Mr. Anil Malhotra, New Delhi V. ACIT, New Delhi

ITA 4059/DEL/2010

• Counselvise Citation: 405920114 RSA 2010
• Duration Of Justice: 3 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-01-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 01-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: O P SAPRA
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A: NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI I. C. SUDHIR, JUDICIAL MEMBER ITA NO. 4059/DEL/2010 ASSESSMENT YEAR: 2001- 2002 SHRI ANIL MALHOTRA VS. ACI T F-301, ASHISH COMPLEX CIRCLE 34 (1) LSC-1, SHRESHTHA VIHAR NEW D ELHI. NEW DELHI. ADHPM6240Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI O.P. SAPR A, ADVOCATE RESPONDENT BY : SHRI Y. KAKKAR, DR ORDER PER I.C. SUDHIR, JUDICIAL MEMBER THE ASSESSEE HAS QUESTIONED FIRST AP PELLATE ORDER ON THE GROUND THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE IMP OSITION OF PENALTY OF RS. 3,15,830/- U/S 271(1)(C) OF THE ACT. 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE AUT HORITIES BELOW, MATERIAL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON. 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE BEING PROPRIETOR OF M/S. ANIL MEHTA AND COMPANY AND HASCOR INDIA (EXPORT DIVI SION) HAD CLAIMED DEDUCTION U/S 80HHC OF RS. 18,21,074/-. THE DEDUCTI ON WAS CLAIMED TAKING ITA NO. 4059/DEL/2010 2 EXPORT TURN OVER AS TOTAL TURN OVER EXCLUDING DOMES TIC TURN OVER. THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO WHY THE DOME STIC TURN OVER WAS NOT INCLUDED IN THE TOTAL TURN OVER WHILE CALCULATING T HE DEDUCTION U/S 80-HHC. THE AO WAS NOT SATISFIED WITH THE EXPLANATION OF TH E ASSESSEE AND IT WAS HELD THAT FOR CALCULATING THE DEDUCTION U/S 80HHC, THE DOMESTIC TURN OVER SHOULD BE INCLUDED IN TOTAL TURN OVER AS PER PROVIS O TO SECTION 80HHC (B) OF THE ACT. ACCORDINGLY DEDUCTION U/S 80HHC WAS COMPUT ED AT RS. 9,21,275/- AS THE ASSESSEE WAS TRADING GOODS IN BOTH DOMESTIC AND EXPORT MARKET. IN FIRST APPEAL THE LD. CIT(A) HELD THAT THE COMPUTATI ON OF DEDUCTION U/S 80HHC BY INCLUDING DOMESTIC TURN OVER IN TOTAL TURN OVER WAS IN ORDER. THE TRIBUNAL SET ASIDE THE ISSUE TO THE FILE OF THE AO WITH DIRECTION THAT HE WILL EXAMINE INTERLACING OF FUNDS ALONGWITH COMMON USE O F ASSETS BY BOTH THE UNITS AND TO DECIDE THE ISSUE AFRESH. THE AO HELD T HAT THERE WAS INTERLACING OF FUND AS THERE WAS INTERMINGLING OF THE MAINTENAN CE OF SINGLE BALANCE SHEET FOR BOTH THE UNITS WHICH WERE SHARING THE SAM E PREMISES AND RENT WHICH WAS BEING PAID ON PRO RATA BASIS. THE ASSESSM ENT WAS ACCORDINGLY MADE AT THE INCOME OF RS. 14,17,430/- AS ORIGINALLY ASSESSED RESTRICTING THE DEDUCTION U/S 80HHC AT RS. 9,21,275/-. THE AO ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE INCOME AND LEVIED THE PENALTY AT RS. 3,15,830/- WHICH HAS BEEN UPHELD BY THE LD. CIT(A) ON THE BASIS THAT THERE WAS DELIBERATE INTEN TION OF THE ASSESSEE TO CONCEAL THE FACTS RELATING TO THE TRUE INCOME. ITA NO. 4059/DEL/2010 3 4. IN SUPPORT OF THE GROUND THE LD. AR HAS BASICALLY REITERATED THE EXPLANATION MADE BEFORE THE AUTHORITIES BELOW. HE S UBMITTED THAT THE ASSESSEE HAD NEITHER CONCEALED THE PARTICULARS OF I NCOME NOR HAD FURNISHED INACCURATE PARTICULARS THEREOF. THE ASSESSEE HAD DI SCLOSED ALL THE RELEVANT FACTS FOR CLAIMING DEDUCTION U/S 80HHC OF THE ACT AND IN THIS REGARD HE WAS FULLY DEPENDENT UPON HIS AUDITOR. IN SUPPORT HE PL ACED RELIANCE ON THE FOLLOWING DECISIONS :- 1. CIT VS. RELIANCE PETRO PRODUCTS PVT. L TD. 322 ITR 158 (SC) 2. PRICE WATERHOUSE COOPERS LTD. VS. CIT, 348 ITR 308 (SC) 3. T. ASHOK RAI VS. CIT 292 ITR 11 (SC) & ORS. 5. THE LD. AR SUBMITTED FURTHER THAT THE LEVY OF PENALTY IS ALSO ILLEGAL BECAUSE THE AO HAD LEVIED THE PENALTY ON THE ALLEGA TION THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME WHER EAS THE LD. CIT(A) HAS JUSTIFIED THE PENALTY ON THE BASIS THAT THE ASSESSE E HAD CONCEALED THE INCOME. IN THIS REGARD HE HAS CITED FOLLOWING DECIS IONS : 1. CIT VS. LAKHDHIR LALJI, 85 ITR 77 (GU J) 2. PADMA RAM BHARATI VS. CIT 110 ITR 54 (GUJ) 6. LD. DR ON THE OTHER HAND TRIED TO JUSTIF Y THE PENALTY ORDER PASSED BY THE AO U/S 271(1) OF THE ACT, SUSTAINED BY THE LD. CIT(A). SHE SUBMITTED THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS THEREOF ON THE PA RT OF THE ASSESSEE WHILE CLAIMING DEDUCTION U/S 80HHC OF THE ACT BY NOT INCL UDING DOMESTIC TURN ITA NO. 4059/DEL/2010 4 OVER IN THE TOTAL TURN OVER FOR THE CLAIMED DEDUCTI ON. IT WAS KNOWN TO THE ASSESSEE THAT AS PER THE PROVISO TO SECTION 80HHC(B ) THE DOMESTIC TURN OVER SHOULD BE INCLUDED IN TOTAL TURN OVER FOR CLAI MING THE DEDUCTION U/S 80HHC OF THE ACT, ESPECIALLY WHEN THE ASSESSEE WA S TRADING IN GOODS IN BOTH DOMESTIC AND EXPORT MARKETS. ASSESSEE ALSO FAI LED TO FURNISH HIS EXPLANATION IN CONNECTION WITH INTERLACING OF FUNDS ALONGWITH THE COMMON USE OF ASSETS IF ANY BY BOTH THE UNITS. BOTH THE UN ITS WERE SHARING THE SAME PREMISES AND THE RENT WAS BEING PAID ON PRO RATA BA SIS. SHE PLACED RELIANCE ON THE FOLLOWING DECISIONS :- 1. YUMI RESTAURANTS (INDIA) P. LTD. VS. CIT (2010) 327 ITR 150 (DEL) 2. CIT VS. HARPARSHAD AND COMPANY LTD. (2010) 328 ITR 53 (DEL) 3. MAGNUM POWER GENERATION LTD.VS. DCIT(2011) 11 I TR (TRIB) 493 (D EL) 4. ITO VS. TCFC FINANCE LTD.(2011) 11 ITR (T RIB) 153 (MUMBAI) 7. CONSIDERING THE ABOVE SUBMISSIONS IN TOTA LITY AND ESPECIALLY THAT THERE IS NO ALLEGATION OF NON-DISCLOSURE OF RELATED FACTS TO THE CLAIMED DEDUCTION U/S 80HHC OF THE ACT, WE ARE OF THE VIEW THAT IT IS NOT A CASE WHERE IT CAN BE STATED BEYOND DOUBT THAT THE ASSES SEE HAD CONCEALED PARTICULARS OF INCOME OR HAD FURNISHED INACCURATE P ARTICULARS THEREOF WHILE CLAIMING DEDUCTION U/S 80HHC OF THE ACT. EVEN THE AU THORITIES BELOW ON THE BASIS OF THE DISCLOSURE OF THE RELEVANT FACTS ONLY HAVE COME TO THE CONCLUSION THAT FOR CALCULATING THE DEDUCTION U/S 8 0HHC THE DOMESTIC TURN OVER SHOULD HAVE BEEN INCLUDED IN TOTAL TURN OVER A S PER THE PROVISO TO ITA NO. 4059/DEL/2010 5 SECTION 80HHC (B) OF THE ACT. IT WAS ONLY ON THE B ASIS OF THE DISCLOSURE OF THE FACTS BY THE ASSESSEE THE AUTHORITIES BELOW NOT ICED THAT BOTH THE UNITS UNDER THE PROPRIETORSHIP OF THE ASSESSEE WERE SHARI NG THE SAME PREMISES AND THE RENT WAS BEING PAID ON PRO RATA BASIS. BEIN G A PENAL PROVISION THE LEGISLATURE HAS TAKEN PRECAUTION FOR INVOCATION OF THE PROVISIONS LAID DOWN U/S 271(1)(C) OF THE ACT I.E. BEFORE INVOKING THIS PROVISION THE AO HAS TO COME TO THE CONCLUSION BEYOND DOUBT THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS THEREOF ON THE PART OF THE ASSESSEE TOWARDS THE ADDITION SUSTAINED. AS DISCUSSED ABOVE UNDER THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, S UCH CONCLUSION BEYOND DOUBT CANNOT BE ARRIVED AT THAT THERE WAS CONCEALME NT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF WHILE CLAIMING DEDUCTION U/S 80HHC OF THE ACT BY THE ASSESSEE WHICH REMAINED THE SUBJECT MATTER OF THE PENALTY. THE DECISION CITED ABOVE DO NOT DISPU TE THIS VIEW THAT FOR INVOCATION OF THE PENAL PROVISIONS U/S 271(1)(C) IT IS OBLIGATORY FOR THE AO TO COME TO THIS CONCLUSION BEYOND DOUBT THAT REGARDING THE ADDITION IN QUESTION THERE WAS CONCEALMENT OF PARTICULARS OF IN COME OR FURNISHING INACCURATE PARTICULARS THEREOF ON THE PART OF THE A SSESSEE, WHICH IS MISSING IN THE PRESENT CASE. THE AUTHORITIES BELOW WERE TH US NOT JUSTIFIED IN IMPOSING PENALTY U/S 271(1)(C) OF THE ACT AND SUST AINING THE SAME FOR CLAIMING THE DEDUCTION U/S 80HHC OF THE ACT ON THE BASIS OF DISCLOSED FACTS NECESSARY FOR THE DEDUCTION. WE THUS WHILE SETTING ASIDE THE ORDERS OF THE ITA NO. 4059/DEL/2010 6 AUTHORITIES BELOW IN THIS REGARD DIRECT THE AO TO D ELETE THE PENALTY IN QUESTION. THE GROUND IS ACCORDINGLY ALLOWED. 8. CONSEQUENTLY APPEAL IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 17 TH JANUARY, 2014. SD/- SD/- (G.D. AGRAWAL) ( I.C. SUDHIR ) VICE PRESIDENT JUDICIAL MEMBER DATED 17 TH JANUARY, 2014 VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR, ITAT