CHARLES CORREA, MUMBAI V. ACIT RG 11(2), MUMBAI

ITA 3934/MUM/2010

• Counselvise Citation: 393419914 RSA 2010
• Duration Of Justice: 1 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-05-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 14-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S RAWAL
• Assessee Lawyers: R C JAIN
• Keywords: Bonafide belief; Wrong claim; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, C, MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND RAJENDRA SINGH ( A.M ) ITA NO.3934/MUM/2010 (ASSESSMENT YEAR: 2002-03) MR. CHARLES CORREA ENGINEERING CENTRE 9, MATHEW ROAD, MUMBAI-400 004. PAN: AAAPC 0002G ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 11(2), AAYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI-400 020. APPELLANT V/S RESPONDENT APPELLANT BY : SHRI R.C. JAIN RESPONDENT BY : SHRI R.S.RAWAL O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 2.3.2010 PASSED BY THE LEAR NED COMMISSIONER OF INCOME TAX (A) FOR THE ASSESSMENT YEAR 2002-03. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS AN AARCHITECT BY PROFESSION AND HAS SHOWN INCOME FROM FOREIGN SOURCES CLAIMING DEDUCTION OF RS.65,55,660 /- UNDER SECTION 80-O OF THE INCOME TAX ACT, 1961 (THE ACT) ON AN AMOUNT OF RS.2,18,52,198/-. HOWEVER, THE AO ALLO WED DEDUCTION OF RS.39,71,428/- ONLY AS THE ASSESSEE F AILED TO SUBMIT THE DETAILED EVIDENCE CALLED BY THE AO TO SUBSTANTIATE THE CLAIM MADE. ON APPEAL, THE LEARN ED COMMISSIONER OF INCOME TAX (A), HOWEVER, RESTRICTED THE ITA NO.3934/MUM/2010 (ASSESSMENT YEAR: 2002-03) 2 DISALLOWANCE TO 25% OF RS.79,16,715/- AND DIRECTED THE AO TO RE-CALCULATE THE BENEFIT UNDER SECTION 80-O OF T HE ACT ACCORDINGLY. THE AO AFTER GIVING EFFECT TO THE OR DER OF THE LEARNED COMMISSIONER OF INCOME TAX (A) ISSUED N OTICE TO SHOW CAUSE AS TO WHY PENALTY UNDER SECTION 271(1)( C ) MAY NOT BE IMPOSED. IN RESPONSE, IT WAS INTER ALIA SUB MITTED BY THE ASSESSEE THAT THE ASSESSEE HAS NOT GIVEN AN INA CCURATE PARTICULARS TO CONCEAL THE INCOME. HOWEVER, THE AO WAS OF THE VIEW THAT TO THE EXTENT OF DIFFERENCE OF DISAL LOWANCE OF DEDUCTION UNDER SECTION 80-O OF THE ACT, THE ASSE SSEE HAS CONCEALED HIS INCOME IN MUCH AS FURNISHED INACCU RATE PARTICULARS OF INCOME AND ACCORDINGLY IMPOSED PENAL TY OF RS. 6,16,354/- VIDE ORDER DATED 28.3.2007 PASSED U NDER SECTION 271 (1)( C ) OF THE ACT. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (A) FOR THE SAME REASONS UPHELD THE PENALTY IMPOSED BY THE AO. 3. BEING AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A) THE ASSESSEE IS IN A PPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SUSTE NANCE OF PENALTY IMPOSED BY THE AO. 4. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT THE TRIBUNAL IN THE ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2003-04 ON THE SIMILA R ITA NO.3934/MUM/2010 (ASSESSMENT YEAR: 2002-03) 3 DISALLOWANCE OF EXPENSES HAS DELETED THE PENALTY I MPOSED BY THE AO, THEREFORE, IN VIEW OF THE ORDER OF THE TRIBUNAL, THE PENALTY IMPOSED BY THE AO AND SUSTAINED BY THE LEARNED COMMISSIONER OF INCOME TAX (A) BE DELETED. HE HAS ALSO PLACED ON RECORD THE COPY OF THE SAID ORDER OF THE TRIBUNAL. 5. ON THE OTHER HAND, THE LEARNED D.R. SUPPORTS THE ORDER OF THE AO AND THE LEARNED COMMISSIONER OF INCOME TAX(A). 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECO RD. WE FIND THAT THERE IS NO DISPUTE THAT THE PENALTY UND ER SECTION 271(1)( C ) OF THE ACT WAS IMPOSED BY THE AO ON T HE SUSTENANCE OF DISALLOWANCE OF DEDUCTION UNDER SECT ION 80-O OF THE ACT. WE FURTHER FIND THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A) SUSTAINING THE DISA LLOWANCE TO 25% OF RS.79,16,715/- HAS BEEN UPHELD BY THE T RIBUNAL IN THE ASSESSEES OWN IN SHRI CHARLES M.CORREA V/S THE ACIT AND VICE-VERSA IN ITA NOS.2718/MUM/2006 AND 2888/MUM/2006 FOR THE ASSESSMENT YEAR : 2002-03 V IDE ORDER DATED 12.11.2008. WE FURTHER FIND THAT THE TRIBUNAL IN THE ASSESSEES OWN CASE IN MR. CHARLES CORREA V /S ACIT IN ITA NO.3387/MUM/2009 VIDE ORDER DATED 4.6.2010 ON THE DISALLOWANCE OF FOREIGN TRAVELLING EXPENSES HAS DE LETED THE PENALTY IMPOSED BY THE AO VIDE FINDINGS RECORDED IN ITA NO.3934/MUM/2010 (ASSESSMENT YEAR: 2002-03) 4 PARAGRAPHS 6 TO 8 OF THE ORDER OF THE TRIBUNAL WHIC H ARE REPRODUCED AS UNDER : 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABL E ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE HAS DISCLOSED ALL THE DETAILS OF FOREIGN TRAVEL EXPENSES. THE DISALLOWANCE OF RS.37,75,913/- WAS MADE BY THE ASSESSING OFFICER ON THE GROUND THA T THE INVOLVEMENT OF PERSONAL EXPENDITURE IS NOT RULE D OUT. IN ORDER TO APPLY THE PROVISIONS OF SECTION 271(1)(C), THERE HAS TO BE CONCEALMENT OF PARTICULA RS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. IN THE PRESENT CASE IT IS NOT THE CA SE OF THE AO THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME. THE AO HAS IMPOSED PENALTY ON THE GROUND THAT THE ASSESSEE HAS FURNISH ED INACCURATE PARTICULARS OF HIS INCOME. 7. IN A RECENT JUDGMENT OF THE HONBLE APEX COURT I N CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158(SC) THEIR LORDSHIPS, AFTER CONSIDERING VARIOUS DECISIONS INCLUDING DILIP N. SHROFF VS. JCI T (2007) 291 ITR 519(SC) AND UNION OF INDIA VS. 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) OF THE INCOME- TAX ACT, 1961, SUGGESTS THAT IN ORDER T O BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF TH E PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY , 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 MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HEL D GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORD ER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ITA NO.3934/MUM/2010 (ASSESSMENT YEAR: 2002-03) 5 ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY 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 SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT 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 REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 8. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF HON BLE APEX COURT AND KEEPING IN VIEW THAT IT IS NOT THE C ASE OF THE REVENUE THAT THE ASSESSEE HAS NOT FILED COMPLET E PARTICULARS OF HIS INCOME OR IT IS NOT THE CASE OF BONAFIDE BELIEF OR THE EXPLANATION OFFERED BY THE ASSESSEE W AS FOUND TO BE FALSE OR UNTRUE, WE ARE OF THE VIEW THA T MAKING A WRONG CLAIM IS NOT AT PAR WITH CONCEALMENT OR GIVING OF INACCURATE INFORMATION, WHICH MAY CALL FO R LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. THIS VIEW ALS O FINDS SUPPORT FROM THE RECENT DECISIONS IN CIT VS. SIDHAR THA ENTERPRISES (2010) 322 ITR 80 (P&H) AND CIT VS. SHAHABAD CO-OP. SUGAR MILLS LTD. (2010) 322 ITR 73(P&H). ACCORDINGLY THE PENALTY IMPOSED BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) I S DELETED. THE GROUNDS TAKEN BY THE ASSESSEE ARE, THEREFORE, ALLOWED. IN THE ABSENCE OF ANY DISTINGUISHING FEATURES BROUG HT ON RECORD BY THE REVENUE, WE RESPECTFULLY FOLLOWING TH E ORDER OF THE TRIBUNAL (SUPRA) HOLD THAT MERELY BECAUSE THE ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80-O, D UE TO DIFFERENCE OF OPINION, WAS NOT ALLOWED IN FULL OR PARTLY DISALLOWED DOES NOT MEAN THAT THE ASSESSEE HAS CONC EALED HIS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF THE ITA NO.3934/MUM/2010 (ASSESSMENT YEAR: 2002-03) 6 INCOME. IT IS NOT THE CASE OF THE REVENUE THAT TH E CLAIM OF DEDUCTION UNDER SECTION 80-O OF THE ACT WAS FOUND TO BE FALSE. ACCORDINGLY THE PENALTY IMPOSED BY THE AO UNDER SECTION 271(1)(C) AND SUSTAINED BY THE LEARNED COMM ISSIONER OF INCOME TAX (A) IS DELETED. THE GROUNDS TAKEN B Y THE ASSESSEE ARE THEREFORE ALLOWED. 7. IN THE RESULT, THE ASSESSEES APPEAL STANDS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH MAY,2011. SD SD (RAJENDRA SINGH ) (D.K.A GARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 20 TH MAY, 2011 SRL:18511 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILED. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI