ITO, New Delhi V. M/s FX Enterprises Solutions India Pvt. Ltd., New Delhi

ITA 4246/DEL/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0067 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 12-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL
• Assessee Lawyers: YOGESH K JAGI A
• Keywords: Wrong claim; Difference of opinion; Revenue expenditure
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH. T.S. KAPOOR , ACCOUNTANT MEMBER I .T.A .NO. - 4246 /DEL/201 3 (ASSESSMENT YEAR - 2009 - 10 ) ITO WARD 11(3) NEW DELHI (APPELLANT) VS FX ENTERPRISES SOLUTIONS INDIA PVT. LTD. E - 27/8, GROUND FLOOR, RIGHT SIDE MALVIYA NAGAR, NEW DELHI AAACF4881H (RESPONDENT) APPELLANT BY SH. K.K. JAISWAL, SR. DR RESPONDENT BY SH. YOGESH K. JAGIA, ADV ORDER PER DIVA SINGH, JM BY THE PRESENT APPEAL THE ASSESSEE ASSAILS THE CORRECTNESS OF THE ORDER DATED 1/8/2012 OF CIT(A) XIII, NEW DELHI PERTAINING TO 2009 - 10 ASSESSMENT YEAR ON THE FOLLOWING GROUND: - 1. ON THE FACTS AND THE CIRCUMSTANCES, THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE PENALTY OF RS.7,39,338/ - OF THE ACT IMPOSED U/S 271(1)(C) OF THE I.T. ACT 1961 WITHOUT CONSIDERING THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF ITS INCOME. 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS COMPLETED U/S 143(3) AT THE BOOK PROFIT OF RS.53,98,386/ - . IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSIN G OFFICER MADE AN ADDITION OF RS.1,30,302/ - ON ACCOUNT OF EXCESS INTEREST PAID. APART FROM THAT HE ALSO MADE AN ADDITION BY WAY OF A DISALLOWANCE OF RS.22,62,376/ - CONSIDERING THE EXPENSES DEBITED IN THE P &L ACCOUNT IN REGARD TO WHICH THE ADDITION WAS MA DE FOR WANT OF EXPLANATION FILED. THESE ADDITIONS WERE ACCEPTED BY THE ASSESSES AS NO APPEALS WERE FILED. AS A RESULT OF THE ADDITIONS HAVING BEEN ACCEPTED THE AO REQUIRED THE ASSESSEE TO EXPLAIN WHY PENALTY U/S 271(1)(C) SHOULD NOT BE IMPOSED. THE DATE OF HEARING 08 .0 5 .2015 DATE OF PRONOUNCEMENT 27 .0 5 .2015 I.T.A .NO. - 4246/DEL/13 PAGE 2 OF 5 EXP LANATION OFFERED BY THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER ON ACCOUNT OF THE FOLLOWING REASON. THE REPLY FILED BY THE ASSESSEE NOWHERE MENTIONS WHY EXCESS INTEREST AMOUNTING TO RS.1,30,302/ - WAS PAID OR UNDER WHAT CIRCUMSTANCES , T HE ASSESSEE HAD TO PAY INTEREST @ 16% P.A. SIMILARLY, AS REGARD TO DISALLOWANCE MADE ON ACCOUNT OF EXPENSES DEBITED IN P&L ACCOUNT AMOUNTING TO RS.22,62,376/ - , THE ASSESSEE DID NOT FURNISH ANY DOCUMENTARY EVIDENCE NEITHER AT ASSESSMENT PROCEEDINGS NOR AT THE TIME OF ISSUING SHOW CAUSE NOTICE. 3. AS A RESULT OF THIS, CONSIDERING THE A DDITIONS MADE PENALTY AMOUNTING TO RS. 7,39,338/ - WAS IMPOSED. 