Appeal details
Counselvise Citation
[2010] 119 COUNSELVISE.COM (IT) 5800 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 month(s) 14 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-03-2010
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
D
Next Hearing Date
16-03-2010
Assessment Year
1998-1999
Appeal Filed On
16-11-2009
Judgement Text
I.T.A. NO. 4384 /DEL/2009 1/7 IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH F BEFORE SHRI DEEPAK R. SHAH, ACCOUTANT MEMBER AND RAJPAL YADAV, JUDICIAL MEMBER ITA NO. 4384 /DEL/2009 (ASSESSMENT YEAR 1998-99) KRISHNA SACHDEVA, VS. DCIT, CIRCLE 26(1), 112-A, EKTA ENCLAVE, NEW DELHI. NEW DELHI-110087 (APPELLANTS) (RESPONDENTS) PAN / GIR NO. 9-K/CC-8/ABIPS7189P APPELLANT BY: SHRI RAHUL KHARE, ADV. RESPONDENT BY: SHRI B K GUPTA, SR. DR ORDER PER RAJPAL YADAV, JM: 1. THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORDER OF LD. CIT(A) DATED 16.09.2009 PASSED FOR ASSESSMENT YEAR 1998-99. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE 8 OF ITAT RULES. THEY ARE ARGUMENTATIVE AND DESCRIPTIVE IN NATURE. THE SOLITARY GRIEVANCE, THE ASSESSEE IS TH AT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF R S.2 LACS IMPOSED U/S 271(1)(C). I.T.A. NO. 4384 /DEL/2009 2/7 2. THE BRIEF FACTS OF THE CASE ARE THAT A NOTICE U/ S 142(1) OF THE ACT WAS SERVED ON THE ASSESSEE ON 20.01.1999 DIRECTING HER TO FILE THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 1998-99. ACCORDING TO THE A.O., TH E RETURN WAS NOT FILED. HOWEVER, IN RESPONSE TO THE OTHER NOTICE, SHE HAS FILED HER RETURN OF INCOME ON 26.02 .2000 DECLARING A LOSS OF RS.1,70,143/-. THE A.O. HAD IS SUED NOTICE U/S 143(2) AND IN RESPONSE TO THE NOTICE SHR I RAJIV ARORA, CA, TAX CONSULTANT OF THE ASSESSEE APPEARED FROM TIME TO TIME. ON SCRUTINY OF ACCOUNT S IT REVEALED TO THE A.O. THAT IN SCHEDULE H IN P & L ACCOUNT THE ASSESSEE HAS DEBITED A SUM OF RS.7 LACS UNDER THE HEAD LOSS ON SALE OF ASSETS. ACCORDING TO THE A.O., THE LOSS ON SALE OF ASSETS IS A CAPITAL LOSS AND IT CANNOT BE SET OF AGAINST THE BUSINESS INCOME AS PER SECTION 71(3) OF THE I. T. ACT. HENCE, HE DISALLOW ED THE CLAIM OF THE ASSESSEE. SIMILARLY, THE A.O. FOUND T HAT AN AUDIT FEE OF RS.1.25 LACS PAYABLE PERTAINED TO THE PERIOD BEFORE 01.04.1997, WHICH IS NOT ALLOWABLE TO THE ASSESSEE IN THIS ACCOUNTING YEAR. AFTER CONSIDERIN G THESE TWO ITEMS AND THE LOSS SHOWN BY THE ASSESSEE IN HER RETURN OF INCOME AT RS.1,70,143/-, HE DETERMINE D THE TAXABLE INCOME OF THE ASSESSEE AT RS.6,54,860/-. T HE A.O. INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C ) ON I.T.A. NO. 4384 /DEL/2009 3/7 ACCOUNT OF FURNISHING INACCURATE PARTICULARS BY DEB ITING THE CAPITAL LOSS IN THE P & L ACCOUNT AND CLAIMING THE SET-OF OF IT AGAINST THE BUSINESS INCOME. IT EMERG ES OUT FROM THE PENALTY ORDER THAT THE A.O. HAD GIVEN AN OPPORTUNITY OF HEARING TO THE ASSESSEE VIDE NOTICE DATED 18.03.2008 WHEREBY HE DIRECTED THE ASSESSEE TO APPE AR ON 25.03.2008. ACCORDING TO THE A.O., ASSESSEE DID NOT ATTEND THE PROCEEDINGS BEFORE HIM AND HE IMPOSED TH E PENALTY OF RS.2 LACS. 3. ON APPEAL, THE ASSESSEE HAS FILED THE WRITTEN SUBMISSIONS. SHE CONTENDED THAT HE IS AN OLD LADY OF 87 YEARS AND SHE HAS NOT BEEN CARRYING ON ANY BUSINESS ACTIVITIES FOR THE LAST MORE THAN 12 YEARS AND SHE IS NOT CONVERSANT WITH THE COMPLEXITIES OF TAX LAWS. IN PURSUANCE TO THE NOTICE ISSUED BY THE A.O. REQUIRIN G HER TO FILE THE RETURN, SHE APPROACHED THE CHARTERED ACCOUNTANT WHO HAS PREPARED THE RETURN. THERE WAS NO INTENTION TO CLAIM THE LOSS BECAUSE ULTIMATELY SHE IS NOT GOING TO EARN ANY BUSINESS INCOME IN FUTURE, WHICH CAN BE SET OF AGAINST THIS LOSS. THE LOSS ON SALE OF A SSET EVEN IF SHOWN INDEPENDENTLY, THEN ALSO, THERE WOULD NOT BE ANY TAXABLE INCOME. ACCORDING TO THE ASSESSEE, SHE WAS NOT GOING TO GET ANY FINANCIAL BENEFIT BY FILING LO SS RETURN BECAUSE THERE WAS NO SCOPE FOR BUSINESS IN T HE I.T.A. NO. 4384 /DEL/2009 4/7 SUBSEQUENT YEARS. SHE RELIED UPON THE JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF MOTILAL PADAMP AT SUGAR MILLS VS STATE REPORTED IN 118 ITR 326 AND BT X CHEMICALS PVT. LTD. VS CIT 155 TAXMAN 644 (GUJ.) AN D CIT VS HARYANA WAREHOUSING CORP. 314 ITR 215 (P & H). THE LD. CIT(A) HAS REJECTED THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HERSELF ADMITTED THAT THE RETURN WAS COMPILED ON THE BASIS OF AUDITED ACCOUNTS. SHE HAS THE SERVICES OF THE C.A. AND THEREFORE, SHE CANNOT TAKE THE PLEA THAT SHE WAS NO T CONVERSANT WITH THE COMPLEXITY OF TAX LAWS. AS FAR AS THE CONTENTION OF THE ASSESSEE IS THAT SHE WOULD NO T GET ANY FINANCIAL BENEFIT BECAUSE NO BUSINESS IS BEING CARRIED OUT FOR THE LAST 12 YEARS AND THERE IS NO S COPE OF ANY BUSINESS ACTIVITIES IN THE SUBSEQUENT YEAS ARE CONCERNED, LD. CIT(A) HAS OBSERVED THAT NOBODY CAN BE APTLY CERTAIN ABOUT THE FUTURE PROSPECTS OF ONES BU SINESS AND THE SENSE OF ENTERPRENEURSHIP ALWAYS STRIVE TO GAIN PROFITS. HE REJECTED THE APPEAL OF THE ASSESSEE. 4. THE LD. COUNSEL FOR THE ASSESSEE REITERATED HIS CONTENTION AS WERE RAISED BEFORE THE 1 ST APPELLATE AUTHORITY. HE FURTHER POINTED OUT THAT THE ASSESSE E HAD FILED PETITION FOR INSOLVENCY THAT THERE HAS BEEN N O BUSINESS ACTIVITIES AGAINST WHICH SUCH LOSS CAN BE I.T.A. NO. 4384 /DEL/2009 5/7 CLAIMED AS SET OFF. HE EMPHASIZED THAT THE ASSESSE E WAS NOT GOING TO GET ANY FINANCIAL BENEFIT BY DEBITING THIS CAPITAL LOSS IN THE P & L ACCOUNT AND SETTING OF AG AINST THE ALLEGED BUSINESS INCOME. IT INDICATES THAT THE RE WAS NO DELIBERATE ATTEMPT AT THE END OF THE ASSESSEE. ON THE OTHER HAND, LD. D.R. RELIED UPON THE ORDER OF LD. CIT(A). HE POINTED OUT THAT THE ASSESSEE HAS AVAILE D THE SERVICES OF THE EXPERT TAX CONSULTANT AND THEREFORE , SHE IS PRECLUDED TO RAISE A PLEA THAT SHE WAS NOT CONVE RSANT WITH THE COMPLEXITIES OF TAX LAWS. IN SUPPORT OF H IS CONTENTION, HE RELIED UPON THE DECISION OF HON'BLE HIGH COURT OF DELHI RENDERED IN THE CASE OF CIT VS ESCOR TS FINANCE LTD. REPORTED IN 2009 TIOL 483 H.C.-DEL-IT IN I.T.A. NO.1005/2008. 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AND GONE THROUGH THE RECORDS. IT IS TRUE THAT ASSESSEE HAS DEBITED CAPITAL LOSS IN THE P & L ACCOUNT UNDER THE HEAD L OSS ON SALE OF ASSETS. THIS LOSS IS IN THE NATURE OF CAP ITAL LOSS AND CANNOT BE DEBITED TO THE P & L ACCOUNT,. IT CA NNOT BE SET OF AGAINST THE BUSINESS INCOME. THIS CONDUC T OF THE ASSESSEE HAS TO BE SEEN WITH OTHER SURROUNDING CIRCUMSTANCES. THE ASSESSEE IS AN OLD LADY OF 87 YEARS AS ALLEGED BY THE ASSESSEE BEFORE THE CIT(A). SHE IS NOT DOING ANY BUSINESS FOR THE LAST MORE THAN 12 YEARS AND I.T.A. NO. 4384 /DEL/2009 6/7 THERE WAS NO SCOPE FOR BUSINESS IN THE SUBSEQUENT Y EARS. THIS CONDUCT WOULD INDICATE THAT IF THIS CAPITAL LO SS WAS ALLOWED TO THE ASSESSEE IN THE GARB OF BUSINESS LOS S THEN IT CAN BE SET OF AGAINST BUSINESS INCOME IN THE SUBSEQUENT YEARS. BUT WHEN THERE IS NO BUSINESS ACTIVITY FOR THE LAST 12 YEARS AND NO SCOPE IN THE SUBSEQUENT YEARS, THEN IT WOULD INDICATE THAT IT WA S A BONA FIDE LAPSE WHILE COMPUTING THE INCOME OF THE ASSESSEE FOR THE PURPOSE OF FILING THE RETURN. THE RE APPEARS NOT ANY DELIBERATE ATTEMPT ON THE PART OF T HE ASSESSEE TO HIDE A PARTICULAR INCOME FROM THE DEPARTMENT. IT CAN BE A POSSIBLE ERROR. THE HON'B LE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CIT V S SIDHARTHA ENTERPRISES LUDHIANA REPORTED IN 908 OF 2 008 DECIDED ON 14.7.1999 HAS HELD THAT FOR VISITING THE ASSESSEE WITH PENALTY U/S 271(1)(C), THERE SHOULD B E SOME ELEMENT OF DELIBERATE DEFAULT AT THE END OF TH E ASSESSEE FOR FURNISHING INACCURATE PARTICULARS OF I NCOME. IF AN ASSESSEE HAS COMMITTED A MISTAKE BONA-FIDE TH EN THAT WOULD NOT BE A CASE FOR IMPOSING THE PENALTY. THE ATTENDING CIRCUMSTANCES DO INDICATE IN THE PRESENT CASE THAT THERE WAS NO DELIBERATE ATTEMPT AT THE PART OF THE ASSESSEE TO CLAIM THIS CAPITAL LOSS IN THE P & L AC COUNT. I.T.A. NO. 4384 /DEL/2009 7/7 IT IS A BONA FIDE MISTAKE. THEREFORE, ASSESSEE DOE S NOT DESERVE TO BE VISITED WITH PENALTY. 6. IN THE RESULT, WE ALLOW THE APPEAL OF THE ASSESS EE AND DELETE THE PENALTY. 7. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT O N 31 ST MAR., 2010. SD.-/ SD./- (DEEPAK R. SHAH) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31 ST MAR., 2009 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI
