. 3728/DEL/2017 ASSESSEE HAD EARNED INTEREST INCOME OF RS. 6,16,410 /- WHICH WAS SHOWN BY THE ASSESSEE AS BUSINESS INCOME IN TH E RETURN OF INCOME FILED AND WAS ASSESSED BY THE ASSESSING O FFICER UNDER THE HEAD BUSINESS INCOME. AGAINST THIS BUSI NESS INCOME, THE ASSESSEE HAD CLAIMED EXPENSES OF RS. 83 ,34,206/- AND ARRIVED AT LOSS OF RS. 77,17,798/- WHICH WAS SH OWN IN THE RETURN OF INCOME. AS THE EXPENDITURE CLAIMED BY THE ASSESSEE WAS NOT FOUND BY THE ASSESSING OFFICER AS NOT GENUI NE OR INFLATED THE LEVY OF PENALTY WAS NOT JUSTIFIED. HE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. [322 ITR 158] WHEREIN IT WAS HELD THAT MERE MAKING OF INCORRECT CLAIM IN THE RETURN OF INCOME DOES NOT AMOUNT TO CONCEALMENT OF INCOME. HE FURTHER SUBMITTED EVEN OTHERWISE THE SUM OF RS. 81,71,490/- OUT OF THE ADDITION OF RS. 82,21,846/- PERTAINED TO EXCHAN GE FLUCTUATION LOSS ON EXTERNAL COMMERCIAL BORROWINGS IN WHICH WAS AN ALLOWABLE EXPENDITURE IN VIEW OF DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. WOODWARD GOVERNOR INDIA PVT. LTD. 312 ITR 254 (SC) WHEREIN IT WAS HELD LOSS SUFFERED BY THE ASSESSEE ON ACCOUNT O F FLUCTUATION IN THE RATE OF FOREIGN EXCHANGE AS ON T HE DATE OF THE BALANCE SHEET IS AN ITEM OF EXPENDITURE U/S 37( 1) OF THE INCOME TAX ACT, 1961. HENCE THE ASSESSEE WAS NOT EX IGIBLE TO PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 7. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE, SHRI SHAILESH KUMAR, SR. DR FULLY JUSTIFIED THE ORD ERS OF THE LOWER AUTHORITIES. 4 ITA N O. 3728/DEL/2017 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAIL ABLE ON RECORD. IN THE INSTANT CASE THE ASSESSEE DISCLOSED THE LOSS OF RS. 77,17,798/- AFTER SETTING OFF OF TOTAL EXPENDIT URE OF RS. 83,34,206/- AGAINST BUSINESS INCOME OF RS. 6,16,410 /-. ON ASSESSMENT THE ASSESSING OFFICER DISALLOWED ENTIRE EXPENDITURE OF RS. 83,34,206/- AND DETERMINED ASSES SEES INCOME AT RS. 89,50,620/- ON THE GROUND THAT NO BUS INESS WAS CARRIED OUT BY THE ASSESSEE DURING THE YEAR UND ER CONSIDERATION AND THEREFORE BUSINESS EXPENSES CANNO T BE ALLOWED AS DEDUCTION. 9. IN THE QUANTUM APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), HE ALLOWED DEDUCTION FOR AUDI T FEE OF RS. 1,12,360/- AND CONFIRMED THE BALANCE DISALLOWANCE OF RS. 82,21,846/-. NO FURTHER APPEAL WAS FILED AGAINST TH E SAID ORDER. 10. IN THE MEANWHILE THE ASSESSING OFFICER PASSED A N ORDER U/S 271(1)(C) OF THE ACT. IN THIS ORDER THE ASSESSI NG OFFICER HAS HELD THAT HE WAS SATISFIED THAT THE ASSESSEE HAS CO NCEALED PARTICULARS OF HIS INCOME OF RS. 89,50,620/- AND CO NSEQUENTLY HE IMPOSED PENALTY OF RS. 27,65,750/-. 11. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) FINDING THAT IN QUANTUM APPEAL RELIEF OF RS. 1,12,3 60/- WAS ALLOWED, HE DELETED THAT THE PENALTY LEVIED IN RESP ECT OF RS. 1,12,360/- AND CONFIRMED THE LEVY OF PENALTY ON THE BALANCE 5 ITA N O. 3728/DEL/2017 AMOUNT AS HE WAS OF THE VIEW THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF THE BALANCE AMOUNT. 12. WE FIND THAT IT IS NOT IN DISPUTE THAT THE ASSE SSING OFFICER HAS NOT LEVIED ANY PENALTY ON THE GROUND OF FURNISHING OF ANY INACCURATE PARTICULARS OF INCOME BY THE ASSE SSEE. THE CHARGE WHICH WAS FRAMED AGAINST THE ASSESSEE BY THE ASSESSING OFFICER WAS THE GUILT OF CONCEALMENT OF P ARTICULARS OF INCOME AND NO CHARGE WAS FRAMED FOR FURNISHING ANY INACCURATE PARTICULARS OF INCOME. 13. FURTHER, WE FIND THAT THE CIT(A) BEFORE HOLDING THE ASSESSEE GUILTY OF FURNISHING OF INACCURATE PARTICU LARS OF INCOME HAS NOT ISSUED ANY SHOW CAUSE NOTICE TO THE ASSESSEE AND HAS NOT ALLOWED ANY OPPORTUNITY OF HEARING TO T HE ASSESSEE IN RESPECT OF THAT CHARGE. IN THE CIRCUMST ANCES, THE ORDER OF THE COMMISSIONER OF INCOME TAX IS BAD IN L AW AND UNSUSTAINABLE. 14. MOREOVER, WE FIND THAT NO PARTICULARS OF INCOME WHICH WAS CONCEALED BY THE ASSESSEE COULD BE POINTED OUT BY THE REVENUE. THEREFORE, WE DELETE THE PENALTY LEVIED U/ S 271(1)(C) AGAINST THE ASSESSEE AND ALLOW THE GROUNDS OF APPE AL OF THE ASSESSEE. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 6 ITA N O. 3728/DEL/2017 ORDER PRONOUNCED IN THE COURT ON 17 TH DECEMBER, 2018 AT NEW DELHI. SD/- SD/- (KULDIP SINGH) (N.S.SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17.12.2018 *BR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 12 .1 2 .2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 1 3 .1 2 .2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 14.12.2018 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 17.12.2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 17.12.2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 17.12.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 7 ITA N O. 3728/DEL/2017