4. AGGRIEVED BY THIS THE ASSESSEE CAME IN APPEAL BEFORE THE F IRST A PPELLATE A UTHORITY RE - ITERATING THE SUBMISSIONS ADVANCED BEFORE THE AO IN PENALTY PROCEEDINGS WHICH HAVE BEEN EXTRACTED IN THE PENALTY ORDER AND ALSO RELYING UPON VARIOUS DECISIONS. C ONSIDERING THE EXPLANATION OFFERED AND THE JUDICIAL PRECEDENT RELIED UPON THE PENALTY IMPOSED WAS DELETED . 5. A GGRIEVED BY TH IS, THE R EVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6 . LD. SR. DR , MR. K. K. JAISWAL INVITING ATTENTION TO THE ASSESSMENT ORDER AND THE IMPUGNED ORDER SUBMITTED THAT THE CIT(A) HAS ONLY DISCUSSED THE TWO ADDITIONS HOLDING THE SAME TO BE REVENUE IN NATURE AND HAS NOT MADE OUT A CASE THAT IT WAS A BOGUS CLAIM. INVITING ATTENTION TO THE THIRD PAGE OF THE ASSESSMENT ORDER, IT WAS SUBMITTED THAT SINCE THE ASSESSEE S INCOME UNDER TH E M AT PROVISIONS BEING A 115JB CASE WAS HIGHER THAN A NORMAL INCOME IN REGARD TO WHICH ALSO SATISFACTION HAS BEEN RECORDED. IT WAS HIS SUBMISSION THAT THIS FACT HAS NOT BEEN DISCUSSED IN THE IMPUGNED ORDER. ACCORDINGLY IT WAS HIS SUBMISSION THAT THE SA ID ISSUE HAS NOT BEEN DISCUSSED BY THE CIT(A) AND THE ORDER NEEDS TO BE SET ASIDE AND THE PENALTY ORDER BE CONFIRMED. 7 . THE LD. AR ON THE OTHER HAND SUBMITTED THAT A PERUSAL OF THE PENALTY ORDER WOULD SHOW THAT PENALTY HAS BEEN IMPOSED ONLY ON ACCOUNT OF DISALLOWANCE OF INTEREST PAID AND DISALLOWANCE OF THE EXPENDITURE CLAIMED. THE OBJECTION POSED ON THE GROUND THAT IN THE ASSESSMENT ORDER THE AO ALSO CONSIDERED THE OTHER ISSUE IS OF NO RELEVANCE AS THE FACT REMAINS THAT THE PENALTY HAS BEEN IMPOSED BY TH E AO ONLY ON THESE TWO ISSUES THUS IT WAS ARGUED THAT EVEN IF THE A SSESSING O FFICER INITIATED PROCEEDINGS ON ACCOUNT OF ADJUSTMENTS IN THE BOOK PROFIT BUT THE FACT REMAINS THAT AT THE TIME OF LEVYING PENALTY HE HAS IMPOSE D PENALTY ONLY ON THE I.T.A .NO. - 4246/DEL/13 PAGE 3 OF 5 ADDITIONS MA DE AS PER THE NORMAL PROFITS OF THE COMPANY AND IN THESE FACTS THE DEPARTMENT CAN RELY ONLY ON THE REASONS ON WHICH THE PENALTY WAS IMPOSED . IT WAS ARGUED IN THE ALTERNATIVE EVEN IF THE SAID ISSUE IS TO BE DECIDED AGAINST THE ASSESSEE. THE N RELIANCE IS PLACED ON THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. NA LWA SONS INVESTMENT (2010) 327 ITR 5 43 WHICH ADDRESSES THE ISSUE . C OPY OF THE SAME IT WAS SUBMITTED IS AT 11 TO 19 OF THE PAPER BOOK . INVITING ATTENTION TO PAPER BOOK PAGE 70, I T WA S SUBMITTED THAT THE DEPARTMENT FILED SLP AGAINST THE SAID ORDER AND IT WAS DISMISSED BY THE APEX COURT. 7.1 . ADDRESSING THE ISSUE ON FACTS CONSIDERED IN THE IMPUGNED ORDER IT WAS SUBMITTED THAT THE ASSESSEE FOLLOWING ITS PAST PRACTICE ON THE ISSUE HAD CLAIMED INTEREST PAYMENT AT THE RATE OF 16% AND THE DEPARTMENT FOLLOWING ITS PAST PRACTICE HAD RESTRICTED THE SAME TO 12% . ON THIS FACT NO PENALTY HAS BEEN IMPOSED BY THE ASSESSING OFFICER IN THE PAST AND ONLY IN THIS YEAR PENALTY WAS IMPOSED. IT WAS SUBMITTED THAT IT IS NOT A CASE THAT A BOGUS CLAIM WAS MADE BY THE ASSESSEE AND THE MERE FACT THAT THE ASSESSEE HAS NOT CHALLENGED THIS ADDITION DOES NOT MEAN THAT THE ASSESSEE HAS WITHHELD ANY PARTICULAR S OF INCOME OR FILED IN ACCURATE PARTICULARS OF I NCOME . 7.2. A DDRESSING THE NEXT ISSUE , IT WAS HIS SUBMISSION THAT THE CLAIM IS BASED ON THE EXPENSES IN REGARD TO THE CLAIM IN 2008 - 09 WHEREIN THE ASSESSEE DEFERRED THE EXPENSES @ RATE OF 1/5 TH FOR 5 YEARS AND THE AMOUNT OF RS. 22,62,376/ - CONSISTED OF R S. 8, 0 4 ,0 76/ - FOR 2008 - 09 AND THE BALANCE AMOUNT OF 14,58,300/ - PERTAINING TO THE EARLIER YEARS . THE EXPENDITURE HEREIN WAS ALSO GENUINE AND NOT BOGUS AND THIS TOO WAS NOT THE CASE OF FILING ANY INACCURATE INCOME OR WITHHOLDING PARTICULARS OF INCOME . RELI ANCE IT WAS SUBMITTED PLACED UPON THE DECISIONS OF THE APEX COURT IN THE CASE OF CIT VS RELIANCE PETRO PRODUCTS (2010) 322 ITR 158 (SC) AND T HE ORDER OF THE TRIB UNAL DATED 16.04.2015 IN ITA NO. - 5364/DEL/2013 IN ACIT VS ORTEL COMMUNICATION LTD. (COPY AT PA GES 21 - 24 OF THE PAPER BOOK). 8 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A PERUSAL OF THE ASSESSMENT ORDER IT IS SEEN THAT THE ASSESSING OFFICER HAS RECORDED HIS SATISFACTION FOR INITIATING PENALTY PROCEEDINGS U/S 271(1 ) (C) ON THREE GROUNDS. HOWEVER, A T THE TIME OF PASSING THE PENALTY ORDER, HE HAS IMPOSED PENALTY ONLY ON THE GROUNDS OF THE TWO ADDITIONS OF RS.22,62,376/ - AND RS. 1,30,302/ - MADE WHILE WORKING OUT THE NORMAL PROFITS OF THE ASSESSEE COMPANY. I.T.A .NO. - 4246/DEL/13 PAGE 4 OF 5 PR ESUMABLY TO AVOID THE CONFUSION THIS FACT IS EMPHASIZED IN THE PENALTY ORDER BY THE AO IN THE CONCLUDING PORTION OF HIS ORDER WHERE SPECIFIC REFERENCE IS AGAIN MADE TO THE TOTAL AMOUNT OF ADDITION ON ACCOUNT OF WHICH IT WAS HELD THAT THE PENALTY WAS TO BE IMPOSED. ACCORDINGLY THE ARGUMENTS OF THE LD. SR. DR QUA THE SAME DO NOT ARISE FROM THE PENALTY ORDER. 8. 1. ADDRESSING THE REMAINING ARGUMENTS OF THE DEPARTMENT AND THE LD. AR WHICH HAVE BEEN BROUGHT OUT IN DETAIL IN THE EARLIER PART OF THIS ORDER , W E F IND OURSELVES IN THE FACTS AS THEY STAND THAT THE FINDING UNDER CHALLENGE CONSIDERING THE JUDICIAL PRECEDENT RELIED UPON BEFORE US DESERVES TO BE UPHELD. BEING SATISFIED WITH THE REASONING AND FINDING ON FACTS WE FIND OURSELVES UNABLE TO COME TO A CONT RARY FINDING IN THE FACE OF THE PECULIAR FACTS QUA THE ISSUES INVOLVED. IN THE ABSENCE OF ANY INFIRMITY IN THE IMPUGNED ORDER , T HE FOLLOWING FINDING OF THE CIT(A) IS UPHELD BY US: - 5.2 DECISION I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AND OBSERVATION OF THE ASSESSING OFFICER. IT IS SEEN THAT IN THE ASSESSMENT ORDER PASSED ASSESSING OFFICER HAD DISALLOWED EXCESS INTEREST PAYMENT OF RS.1,30,302/ - U/S 40A(2)(B) OF THE IT ACT ON THE GROUND THAT THIS INTEREST PAYMENT