ACIT, New Delhi V. M/s H&H Corporative Buying House, New Delhi

ITA 44/DEL/2009

• Counselvise Citation: 4420114 RSA 2009
• Duration Of Justice: 2 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-10-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 07-01-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Assessee Lawyers: RAJ KUMAR
• Keywords: Wrong claim; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C DELHI BEFORE SHRI C.L. SETHI AND SHRI K.G. BANSAL ITA NO. 44(DEL)/2009 ASSESSMENT YEAR: 2004-05 ASSTT. COMMISSIONER OF INCOME M/S H&H CORPORATIVE BUYING TAX, CIRCLE 27(1), NEW DELHI. VS. HOUSE , A-21/19, NARAINA INDL. AREA, PHASE-II, NEW DELHI. PAN: AAAFH5339K (APPELLANT) (RESPON DENT) APPELLANT BY : SHRI SALIL MISHRA, DR RESPONDENT BY: SHR I RAJ KUMAR, C.A. DATE OF HEARING : 24.10.2011 DATE OF PRONOUNCEMENT : 25.10.2011. ORDER PER K.G. BANSAL : AM THE ONLY GROUND TAKEN BY THE REVENUE IN THIS CAS E IS THAT THE LD. CIT(APPEALS) ERRED IN DELETING THE PENALTY OF RS . 35,68,710/- LEVIED BY THE AO IN RESPECT OF DEBIT OF RS. 1,18,95,702/- T O THE PROFIT AND LOSS ACCOUNT ON ACCOUNT OF LOSS ON SALE OF MOTOR VEHICL ES AND IMMOVABLE ASSETS. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED ITS RETURN ON 01.11.2004 DECLARING LOSS OF RS. 1,17,31,158/-. THIS LOSS INCLUDED A SUM OF RS. 1,18,95,702/- REPRESENTING LOSS OCCURRING ON SALE OF OPEL ASTRA ITA NO. 44(DEL)/2009 2 CAR, LANCER CAR, OFFICE ALONG WITH FURNITURE AN D FITTING AND LAND BEARING PLOT NUMBERS 8, 9 AND 10 SITUATED AT JAIPUR. I N THE ASSESSMENT PROCEEDINGS, THIS LOSS WAS NOT ALLOWED AS TH E ASSETS WERE CONSIDERED AS DEPRECIABLE ASSETS AND, THEREFORE, THE SALE P ROCEEDS HAD TO BE DEDUCTED FROM THE BLOCKS OF ASSETS. ACCORDINGLY, THE LO SS WAS COMPUTED AT RS. 2,90,920/-. PENALTY PROCEEDINGS WERE ALSO INITIA TED U/S 271(1)(C) OF THE ACT. THESE PROCEEDINGS WERE COMPLETED ON 26.06 .2007 BY LEVYING THE MINIMUM PENALTY OF RS. 35,68,710/-. IT IS MENTION ED THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME BY CLA IMING LOSS ON SALE OF DEPRECIABLE ASSETS AS BUSINESS LOSS. THIS IS I N CONTRAVENTION OF SECTION 50 OF THE ACT. THE ASSESSEE COULD ALSO NOT S UBSTANTIATE ITS CLAIM IN PENALTY PROCEEDINGS. 2.1 THE PENALTY HAS BEEN DELETED BY THE LD. CI T(APPEALS) BY OBSERVING THAT: (I) THE DISALLOWANCE OF THE LOSS REPRESENTS BONA FID E DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE AO; AND (II) PRIMARY FACTS HAD BEEN DISCLOSED AND, THUS, THE RE IS NO CONSCIOUS EFFORT TO CONCEAL INCOME OR FURNISH IN ACCURATE PARTICULARS OF INCOME. ITA NO. 44(DEL)/2009 3 3. BEFORE US, THE LD. DR SUBMITTED THAT THE CLAIM OF THE ASSESSEE IS PRIMA FACIE INADMISSIBLE. THE INITIAL BURDEN TO FURNISH EXPLANATION IS ON THE ASSESSEE AND SUCH EXPLANATION SHOULD BE BONA FIDE. THERE IS NO NEED FOR THE REVENUE TO ESTABLISH MENS REA IF THE EX PLANATION IS FOUND TO BE FALSE OR NOT BONA FIDE. IN THIS CONNECTION, RELI ANCE HAS BEEN PLACED ON THE DECISION IN THE CASE OF UNION OF INDIA VS. DHARME NDRA TEXTILE PROCESSORS LTD., (2008) 306 ITR 277 (SC) AND CIT VS. ZOOM COMMUNICATIONS LTD., 191 TAXMAN 179 (DEL). 3.1 ON THE OTHER HAND, THE LD. COUNSEL SUBMITTED THAT THE INITIAL BURDEN TO FURNISH EXPLANATION ABOUT CIRCUMSTANCES IN WHI CH THE CLAIM WAS MADE IS ON THE ASSESSEE. THE ASSESSEE HAS FURNISHED SUCH AN EXPLANATION. THE LD. CIT(APPEALS) HAS FOUND THAT THERE IS A BONA FIDE D IFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE AO. THE BUSINESS OF THE ASSESSEE HAS BEEN CLOSED DOWN, THUS, THE CLAIM OF LOSS IS OF NO C ONSEQUENCE FOR FUTURE. IN THE ASSESSMENT ORDER, THE AO HAS ALSO FURNISHED A FINDING THAT UNABSORBED LOSS OF ONLY RS. 2,90,920/- FOR ASSESSMENT YEAR 20 02-03 IS ALLOWED TO BE CARRIED FORWARD. THEREFORE, THE CLAIM CAN AT BEST BE TERMED TO BE A WRONG CLAIM AS IT DOES NOT LEAD TO ANY BENEFIT TO THE ASSESSEE. ITA NO. 44(DEL)/2009 4 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. WE FIND THAT THE INITIAL BURDEN OF F URNISHING A BONA FIDE EXPLANATION IS ON THE ASSESSEE AS HELD IN THE CAS E OF DHARMENDRA TEXTILE PROCESSORS LTD. (SUPRA). THE CIRCUMSTANCE IN WHICH A PRIMA FACIE INADMISSIBLE CLAIM IS MADE HAS ALSO TO BE EXPLAI NED BY THE ASSESSEE. THEREAFTER, THE AO OR THE LD. CIT(APPEALS) HAS TO EXAMINE WHETHER THE EXPLANATION IS BONA FIDE OR NOT. THE AUTHORITY CAN ALSO BRING FURTHER EVIDENCE ON RECORD TO REBUT THE EXPLANATION OF TH E ASSESSEE. AS AGAINST THE AFORESAID PROCEDURE TO BE FOLLOWED, THE LD. CIT(A PPEALS) DEVOTED HIS TIME TO ASCERTAIN WHETHER THERE WAS ANY CONTUMACIOUS CONDUCT ON THE PART OF THE ASSESSEE. THE CIRCUMSTANCE UNDER WHICH THE C LAIM WAS MADE HAS NOT BEEN EXAMINED. THEREFORE, WE THINK IT FIT TO RE STORE THE MATTER TO HIS FILE WITH A VIEW TO EXAMINE THE LEVY OF PENALTY IN T HE LIGHT OF AFORESAID DECISION RELIED UPON BY THE LD. DR AND ANY OTHER DECISION WHICH MAY ALSO BE BROUGHT ON RECORD IN THE COURSE OF DE-NOVO PR OCEEDINGS. 5. IN THE RESULT, THE APPEAL IS TREATED AS ALLOWE D FOR STATISTICAL PURPOSES. SD/- SD/- (C.L. SETHI) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA ITA NO. 44(DEL)/2009 5 COPY OF THE ORDER FORWARDED TO:- M/S H&H CORPORATIVE BUYING HOUSE, NEW DELHI. ASSTT. CIT, CIRCLE 27(1), NEW DELHI. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.