DCIT, New Delhi V. Sh. Kamal Suri, New Delhi

ITA 4224/DEL/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5774 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 25-03-2010
• Assessment Year: 1998-1999
• Appeal Filed On: 29-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA
• Assessee Lawyers: SANJAY KAPOOR
• Keywords: Wrong claim
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SHRI K.D.RANJAN AND SHRI GEORGE MATHAN ITA NO.4224/DEL/2009 ASSESSMENT YEAR : 1998-99 DCIT, CIRCLE-26(1), NEW DELHI. VS. SHRI KAMAL SURI, 112-A EKTA ENCLAVE, NEAR PEERA GARHI, NEW DELHI. PAN ABIPS8070M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B.K.GUPTA, SR. D.R. RESPONDENT BY : SHRI SANJAY KAPOOR, C.A. ORDER PER K.D.RANJAN, AM: THIS APPEAL BY THE REVENUE FOR ASSESSMENT YEAR 1998 -99 ARISES OUT OF ORDER OF CIT(A)-XXIV, NEW DELHI. THE ONLY ISSUE FOR CONSIDERATION RELATES TO DELETING THE PENALTY U/S 271(1)(C) OF RS .2,25,000/-. 2. THE FACTS, STATED IN BRIEF, ARE THAT ASSESSMENT U/S 143(3) WAS COMPLETED ON A TOTAL INCOME OF RS.8,29,960/- AS AGA INST THE RETURNED LOSS OF RS.2,29,94,126/-. THE ASSESSING OFFICER MADE AN ADD ITION OF RS. 2,38,24,086/- ON ACCOUNT OF INTEREST AND BANK CHARG ES DEBITED IN PROFIT AND LOSS ACCOUNT UNDER THE HEAD PROVISION TO PROFIT AN D LOSS ACCOUNT. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS OF THE RETURNE D INCOME. 2 3. DURING THE COURSE OF PENALTY PROCEEDINGS, NO REP LY WAS SUBMITTED BY THE ASSESSEE. THE ASSESSING OFFICER IMPOSED PENALTY U/S 271(1)(C ) ON THE AMOUNT OF TAX SOUGHT TO BE EVADED. 4. ON APPEAL, IT WAS SUBMITTED BY THE ASSESSEE THAT THE ADDITION WAS MADE BY THE ASSESSING OFFICER ON THE GROUND THAT TH E LIABILITY TO PAY INTEREST WAS JOINT AND SEVERAL WITH THE OTHER PARTIES. PENDI NG SUIT THE QUANTUM OF LIABILITY WAS NOT ASCERTAINABLE. IT WAS FURTHER SUB MITTED THAT ASSESSEE WAS THE MAIN BORROWER WHO USED SUCH BORROWINGS FOR HIS BUSI NESS. OTHER PARTIES TO THE SUIT WERE MERELY GUARANTORS. THE MERE FACT THAT QUANTUM OF INTEREST CHARGED BY THE BANK WAS DULY CONTESTED DID NOT MEAN THAT LIABILITY HAD BECOME CONTINGENT. THE ASSESSEE HAD DEBITED INTERES T IN THE PROFIT AND LOSS ACCOUNT ON THE BASIS OF DEMAND NOTICE ISSUED BY THE BANK. THE ASSESSEE HAD MADE A SPECIFIC DISCLOSURE IN THE NOTES TO THE AUDI TED ACCOUNTS THAT PROVISION OF INTEREST WAS MADE IN RESPECT OF BORROWINGS FROM THE BANK AND THE CLAIM OF THE BANK WAS DULY CONTESTED BEFORE THE DEBTS RECOVE RY TRIBUNAL. THEREFORE, THERE WAS NO DELIBERATE ATTEMPT ON THE PART OF THE ASSESSEE TO MAKE A WRONG CLAIM AND THE ASSESSEE HAD NOT CONCEALED ANY INCOME . THE LD. A.R. OF THE ASSESSEE RELIED ON THE DECISION OF THE I.T.A.T. IN THE CASE OF M.S.UNIVERSAL EXPORTS LTD. ITA NO.283/DEL/2007 DATED 06/2/2009 WH EREIN ON IDENTICAL FACTS, PENALTY WAS HELD TO BE NOT LEVIABLE. 5. THE LD. CIT(A) AFTER CONSIDERING THE VARIOUS DEC ISIONS WAS OF THE OPINION THAT MERE DISALLOWANCE/ADDITION OF INTEREST CHARGED TO PROFIT AND LOSS ACCOUNT COULD NOT BE SAID THAT THE ASSESSEE HA D FURNISHED INACCURATE PARTICULARS OF HIS INCOME WITHIN THE MEANING OF SEC TION 271(1)(C) OF THE ACT. THE PRESUMPTION OF CONCEALMENT AS CONTAINED IN EXPL ANATION 1 TO SEC. 271(1)(C ) OF THE ACT IS ATTRACTED IN THE CASE OF T HE ASSESSEE IN RESPECT OF 3 DISALLOWANCE OF INTEREST. BUT, WHERE THE ASSESSEE R EBUTS SUCH PRESUMPTION BY OFFERING AN EXPLANATION THAT ALL THE NECESSARY FACT S RELATING TO COMPUTATION OF INCOME IN RESPECT OF WHICH PENALTY HAS BEEN IMPOSED HAD BEEN DISCLOSED BY HIM OR, THE EXPLANATION OFFERED BY THE ASSESSEE IS BONA FIDE, PENALTY WAS NOT LEVIABLE. LD. CIT(A) HAD FOUND THE EXPLANATION OFFE RED BY ASSESSEE AS BONA FIDE. ACCORDINGLY, PENALTY IMPOSED BY THE ASSESSING OFFICER WAS DELETED. 