ACIT, New Delhi V. Shri Govind Ambadi, New Delhi

ITA 3765/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53021 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-10-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 05-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Assessee Lawyers: I M SA NSI
• Keywords: Wrong claim; Revised return
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C DELHI BEFORE SHRI C.L. SETHI AND SHRI K.G. BANSAL ITA NO. 3765(DEL)/2011 ASSESSMENT YEAR: 2007-08 ASSTT. COMMISSIONER OF SHR I GOBIND AMBADY, INCOME-TAX, CIRCLE 46(1), VS. 55, MAYFAIR GARDEN, NEW DELHI. HAUZ KHAS, NEW DELHI-110016. PAN: AAAPA3905G (APPELLANT) (RESPON DENT) APPELLANT BY : SHRI SALIL MISHRA, DR RESPONDENT BY : SH RI I.M. SANSI, C.A. DATE OF HEARING : 19.10.2011 DATE OF PRONOUNCEMENT: 25.10.2011. ORDER PER K.G. BANSAL : AM THE ONLY GROUND TAKEN IN THIS APPEAL FILED BY THE REVENUE IS THAT THE LD. CIT(APPEALS) ERRED IN DELETING THE PENALTY OF RS. 4,42,723/- LEVIED BY THE AO U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (THE ACT FOR SHORT). 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED HIS RETURN ON 31.07.2007 DECLARING TOTAL INCOME OF RS. 1,56,03,2 40/-. THE ASSESSMENT U/S 143(3) WAS COMPLETED ON 10.06.2009 AT TOTAL INCOM E OF RS. 1,81,19,750/-. IN THIS ASSESSMENT, THE CLAIM OF THE ASSESSEE FO R DEDUCTION OF RS. 18,25,166/- U/S 80RRA OF THE ACT WAS DENIED. I T IS MENTIONED THAT THIS ITA NO. 3765(DEL)/2011 2 DEDUCTION WAS CLAIMED FROM CONSULTANCY FEES OF RS . 1,21,67,777/- RECEIVED FROM GENEVA. SUCH DEDUCTION IS NOT ADMISSIBLE F OR THIS YEAR AS THE PROVISION WAS DELETED WITH EFFECT FROM 01.04.2005 . IN OTHER WORDS, THE DEDUCTION WAS ADMISSIBLE FOR AND UP TO ASSESSMEN T YEAR 2004-05 AND NOT THEREAFTER. THIS PART OF THE ORDER HAS BEEN AC CEPTED BY THE ASSESSEE. PENALTY PROCEEDINGS WERE ALSO INITIATED U/S 271 (1)(C) OF THE ACT. IT WAS SUBMITTED THAT THE ASSESSMENT PROCEEDINGS WERE COM PLETED ON 29.05.2009 BY THE ASSESSING OFFICER WITHOUT DETECTING THAT TH E CLAIM WAS NOT ADMISSIBLE. THE COUNSEL OF THE ASSESSEE REALIZED THAT THE CLAIM WAS ERRONEOUSLY MADE. THEREFORE, HE RETURNED TO THE O FFICE ON THAT DATE, 29.05.2009, WITH THE WRITTEN SUBMISSIONS. HOWEVER , HE WAS ASKED TO COME TO THE OFFICE ON 01.06.2009. THE SUBMISSION S WERE TAKEN ON RECORD ON THIS DATE. IN OTHER WORDS, IT WAS SUBMITTED THAT THE CLAIM HAD BEEN WITHDRAWN BEFORE THE NON-ADMISSIBILITY WAS DETEC TED BY THE AO. THESE SUBMISSIONS WERE EXAMINED IN THE PENALTY ORDER, I T IS MENTIONED THAT THERE IS NO DISPUTE THAT THE CLAIM OF THE ASSESSEE IS E RRONEOUS. THE CLAIM WAS NOT WITHDRAWN BY FILING ANY REVISED RETURN, WHICH COUL D HAVE BEEN FILED UP TO 31.03.2009. IT WAS ALSO SUBMITTED THAT THE CL AIM WAS MADE UNDER THE WRONG GUIDANCE OF THE TAX ADVISOR. HOWEVER, REL IANCE WAS PLACED ON THE DECISION IN THE CASE OF CIT, DELHI-IV VS. ESCORTS FINANCE LTD, (2010) 328 ITA NO. 3765(DEL)/2011 3 ITR 44 (DEL) TO COME TO THE CONCLUSION THAT THE A SSESSEE CANNOT TAKE SHELTER BEHIND THE GUIDANCE OF THE CHARTERED AC COUNTANT. THEREFORE, THE PENALTY WAS LEVIED. 