IS EXCESSIVE TO THE REL ATIVES OF THE APPELLANT CONCERNS. SIMILARLY, THE ASSESSING OFFICER HAS DISALLOWED DEFERRED REVENUE EXPENDITURE OF RS.22,62,376/ - ON THE GROUND THAT NO DETAILS WERE SUB MITTED. ON THE BASIS OF THESE DISALLOWANCES PENALTY U/S 271(1)(C) OF THE IT ACT WAS LE VIED BY THE ASSESSING OFFICER OF RS.7,39,338/ - . IT IS SUBMITTED BY THE APPELLANT THAT EXPENDITURE OF INTEREST PAYMENT CLAIMED BY THE APPELLANT WAS NOT FICTITIOUS OR BOGUS. IT WAS A GENUINE EXPENDITURE CLAIMED BY THE APPELLANT AND SAME WAS PAID TO THE PER SON FROM WHO LOANS WERE TAKEN. THERE WAS NO CONCEALMENT OF FACTS OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE APPELLANT HAS DISCLOSED ALL THE FACTS OF THE INTEREST EXPENDITURE IN THE RETURN OF INCOME AND CLAIM WAS MADE ON THE BASIS OF PAYMENT M ADE TO THE PERSONS. SIMILARLY, THE DEFERRED REVENUE EXPENDITURE OF RS.22,62,376/ - WAS CLAIMED ON THE BASIS OF CONSISTENT METHOD FOLLOWED BY THE APPELLANT. THE EXPENDITURE IN QUESTION WAS REVENU9E BUT SAME WAS DEFERRED FOR FUTURE YEARS TO BE CLAIMED AGAI NST THE INCOME OF FUTURE YEARS. THE EXPENDITURE WAS TO BE AMORTIZED IN 5 YEARS PERIOD AND 1/5 TH WAS TOO BE CLAIMED EVERY YEAR. THE AMOUNT DEBITED OF RS.22, 62,376/ - CONSISTED OF RS.8, 04,076/ - FOR A.Y 2008 - 09 AND THE BALANCE AMOUNT OF RS.14,58,300/ - WAS PERTAINING TO EARLIER YEARS. THE EXPENDITURE WAS REVENUE IN NATURE AND SAME WAS NOT BOGUS OR NOT GENUINE. EVERYTHING WAS DISCLOSED IN THE RETURN OF INCOME AND THERE WAS CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS. THE DISALLOWANCE MADE BY THE AS SESSING OFFICER WAS ON THE BASIS OF DIFFERENCE OF OPINION. ANY DISALLOWANCE MADE ON THE BASIS OF DIFFERENCE OF OPINION IS NOT SUFFICIENT FOR ARRIVING AT CONCLUSION THAT APPELLANT HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR HAS CONCEALED THE INCOME. THE APPELLANT HAS NOT FURNISHED ANY INACCURATE PARTICULARS IN THE RETURN OF INCOME. MERE MAKING A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO I.T.A .NO. - 4246/DEL/13 PAGE 5 OF 5 FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE APPELLANT. SUCH CLAIM MA DE IN THE RETURN OF INCOME CANNOT AMOUNT TO THE INACCURATE PARTICULARS OF INCOME. IN VIEW OF THE FACTUAL POSITION DISCUSSED ABOVE, THE PENALTY LEVIED BY THE ASSESSING OFFICER OF RS.7,39,338/ - ON THE BASIS OF VARIOUS DISALLOWANCES MADE IN THE ASSESSMENT ORD ER WAS NOT JUSTIFIED AND SAME IS DELETED. 8.2 . ACCORDINGLY, IN VIEW OF THE ABOVE, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 9 . IN THE RESULT , THE APPEAL OF THE REVENUE IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 2 7 T H M AY 2015. S D / - S D / - ( T. S. KAPOOR ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 2 7 T H MAY , 2015 *R. NAHEED /AMIT KUMAR * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI