THE ITO, 5 (3), V. M/S DINESH & COMPANY,

ITA 386/IND/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2437 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-11-2009
• Assessment Year: 2000-2001
• Appeal Filed On: 01-06-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: KAMLESH JAIN
• Keywords: Difference of opinion
• Section: 271(1)(c)

Judgement Text

PAGE 1 OF 6 - I.T.A.NO. 386/IND/2006 M/S. DINESH & COMPANY, SANAWAD IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. : N.A. I.T.A.NO.386/IND/2006 A.Y. : 2000-01 INCOME-TAX OFFICER, M/S. DINESH & COMPANY, 5(3), VS KHARGONE RAOD, INDORE. SANAWAD APPELLANT RESPONDENT APPELLANT BY : SMT.APARNA KARAN, SR. DR RESPONDENT BY : SHRI KAMLESH JAIN, ADV. DATE OF HEARING : 24/11/2009 O R D E R PER V.K. GUPTA, A.M. THIS APPEAL FILED BY THE REVENUE ARISES OUT OF ORDE R OF THE LD. CIT(A) DATED 18.4.2006, FOR THE ASSESSMENT YEAR 200 0-01. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. IN THIS APPEAL, THE REVENUE IS AGGRIEVED BY THE DE CISION OF LD. CIT(A) IN CANCELLING THE PENALTY OF RS. 2,01,500/- LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX A CT, 1961. PAGE 2 OF 6 - I.T.A.NO. 386/IND/2006 M/S. DINESH & COMPANY, SANAWAD 4. THE FACTS, IN BRIEF, ARE THAT THE A.O. MADE TOTAL A DDITIONS OF RS. 3,97,551/- OUT OF VARIOUS EXPENSES INCURRED AT BRAN CH OFFICE AND HEAD OFFICE OF THE ASSESSEE. THE TRIBUNAL, ON APPEAL, BY THE ASSESSEE, GAVE RELIEF OF RS. 1,35,933/- IN AGGREGATE. THUS, THE TR IBUNAL CONFIRMED DISALLOWANCES TO THE EXTENT OF RS. 2,61,668/-, WHIC H ARE DETAILED AS UNDER :- BRANCH OFFICE 1. OUT OF SALARY EXPENSES RS. 84,239/- 2. OUT OF SHOP EXPENSES RS. 50,000/- 3. OUT OF TRAVELLING EXPENSES RS. 20,000/- 4. OUT OF WORK SHOP EXPENSES RS. 5,481/- 5. OUT OF COMMISSION TO SUB DEALER RS. 2,390/- 6. OUT OF ADVERTISEMENT EXPENSES RS. 6,500/- HEAD OFFICE 7. OUT OF PETROL & DIESEL EXPS. RS. 2,497/- 8. OUT OF OFFICE EXPENSES RS. 2,497/- 9. OUT OF STATIONERY EXPENSES RS. 4,220/- 10. OUT OF TRAVELLING EXPS. RS. 3,000/- 11. OUT OF TELEPHONE EXPENSES RS. 2,000/- 12. OUT OF ENTERTAINMENT EXPENSES RS. 1,844/ - 13. OUT OF SALARY EXPENSES RS. 15,000/- 14. REMUNERATION TO PARTNERS RS. 62,000/- RS. 2,61,668/- PAGE 3 OF 6 - I.T.A.NO. 386/IND/2006 M/S. DINESH & COMPANY, SANAWAD 5. THE A.O., THEREAFTER, INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961, WHEREIN THE ASSESSEE S UBMITTED THAT SINCE MAJOR ADDITIONS HAD BEEN DELETED AND ASSESSED INCOM E WAS LOSS ULTIMATELY, HENCE, NO PENALTY WAS LEVIABLE. THE ASS ESSEE ALSO PLEADED THAT MOST OF THE ADDITIONS WERE CASE OF ESTIMATION AND, DIFFERENCE OF OPINION AND CONSEQUENTLY, THE PENALTY U/S 271(1)(C) OF THE ACT COULD NOT BE LEVIED. THE A.O., HOWEVER, HELD THAT NO ADDITION HA D BEEN MADE ON PRESUMPTIVE OR ESTIMATION BASIS, HENCE, THE RELEVAN T CONTENTIONS OF THE ASSESSEE WERE NOT ACCEPTABLE. THE A.O. ALSO HELD TH AT ELEMENT OF FURNISHING OF INACCURATE PARTICULARS AND CONCEALMEN T OF INCOME HAD BEEN ESTABLISHED. THE A.O., ACCORDINGLY, LEVIED A PENALT Y @ 200% OF THE TAX INVOLVED AND WORKED OUT THE SAME AT RS. 2,01,500/-. 6. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER INTO APPEAL BEFORE THE LD. CIT(A), WHEREIN SUBMISSIONS MADE BEF ORE THE A.O. WERE REITERATED. THE LD. CIT(A), AFTER CONSIDERING THE S UBMISSIONS OF THE ASSESSEE HELD PROVISIONS OF SECTION 271(1)(C) OF TH E ACT HAD BEEN AMENDED WITH EFFECT FROM 1.4.2003, HENCE, IN THE CASE OF RETURN FILED PRIOR TO SUCH AMENDMENT AND THE ASSESSED INCOME BEI NG LOSS, NO PENALTY COULD BE IMPOSED. THE LD. CIT(A), THEREAFTER, HELD THAT MERE FACT THAT MERELY BECAUSE A CLAIM FOR EXPENDITURE WAS REJECTED WHICH WOULD NOT PAGE 4 OF 6 - I.T.A.NO. 386/IND/2006 M/S. DINESH & COMPANY, SANAWAD LEAD TO AN INFERENCE THAT THE ASSESSEE HAD FURNISHE D INACCURATE PARTICULARS OF INCOME AND, IN THIS REGARD, HE PLACED RELIANCE O N VARIOUS JUDICIAL DECISIONS. ACCORDINGLY, FOR BOTH THESE REASONS, HE CANCELLED THE PENALTY LEVIED BY THE ASSESSING OFFICER. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 7. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE QUANTUM ADDITIONS HAD BEEN CONFIRMED BY THE TRIBUN AL AND IT WAS NOT A CASE OF ESTIMATION OR DISALLOWANCE ON ACCOUNT OF D IFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE A.O., HENCE, PENALTY WAS WRONGLY CANCELLED BY THE CIT(A). SHE ALSO CONTENDED THAT NO W IN VIEW OF THE RECENT DECISIONS OF THE HON'BLE SUPREME COURT, PENA LTY U/S 271(1)(C) OF THE ACT COULD BE LEVIED EVEN IN THE CASE OF AN ASSE SSED LOSS IN THE YEAR UNDER CONSIDERATION ALSO. 8. THE LEARNED COUNSEL, ON THE OTHER HAND, CONTENDED T HAT THE LD. CIT(A) HAD CANCELLED THE PENALTY NOT ONLY FOR THE R EASON THAT IT WAS A CASE OF ASSESSED LOSS BUT ALSO ON MERITS, HENCE, TH E ORDER OF THE LD. CIT(A) WAS LIABLE TO BE CONFIRMED. HE FURTHER PLACE D RELIANCE ON THE SUBMISSIONS MADE BY HIM BEFORE THE LD. CIT(A) AND H IS FINDINGS. 9. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. PAGE 5 OF 6 - I.T.A.NO. 386/IND/2006 M/S. DINESH & COMPANY, SANAWAD 10. IT IS NOTED THAT ONE OF THE MAJOR DISALLOWANCES CON FIRMED BY THE TRIBUNAL IS IN REGARD TO THE SALARY OF EMPLOYEES AT BRANCH OFFICE AMOUNTING TO RS. 84,229/- AND THIS HAS BEEN CONFIRM ED BY THE TRIBUNAL FOR THE REASON THAT THE SAID PAYMENT WAS NOT SUPPOR TED BY THE VOUCHERS AND OTHER DOCUMENTARY EVIDENCES. THE OTHER DISALLOW ANCE OF RS. 50,000/- CONFIRMED BY THE TRIBUNAL PERTAINS TO SHOP EXPENSES OF RS. 91,227/- CLAIMED TO HAVE BEEN INCURRED BY THE ASSESSEE AT BR ANCH OFFICE. WE FIND THAT THIS DISALLOWANCE HAS ALSO BEEN CONFIRMED BY THE TRIBUNAL FOR THE REASON THAT THE ASSESSEE FAILED TO JUSTIFY THE SAME NOR IT FURNISHED ANY DOCUMENTARY EVIDENCES IN REGARD THERETO. THE OTHER MAJOR DISALLOWANCE OF RS. 62,000/-, WHICH WAS CONCEDED BY THE ASSESSEE ITSELF IN THE COURSE OF ASSESSMENT PROCEEDINGS. THUS, THESE ARE NOT THE CASES OF DIFFERENCE OF OPINION OR ESTIMATION BY THE ASSESSING OFFICER. HEN CE, IN OUR OPINION, TO THIS EXTENT, THE ASSESSEE IS GUILTY OF FURNISHING I NACCURATE PARTICULARS OF INCOME. EXCEPT THESE DISALLOWANCES, OTHER DISALLOWA NCES CONFIRMED BY THE TRIBUNAL AND MADE BY THE ASSESSING OFFICER APP EAR TO BE THE CASE OF AD-HOC DISALLOWANCES/ESTIMATION, WHICH DOES NOT FAL L WITHIN THE AMBIT OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. ACCORDINGLY, WE CONFIRM THE LEVY OF PENALTY ONLY IN RESPECT OF SPECIFIC DISALLOWANCES MENTIONED HEREINABOVE, WHICH HAVE BEE N HELD BY US TO BE IN THE REALM OF FURNISHING OF INACCURATE PARTICULAR S OF INCOME. WE FURTHER PAGE 6 OF 6 - I.T.A.NO. 386/IND/2006 M/S. DINESH & COMPANY, SANAWAD HOLD THAT THE PENALTY SHOULD BE LEVIED THEREON @ 10 0% OF THE TAX SOUGHT TO BE EVADED AND NOT @ 200 %. THUS, THIS GROUND OF THE REVENUE STANDS PARTLY ALLOWED. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 10 TH DECEMBER, 2009. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 10 TH DECEMBER, 2009. CPU* 2711812