2.1 BEFORE THE LD. CIT(APPEALS), IT WAS SUBMITTED THAT THE CLAIM WAS MADE ON THE ADVISE OF THE CHARTERED ACCOUNTANT, B ELIEVING IT TO BE ADMISSIBLE AS IN PAST. THE AO DID NOT DETECT T HE WRONG CLAIM TILL 29.05.2009 AND IT WAS ONLY THE COUNSEL OF THE ASS ESSEE WHO REALIZED THE MISTAKE AND WITHDREW THE CLAIM BY FILING WRITTEN SUBMISSIONS. THEREFORE, THERE WAS NO DETECTION ON THE PART OF THE AO. RELIANCE WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS (P) LTD., (2010) 189 TAXMAN 332 AND IT WAS ARGUED THAT SINCE ALL THE FACTS HAD BEEN DISCLOSED, THE PENALTY WA S NOT LEVIABLE. THE LD. CIT(APPEALS) CONSIDERED THE FACTS OF THE CASE A ND SUBMISSIONS MADE BEFORE HIM. IT IS MENTIONED IN THE IMPUGNED ORDE R THAT THE AO HAS NOT FOUND THE EXPLANATION OF THE ASSESSEE TO BE NO T BONA-FIDE. ALL FACTS MATERIAL TO COMPUTATION OF INCOME HAD BEEN DISCLO SED. THE DECISION IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS LTD., (2008) 306 ITR 277 (SC) HAS BEEN CONSIDERED BY THE SAME COURT IN T HE CASE OF RELIANCE PETRO PRODUCTS (P) LTD. RELYING ON THE LATTER DECISIO N, THE PENALTY WAS DELETED. ITA NO. 3765(DEL)/2011 4 3. BEFORE US, THE LD. DR REFERRED FACTS THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80RRA, WHICH WAS NOT ADMISSIBLE FO R THE YEAR UNDER CONSIDERATION AND, THEREFORE, THE DEDUCTION WAS DE NIED BY THE AO. THUS, IT IS A CASE OF MAKING PATENTLY FALSE CLAIM. HE REFERRED TO THE NOTE SHEET ENTRY DATED 29.05.2009 (IT SHOULD BE READ AS 28 .05.2009), WHICH SHOWS THAT THE REPRESENTATIVE OF THE ASSESSEE ATTENDED AND FILED WRITTEN REPLY. THEREAFTER, THE CASE WAS ADJOURNED TO 01.06.20 09. THE ENTRY ON 01.06.2009 IS TO THE EFFECT THAT THE REPRESENTA TIVE OF THE ASSESSEE ATTENDED, WHO WAS ASKED TO EXPLAIN THE CLAIM OF RS. 18,25,166/- U/S 80RRA. AFTER DISCUSSION, HE AGREED THAT THERE IS AN OMISSION IN MAKING THE CLAIM. THE ASSESSMENT ORDER WAS PASSED ON 10.06.2009. THUS, IT WAS ARGUED THAT IT WAS AFTER THE DETECTION BY THE AO THAT THE ASSESSEES REPRESENTATIVE WITHDREW THE CLAIM. THE LETTER DAT ED 29.05.2009, UNDER WHICH THE CLAIM HAS BEEN WITHDRAWN WAS ALSO REFE RRED TO AND IT IS SEEN THAT IT WAS FILED ON 01.06.2009. THUS, THE CASE O F THE LD. DR IS THAT A PATENTLY FALSE CLAIM WAS MADE, WHICH WAS DETECTED BY THE AO AND THEREAFTER THE ASSESSEE WITHDREW THE CLAIM. FURT HER, HE REFERRED TO THE ORDER OF THE LD. CIT(APPEALS). HE ASSAILED THE F INDING THAT THE AO HAS NOT FOUND THE EXPLANATION OFFERED BY THE ASSESSEE TO BE NOT BONA-FIDE. IT IS ITA NO. 3765(DEL)/2011 5 ARGUED THAT THE AO HAS EXPLICITLY HELD THAT THIS CASE RELATES TO A CLAIM WHICH IS CLEARLY INADMISSIBLE AND, THUS, IT IS NO T A CASE OF BONA FIDE ERROR OR WRONG CLAIM, BUT A CASE OF FALSE CLAIM. 3.1 IN REPLY, THE LD. COUNSEL REFERRED TO THE NOTE SHEET THAT THE CASE WAS DISCUSSED ON 28.05.2009 AND CLOSED. THEREAFTER, THE REPRESENTATIVE OF THE ASSESSEE WENT TO THE OFFICE AND FILED A LETTER DATED 29.05.2009 WITHDRAWING THE CLAIM AS HE DID NOT WANT THE REV ENUE TO SUFFER ON ACCOUNT OF A WRONG CLAIM MADE BY THE ASSESSEE ON HIS AD VICE. IN THIS CONNECTION, AN AFFIDAVIT DATED 05.10.2011 HAS ALSO BEEN FILE D FROM SHRI I.M. SANSI, THE COUNSEL, TO THE EFFECT THAT UNDER BONA FIDE BELI EF THAT THE PROVISIONS OF SECTION 80RRA ARE APPLICABLE TO THE ASSESSEE, S HRI GOVIND AMBADY, EVEN FOR ASSESSMENT YEAR 2007-08, HE WAS ADVIS ED ACCORDINGLY. THE ERROR OF JUDGMENT WAS REALIZED LATER ON AND THEREA FTER HE WAS ASKED TO WITHDRAW THE CLAIM, IF MADE. THEREFORE, IT IS ARGU ED THAT THE LD. CIT(APPEALS) HAS RIGHTLY DELETED THE PENALTY. 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. THE FACTS ARE THAT THE ASSESSEE HAD FILED HIS RETURN ON 31.07.2007 IN WHICH DEDUCTION OF RS. 18,25,166/- W AS CLAIMED U/S 80RRA ITA NO. 3765(DEL)/2011 6 OF THE ACT. THE PROVISION IS NOT APPLICABLE TO P ROCEEDINGS OF THIS YEAR AS IT WAS IN FORCE ONLY UP TO ASSESSMENT YEAR 2004-05. THE ASSESSEES REPRESENTATIVE ATTENDED BEFORE THE AO ON 28.05.2009 WHEN THE CASE WAS DISCUSSED AND ADJOURNED TO 01.06.2009. ON THIS DAY, HE WAS ASKED TO EXPLAIN THE CLAIM U/S 80RRA AND AFTER DISCUSSION HE AGREED THAT THERE IS AN OMISSION IN THE CLAIM. THE ASSESSMENT WAS COMPLETED ON 10.06.2009 AND TAX IN RESPECT OF THE WITHDRAWN CLAIM WAS PA ID AS PER DEMAND NOTICE ISSUED BY THE AO. THE QUESTION IS- WHETHER, IT IS A CASE OF A WRONG CLAIM OR A FALSE CLAIM AND WHETHER, THE ASSESSEE IS LIABLE TO PAY PENALTY OR NOT. 4.1 IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS LTD. (SUPRA), IT HAS BEEN HELD THAT THE PENALTY PROCEEDINGS ARE CIVIL IN NATURE, WHICH HAVE TO BE DECIDED BY TAKING INTO ACCOUNT THE PROVISIONS CONTAINED IN SECTION 271(1)(C) INCLUDING EXPLANATIONS THEREUNDER. UNDE R EXPLANATION 1, IT IS FOR THE ASSESSEE TO FURNISH HIS EXPLANATION REGARDIN G THE CLAIM MADE BY HIM. THE EXPLANATION IN THIS CASE IS THAT IT WAS MADE ON THE WRONG ADVICE OF THE REPRESENTATIVE AS IT WAS THOUGHT THAT THE DEDUC TION IS ADMISSIBLE AS IN PAST. APART FROM THE AFFIDAVIT FILED NOW, THERE IS NO EVIDENCE OF ANY ADVICE RENDERED BY THE COUNSEL. WITH A VIEW TO TEST THE TRUTHFULNESS OF THE EXPLANATION, STATEMENT OF INCOME FOR ASSESSMENT YEARS 2004-05 TO 2006- ITA NO. 3765(DEL)/2011 7 07 WERE ALSO CALLED FOR BY THE BENCH. IT IS S EEN THAT THE DEDUCTION HAD NOT BEEN CLAIMED IN ASSESSMENT YEAR 2004-05. T HE DEDUCTION WAS ALSO NOT CLAIMED IN ASSESSMENT YEAR 2005-06 AS HE RECEIVED SALARIES FROM TWO SOURCES AMOUNTING TO RS. 42,27,000/- AND RS. 13,08,900/-. THE NAME OF ABW, GENEVA APPEARS IN RESPECT OF ONE SOURCE OF SALARY. THE DEDUCTION WAS CLAIMED AT RS. 1,69,913/- IN ASSESS MENT YEAR 2006-07 ALTHOUGH THE SAME WAS NOT ADMISSIBLE TO THE ASS ESSEE FOR THIS YEAR ALSO. IT IS NOT EXPLAINED AS TO WHAT HAPPENED TO THE CL AIM MADE IN ASSESSMENT YEAR 2006-07. THE DEDUCTION HAS ALSO BEEN CLAIME D IN ASSESSMENT YEAR 2007-08. FROM THE ABOVE FACTS, IT CAN BE SEEN THAT THE DEDUCTION HAS NOT BEEN CLAIMED YEAR AFTER YEAR AND THERE WAS NO S UCH CLAIM FOR ASSESSMENT YEARS 2004-05 AND 2005-06. THEREFORE, IT CAN BE SAFELY CONCLUDED THAT THE CLAIM WAS MADE AFTER DUE DELIBERATION AND CONS IDERATION IN THE YEARS IN WHICH IT WAS THOUGHT THAT THE SAME IS ADMISSIBLE. THUS, THE SUBMISSION THAT THE ADVICE WAS GIVEN ON THE BASIS THAT THE DED UCTION WAS ADMISSIBLE AS IN EARLIER YEARS IS FALSE. THE FACTS NARRATED AB OVE ALSO SHOW THAT THE PROCEEDINGS WERE NOT CLOSED ON 28.05.2009 AS THE CASE WAS ADJOURNED TO 01.06.2009. ON THIS DATE, THE CLAIM WAS WITHDRAW N AFTER DETECTION AS MENTIONED IN THE ORDER SHEET DATED 01.06.2009, WHIC H HAS BEEN DULY SIGNED BY THE REPRESENTATIVE OF THE ASSESSEE. THEREFORE, THIS EXPLANATION IS ALSO ITA NO. 3765(DEL)/2011 8 FALSE. THE ASSESSEE DID NOT PAY TAX ON OR ABOUT 01.06.2009 BUT WAITED TILL THE DEMAND WAS RAISED BY THE AO ON PASSING THE ORD ER. THIS SHOWS THAT THE TAX WAS PAID ONLY ON COMPLETION OF ASSESSMENT LEA DING TO DENIAL OF THE CLAIM. THUS, THERE WAS DESIRE TO POSTPONE THE PA YMENT OF TAX. 4.2 COMING TO THE FURTHER CASES RELIED UPON BY TH E LD. COUNSEL, THE DECISION IN THE CASE OF ITO VS. PARIKH INVES TMENT & DEVELOPMENT (P) LTD., (2011) 43 SOT 537 IS THAT SINCE THE ASSESS EE HAD FURNISHED FULL PARTICULARS, THE PENALTY WAS NOT LEVIABLE NOTWITHS TANDING THE FACT THAT DEDUCTION U/S 80IB(10) WAS REDUCED BY THE AO B Y AN AMOUNT OF RS. 7,31,419/- REPRESENTING NET MISCELLANEOUS INCOME BY HOLDING THAT THIS AMOUNT DOES NOT REPRESENT INCOME FROM HOUSING DE VELOPMENT ACTIVITIES. THE FACTS OF THE CASE ARE DISTINGUISHABLE AS T HE ASSESSEE WAS ENTITLED TO THE DEDUCTION IN THE FIRST PLACE AND IT WAS ONLY A QUESTION REGARDING VARIOUS COMPONENTS OF INCOME ON WHICH THE DEDUCTIO N COULD BE CLAIMED. ON THE OTHER HAND, IN THE CASE OF CIT VS. GURBAC HAN LAL, (2001) 250 ITR 157 (DEL), IT HAS BEEN HELD THAT THE INITIAL BURD EN OF DISCHARGING THE ONUS UNDER EXPLANATION-1 IS ON THE ASSESSEE, WHICH AUTO MATICALLY COMES INTO OPERATION WHERE THE EXPLANATION OFFERED IS FOUND TO BE FALSE BY THE ASSESSING OFFICER. THE RATIO OF THIS CASE IS CLEA RLY APPLICABLE TO THE FACTS OF ITA NO. 3765(DEL)/2011 9 THE CASE AT HAND. THE FACTS OF THE CASE OF REL IANCE PETRO PRODUCTS (P) LTD. (SUPRA) ARE ALSO DISTINGUISHABLE. IN THAT CASE, THE ASSESSEE HAD CLAIMED DEDUCTION U/S 14A OF THE ACT. THE CASE OF THE REVENUE WAS THAT THE ASSESSEE CLAIMED EXCESSIVE DEDUCTION KNOWING THAT IT WAS INCORRECT AND, THEREFORE, IT AMOUNTED TO CONCEALMENT OF INCOME. T HE HONBLE COURT MENTIONED THAT PARTICULARS MEAN THE DETAILS FU RNISHED IN SUPPORT OF THE CLAIM. THESE DETAILS WERE CORRECTLY SUBMITTED AND, THEREFORE, THE PENALTY WAS NOT LEVIABLE. THE FACTS OF THE CASE BEFORE US ARE TOTALLY DIFFERENT, NAMELY, THAT DEDUCTION U/S 80RRA IS NOT AT ALL A DMISSIBLE TO THE ASSESSEE AND, THUS, THERE IS NO QUESTION OF GOING INTO ANY DETAIL OR DETAILS IN THE MATTER. THE EXPLANATION THAT THE CLAIM WAS MADE O N THE BASIS OF ADVICE THAT THE DEDUCTION IS ADMISSIBLE AS IN PAST HAS BEEN FOUND TO BE FACTUALLY INCORRECT AS NO SUCH CLAIM HAS BEEN MADE FOR AS SESSMENT YEARS 2004-05 AND 2005-06. THE ASSESSEE IS NOT ENTITLED TO DEDU CTION FOR ASSESSMENT YEAR 2006-07 ALSO, BUT IT IS NOT KNOWN AS TO WHAT HA S HAPPENED TO THE CLAIM MADE BY HIM UNDER THE PROVISION IN THIS YEAR. A LTHOUGH SHRI I.M. SANSI, THE COUNSEL, HAS FILED AN AFFIDAVIT, BUT IT IS S EEN THAT HE CONTINUES TO BE THE REPRESENTATIVE OF THE ASSESSEE AND NO EXPLANATION HAS BEEN SOUGHT FROM HIM ABOUT THE CIRCUMSTANCE IN WHICH SUCH A MISTAKE HA S BEEN COMMITTED BY HIM, LEADING TO DEFAULT IN DISCHARGE OF STATUTORY D UTY. IN THESE ITA NO. 3765(DEL)/2011 10 CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FACTS OF THE CASE OF ZOOM COMMUNICATIONS (P) LTD., 191 TAXMAN 179 (DEL) COM E NEARER TO THE FACTS OF THIS CASE. IN THAT CASE, THE HONBLE DELHI H IGH COURT DID NOT ACCEPT THE PLEA OF INADVERTENCE IN MAKING CLAIM FOR DEDU CTION OF INCOME-TAX AS THE CIRCUMSTANCES IN WHICH THE CLAIM WAS MADE COULD NOT BE EXPLAINED. THE FACTS ALSO FALL WITHIN THE RATIO OF THE DEC ISION IN THE CASE OF GURBACHAN LAL (SUPRA) AS WE FIND THAT THE EXPLA NATION FURNISHED BY THE ASSESSEE TO BE FALSE. THEREFORE, WE SET ASIDE T HE ORDER OF THE LD. CIT(APPEALS) AND RESTORE THE ORDER OF THE ASSESSIN G OFFICER. 5. IN THE RESULT, THE APPEAL IS ALLOWED. SD/- SD/- (C.L. SETHI) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA COPY OF THE ORDER FORWARDED TO:- SHRI GOBIND AMBADY, NEW DELHI. ACIT, CIRCLE 46(1), NEW DELHI. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.