6. BEFORE US, THE LD. SR. D.R. SUPPORTED THE ORDER OF THE ASSESSING OFFICER. ON THE OTHER HAND, LD. A.R. OF THE ASSESSE E RELIED ON THE ORDER OF LD. CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE FACTS STATED ABOVE, I T IS APPARENT THAT THE ASSESSEE HAD DEBITED INTEREST OF RS.2,38,24,086/- O N THE BASIS OF DEMAND NOTICE ISSUED BY THE BANK TO THE ASSESSEE. THE ASSE SSEE HAD DISCLOSED THIS FACT IN THE RETURN OF INCOME. THE ADDITION WAS MADE ON THE GROUND THAT THE INTEREST CHARGED WAS BEING CONTESTED BEFORE THE DEB TS RECOVERY TRIBUNAL. FROM THESE FACTS, IT IS CLEAR THAT ASSESSEE HAD DIS CLOSED THE FACTS IN THE NOTE TO THE ACCOUNTS FILED WITH THE RETURN OF INCOME. PE NALTY U/S 271(1)(C ) CAN BE IMPOSED WHERE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. FU RTHER, WHEREVER THERE IS A DIFFERENCE BETWEEN THE RETURNED AND ASSESSED INCOME , THERE IS AN INFERENCE OF CONCEALMENT AS A RULE OF LAW CONTAINED IN EXPLAN ATION 1 TO SEC. 271(1)(C ). THE RESPONSIBILITY FOR REBUTTING SUCH INFERENCE IS SQUARELY ON THE TAXPAYER. THE PRESUMPTION CAN BE REBUTTED BY PRODUCING COGENT , RELIABLE AND RELEVANT MATERIAL. THE ASSESSEE UNDER EXPLANATION 1 TO SEC. 271(1)(C ) IS EXPECTED TO OFFER AN EXPLANATION. FAILURE TO OFFER AN EXPLANATI ON ATTRACTS PENALTY. SIMILARLY, WHERE THE EXPLANATION OFFERED IS FOUND T O BE FALSE, PENALTY WOULD 4 BE ATTRACTED. PENALTY U/S 271(1)(C ) WILL NOT BE IM POSABLE WHERE THE ASSESSEE HAS BEEN ABLE TO SUBSTANTIATE HIS EXPLANATION OR TH E EXPLANATION OFFERED BY THE ASSESSEE IS BONA FIDE AND ALL THE FACTS MATERIA L FOR COMPUTATION OF HIS TOTAL INCOME HAS BEEN DISCLOSED BY HIM. IN THE INST ANT CASE, THE ASSESSEE HAS DISCLOSED IN THE NOTES TO ACCOUNT THAT THE INTEREST LIABILITY HAS BEEN DISPUTED BY THE ASSESSEE. THEREFORE, THE ASSESSEE HAS NOT CO NCEALED ANY INCOME DELIBERATELY. THE EXPLANATION OFFERED BY THE ASSESS EE IS BONA FIDE. THEREFORE, IN OUR CONSIDERED OPINION, PENALTY U/S 271(1)(C ) I S NOT IMPOSABLE. I.T.A.T. DELHI BENCH D IN THE CASE OF M/S M.S.UNIVERSAL EX PORTS LTD. DELETED THE PENALTY WHERE INTEREST CLAIMED BY THE ASSESSEE IN T HE RETURN OF INCOME WAS DISALLOWED U/S 143(3) READ WITH SEC. 147 OF THE ACT . IN THIS CASE ALSO, THE ASSESSEE MADE PROVISION FOR INTEREST OF RS.2,64,26, 264/- FOR WHICH BANK HAD FILED SUIT FOR RECOVERY BEFORE THE DEBTS RECOVERY T RIBUNAL. THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER ON THE BASIS THAT THERE WAS NO LIABILITY FOR PAYMENT OF THE ADDITIONAL INTEREST BY THE ASSE SSEE BECAUSE THE ASSESSEE WAS CONTESTING THE SAME BEFORE THE DEBTS RECOVERY T RIBUNAL. IT WAS HELD THAT PENALTY U/S 271(1)(C ) WAS NOT IMPOSABLE. THE FACTS OF THE CASE BEING IDENTICAL, PENALTY IN OUR CONSIDERED OPINION IS NOT IMPOSABLE. WE ACCORDINGLY, UPHOLD THE ORDER OF LD. CIT(A) DELETIN G THE PENALTY U/S 271(1)(C) OF THE ACT. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 31ST MAR CH, 2010. SD/- SD/- (GEORGE MATHAN) ( K.D.RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31.03.2010. PSP 5 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR