Sri Amitabh Chaturvedi, New Delhi V. DCIT, New Delhi

ITA 3939/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2839 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 09-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R C DANDAY
• Assessee Lawyers: SK SAMPATH
• Keywords: Business expenditure; Difference of opinion
• Section: 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ES: A , NEW DELHI BEFORE SHRI R.K. PANDA , ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE , JUDICIAL MEMBER ITA NO. 3939 /DEL/201 4 AY: 200 8 - 09 SH. AMITABH CHATURVEDI VS. DY.CIT, CIRCLE 37(1) CIT(A) 346, LGF, SATHAL MARG NEW DELHI DEFENCE COLONY NEW DELHI 110 024 PAN: AA PPC 4891 E (APPELLANT) (RESPONDENT) APPELLAN T BY : SH. SK SAMPATH, ADV. RESPONDENT BY : SH. R.C. DANDAY, SR. D.R. DATE OF HEARING : 12 TH JUNE, 2017 DATE OF PRONOUNCEMENT : 15TH JUNE, 2017 ORDER PER R.K. PANDA , ACCOUNTANT MEMBER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 9 TH JUNE, 2014 OF THE LD. CIT(A) - 28, NEW DELHI RELATING TO THE ASSESSMENT YEAR (A.Y.) 2009 - 10. 2. LEVY OF PENALTY OF RS.1,16,858/ - BY THE ASSESSING OFFICER (A.O.) U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 ( THE ACT ) AND CONFIRMED BY THE LD. ITA NO. 3939/DEL/2014 A.Y.: 2008 - 09 SH. AMITABH CHATURVEDI VS. DY.CIT 2 COMMISSIONER OF INCOME TAX (APPEALS) ( CIT(A) FOR SHORT) IS THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE GROUNDS OF APPEAL. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS A SR. ADVOCATE AND PROPRIETOR OF MINE & Y OUNG AND IS PRACTICING IN THE AREA OF REAL ESTAT E AND INFRASTRUCTURE LAW, ARBITRATION AND LITIGATION, I PR LAWS, AVIATION LAWS AND CORPORATE LAWS. HE FILED HIS RETURN OF INCOME ON 25 TH SEPTEMBER,2008 DECLARING TOTAL INCOME OF RS.3,00,37,424/ - . THE A.O. IN THE ORDER PASSED U/S 143(3) OF THE ACT APART F ROM VARIOUS ADDITIONS HAD MADE ADDITION OF RS.36,134/ - ON ACCOUNT OF ELECTRICITY CHARGES IN RESPECT OF THE RESIDENCE AT B - 241, G.K. I, NEW DELHI AND B - 38, DEFENCE COLONY, NEW DELHI BEING PERSONAL IN NATURE . SIMILARLY HE HAD ALSO MADE ADDITION OF RS. 3,07,665/ - ON ACCOUNT OF BUILDING RENOVATION EXPENSES IN RESP ECT OF THE FOLLOWING PROPERTIES BEING NOT RELATED TO HIS PROFESSION. DATE PLACE AMOUNT RS. 26.11.2007 GURGAON FLAT WORK 66,500/ - 02.02.2008 GK I, NEW DELHI 1,04,290/ - 04 .03.2008 CIT(A) - 38, DEFENCE COLONY, NEW DELHI (AS PER BILL DATED 4.3.2008) 1,00,000/ - 18.03.2008 CIT(A) - 38, DEFENCE COLONY, NEW DELHI (AS PER BILL DATED 11.3.2008) 14,130/ - 20.03.2008 DEFENCE COLONY (BILLS NOT GIVEN) 22,745/ - TOTAL: 3,07,665/ - ITA NO. 3939/DEL/2014 A.Y.: 2008 - 09 SH. AMITABH CHATURVEDI VS. DY.CIT 3 THE ABOVE ADDITIONS WERE CONFIRMED BY THE LD. CIT(A). THE A.O. THEREAFTER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT . R EJECTING THE VARIOUS EXP LANATIONS GIVEN BY THE ASSESSEE AND RELYING ON VARIOUS DECISIONS THE A.O. LEVIED PENALTY OF RS.1,16,85 8/ - U/S 271(1)(C) OF THE ACT BEING THE MINIMUM PENALTY LEVIABLE ON TAX SOUGHT TO BE EVADED. 4. IN APPEAL THE LD. CIT(A) CONFIRMED THE PENALTY LEVIED BY THE A.O. W HILE DOING SO HE OBSERVED THAT THE ASSESSEE HAS WRONGLY CLAIMED THE EXPENSES INCURRED ON THE RESIDENTIAL PROPERTY AS BUSINESS EXPENSES. ACCORDING TO HIM IT IS NOT A CASE WHERE THERE IS DIFFERENCE OF OPINION . R ATHER IT IS A CASE WHERE THERE IS DIRECT EVIDENCE TO SHOW THAT THE EX PENSES HAVE BEEN INCURRED ON THE RESIDENTIAL PROPERTY TO CLAIM THE SAME AS BUSINESS EXPENSES. THIS ACCORDING TO THE LD. CIT(A) SHOWS THAT THE CLAIM OF THE ASSESSEE WAS NOT BONAFIDE. HE REFERRED TO THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF C IT VS. ESCORT FINANCE LTD. REPORTED IN 328 ITR 44 WHEREIN IT HAS BEEN HELD THAT EVEN IF THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS BUT IF THE CLAIM WHICH IS EX - FACIE BOGUS IS MADE, THE SAME WILL STILL ATTRACT THE PENALTY P ROVISIONS. HE ALSO REFERRED TO THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ZOOM COMMUNICATIONS PVT . LTD. WHEREIN IT IS HELD THAT VERY FEW RETURNS ARE SELECTED FOR SCRUTINY AND, THEREFORE, NON SUSTAINABLE CLAIMS CANNOT BE SAID TO BE BO NAFIDE. IT HAS BEEN HELD THAT PRIMA FACIE NON - SUSTAINABLE CLAIM MADE IN THE RETURN OF INCOME SHALL DEFINITELY INVITE PENALTY U/S ITA NO. 3939/DEL/2014 A.Y.: 2008 - 09 SH. AMITABH CHATURVEDI VS. DY.CIT 4 271(1)(C) OF THE ACT. HE ACCORDINGLY UPHELD THE PENALTY LEVIED BY THE A.O. U/S 271(1)(C) OF THE ACT. 5. AGGRIEVED BY SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LD.COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT WHEN THE ASSESSEE HAD DECLARED INCOME OF RS.3,00,37,424/ - HE HAS NO INTENTION TO CLAIM ANY BOGUS EXPENDITURE OF SUCH LOW AMOUNT. HE SUBMITTED THAT ALL THE EXPENSES ARE GENUINE EXPENSES . M ERELY BECAUSE THE ADDITION HAS BEEN CONFIRMED, THE SAME DOES NOT CALL FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. HE SUBMITTED THAT VARIOUS DECISIONS RELIED BY THE LD. CIT(A) ARE DISTINGUISHA BLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 6.1 . THE LD.D.R. ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE LD. CIT(A). 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE A.O. AND THE LD. CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSEE IN T HE INSTANT CASE IS A SR. LAWYER WHO HAS FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.3,00,37,424/ - . T HE PENALTY U /S 271(1)(C) ITA NO. 3939/DEL/2014 A.Y.: 2008 - 09 SH. AMITABH CHATURVEDI VS. DY.CIT 5 OF THE ACT IN THE INSTANT CASE HAS BEEN LEVIED ON ACCOUNT OF DISALLOWANCE OF ELECTRICITY CHARGES OF RS.36,134/ - AND DI SALLOWANCE OF BUILDING RENOVATION EXPENSES OF RS.3,07,665/ - THE DETAILS OF WHICH ARE ALREADY GIVEN IN THE PRECEDING PARAGRAPHS. IT IS THE ALLEGATION OF THE REVENUE THAT THE ASSESSEE HAS CLAIMED THESE BOGUS EXPENSES TO SUPPRESS ITS TAXABLE INCOME FOR WHICH LEVY OF PENALTY U/S 271(1)(C) OF THE ACT IS ATTRACTED. I T IS THE CASE OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAS DECLARED SUCH HUGE INCOME AND HE HAS NO INTENTION OF CLAIMING ANY BOGUS EXPENDITURE SO AS TO REDUCE ITS TAXABLE INCOME BY A FEW LAKHS. ACCORDING TO HIM THE CLAIM OF EXPENSES IS BONAFIDE AND MERELY BECAUSE THE EXPENDITURE HAS BEEN DISALLOWED THE SAME DOES NOT ATTRACT THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 8. WE FIND MERIT IN THE ABOVE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. ADMITTEDLY THE ASSESSEE HAS FILED HIS RETURN OF INCOME DECLARING INCOME OF MORE THAN RS.3 CRORES. THE PENALTY HAS BEEN LEVIED ON ACCOUNT OF DISALLOWANCE OF ELECTRICITY CHARGES OF RS.36,134/ - AND DISALLOWANCE OF BUILDING RENOVATION EXPENSES OF RS.3,07,665/ - BEING THE EXPENSES INCURRED ON THE RESIDENTIAL PROPERTIES. THE EXPENSES PER SE ARE NOT BOGUS . THE DISPUTE IS REGARDING THE ALLOWABILITY OF SUCH EXPENSES AS DEDUCTION OUT OF PROFESSIONAL INCOME SINCE ACCORDING TO THE REVENUE SUCH EXPENS ES ARE INCURRED IN RESPECT OF THE PROPERTIES USED FOR THE RESIDENCE. IN OUR OPINION SUCH EXPENSES MAY NOT BE ALLOWED AS EXPENSES INCURRED FOR WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF PROFESSION . HOWEVER, THE SAME IN OUR OPINION DOES NOT CALL FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT . AN ADVOCATE ALTHOUGH FUNCTIONS FROM HIS OFFICE BUT IT CANNOT BE DENIED THAT SOMETIMES HE ALSO PERFORMS FROM HIS RESIDENCE . M ERELY BECAUSE ITA NO. 3939/DEL/2014 A.Y.: 2008 - 09 SH. AMITABH CHATURVEDI VS. DY.CIT 6 THE EXPENDITURE HAS BEEN DISALLOWED TREATING THE SAME AS INCURRED FOR THE RESIDE NTIAL PROPERTIES , T HE SAME IN OUR OPINION DOES NOT CALL FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. FURTHER THE DISALLOWANCE OF SUCH EXPENSES IS TOO LITTLE AS COMPARED TO THE HUGE TAXABLE INCOME DECLARED BY THE ASSESSEE. THERE CANNOT BE ANY MOTIVE A TTRIBUTABLE TO THE ASSESSEE IN THE INSTANT CASE TO SUPPRESS HIS PROFESSIONAL INCOME BY A FEW LAKHS ESPECIALLY WHEN HE IS DECLARING SUCH HUGE TAXABLE INCOME. C ONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND CONSIDERING THE HUGE INCOME DECLARED BY THE ASSESSEE, THE PENALTY U/S 271(1)(C) OF THE ACT ON ACCOUNT OF DISALLOWANCE OF SMALL EXPENSES , IN OUR OPINION , IS UNCALLED FOR. THE VARIOUS DECISIONS RELIED ON BY THE LD. CIT(A) IN OUR OPINION ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A)AND DIRECT THE A.O. TO CANCEL THE PENALTY. THE GROUND RAISED BY THE ASSESSEE IS A CCORDINGLY ALLOWED. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 15 TH JUNE, 2017. SD/ - SD/ - ( SUCHITRA KAMBLE ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 15 TH JUNE, 2017 * MANGA ITA NO. 3939/DEL/2014 A.Y.: 2008 - 09 SH. AMITABH CHATURVEDI VS. DY.CIT 7 COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES NEW DELHI