Bliss Investment Centre Pvt. Ltd., Kolkata V. ITO, Ward - 5(3), Kolkata, Kolkata

ITA 441/KOL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9315 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2011
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 01-03-2010
• Court: TRIBUNAL
• Assessee Lawyers: R SALARPURIA
• Keywords: Reasonable cause

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, C BE NCH : KOLKATA [BEFORE HONBLE SHRI B.R. MITTAL, JM AND HONBLE SH RI C. D. RAO, AM] ITA NO. 441 (KOL) OF 2010 : ASSESSMENT YEAR : 2004 -05 BLISS INVESTMENT CENTRE (P) LTD. -V S.- INCOME TAX OFFICER/WARD-5(3) KOLKATA. [PAN : AABCB 0323 R] KOLKATA. [APPELLANT] [RESPONDENT] APPELLANT BY : SHRI R. SAL ARPURIA RESPONDENT BY : SHRI S. BHADR A PER C. D. RAO, A.M. THE ASSESSEE HAS FILED THIS APPEAL FOR AS SESSMENT YEAR 2004-05 AGAINST THE ORDER OF THE LD. CIT(A)-V, KOLKATA DATED 22.10.2009. THE ONLY IS SUE RAISED BY THE REVENUE IS RELATING TO DELETION OF PENALTY IMPOSED BY THE ASSESSING OFFICE R U/S. 271(1 )(C) OF THE ACT. 2. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSING OFFICER IMPOSED PENALTY OF RS.2,30,580/- U/S. 271(L)(C) BY OBSERVING THAT ASSESSEE CLAIMED D IMINUTION IN VALUE OF INVESTMENTS AMOUNTING TO RS.5,31,495/- AND DEBITED THE SAME IN PROFIT AND LOSS ACCOUNT. THE ASSESSING OFFICER ALSO OBSERVED THAT DIMINUTION VALUE OF INVESTMENTS IS NO T DEDUCTIBLE BUT ASSESSEE HAD DEBITED THE DIMINUTION OF VALUE IN PROFIT AND LOSS ACCOUNT. THE REFORE, ACCORDING TO ASSESSING OFFICER THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF IN COME. HE ALSO OBSERVED THAT IN THE PROFIT AND LOSS ACCOUNT ASSESSEE CLAIMED RS.1,27,310/-UNDER TH E HEAD BAD DEBT WRITTEN OFF. IT WAS NOT CONSIDERED BY THE ASSESSING OFFICER ON THE GROUND T HAT THE ASSESSEE FAILED TO SUBSTANTIATE HIS CLAIM WITH EVIDENCE. HENCE, ACCORDING TO ASSESSING OFFICER, THE ASSESSEE IN THIS CASE ALSO FURNISHED INACCURATE PARTICULARS OF INCOME TO REDUC E THE PROFIT MARGIN. THEREFORE, HE IMPOSED PENALTY OF RS.2,30,580/- I.E. 100% OF THE TAX SOUGH T TO BE EVADED. ON APPEAL, LD. CIT(A) HAS DELETED THE SAME BY OBSERVING AS UNDER :- I HAVE GONE THROUGH THE SUBMISSION OF THE APPELLAN T AND ALSO THE ORDER OF THE AO. THE ASSESSEE AS PER THE REQUIREMEN T UNDER COMPANIES ACT 1956 HAD SHOWN RS.5,31,495/- AS DIMINUTION IN VALUE OF INVESTMENT. HOWEVER, WHILE COMPUTING INCOME UNDER INCOME TAX AC T THE SAME HAS NOT BEEN ADDED TO THE TOTAL INCOME. IT CANNOT BE ACCEPT ED AS A MISTAKE APPARENT FROM RECORD. THE APPELLANT HAS DEBITED IN THE PROFIT & LOSS ACCOUNT WHICH IS FILED WITH RETURN. IN THE COMPUTAT ION, THE SAME HAS NOT BEEN ADDED BACK. IT AMOUNTS TO FURNISHING OF INACCU RATE PARTICULARS OF ITA NO. 441/KOL/20 10 2 INCOME. BASED ON THIS ISSUE ONLY, THE CASE WAS SELE CTED FOR SCRUTINY. THE APPELLANT IMMEDIATELY COULD HAVE FILED REVISED RETU RN OF INCOME DURING THE COURSE OF SCRUTINY PROCEEDINGS. HOWEVER, ONLY AFTER THE ADDITION WAS MADE BY THE A.O. THE APPELLANT REALISES THAT IT IS A MIS TAKE APPARENT FROM RECORD. THE AO IS JUSTIFIED IN LEVYING PENALTY U/S 271(1)(C ) ON THIS ISSUE. HOWEVER, REGARDING THE DISALLOWANCE OF BAD DEBT AMO UNTING TO RS.1,27,310/- CANNOT BE CONSIDERED AS FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE COMPANY. THE A.O. MADE ON LY A LEGAL DISALLOWANCE; HENCE THE SAME CANNOT BE CONSTRUED AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE AO IS DIRECTE D TO LEVY PENALTY ON THE AMOUNT OF RS.5,3 1,495/- AND THE APPELLANT GETS REL IEF TO THE EXTENT OF RS.1,27,310/- ON WHICH PENALTY WAS ALSO LEVIED. THI S GROUND IS PARTLY ALLOWED. FURTHER AGGRIEVED, NOW THE ASSESSEE IS IN APPEAL BE FORE US. 3. AT THE TIME OF HEARING BEFORE US, LD. COUNSEL A PPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT UNDER SIMILAR STATE OF FACTS THIS TR IBUNAL IN THE CASE ITO VS. M/S. ALLIANCE STOCK BROKING LTD. IN ITA NO. 13L6/KOL/2009 DATED 16.07.2 010 FOR ASSESSMENT YEAR 2004-05 HAS DELETED THE PENALTY. THEREFORE, HE REQUESTED TO SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENA LTY LEVIED HIM. 4. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTAT IVE RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES AND THE ORDER OF HONBLE APEX COURT IN THE CASE OF UNION OF INDIA AND OTHERS VS. DHARMENDRA TEXTILES PROCESSORS AND OTHERS [2008] 30 6 ITR 277 (SC). 5. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAR EFUL PERUSAL OF THE MATERIAL AVAILABLE ON RECORD INCLUDING THE CASE LAWS RELIED ON BY BOTH TH E PARTIES, IT IS OBSERVED THAT THIS TRIBUNAL IN THE CASE OF ITO VS. M/S. ALLIANCE STOCK BROKING LTD . IN ITA NO.1316/KOL/2009 DATED 16.07.2010 FOR ASSESSMENT YEAR 2004-05 BY OBSERVING LD. CIT(A)S OBSERVATION HAS DISMISSED THE REVENUE APPEAL WHEREIN LD. CIT(A)S OBSERVATION HAS BEEN RECORDED AS UNDER :- 1.5. ACCORDING TO THE NOTES ON ACCOUNT, THE LOSS W AS ON ACCOUNT OF DIMINUTION IN THE VALUE OF INVESTMENT IN THE SHARES OF ALLIANCE FINLEASE LTD. ACCORDING TO THE AUDITED ACCOUNTS OF THE SAID COMPANY I.E. ALLIANCE FINLEASE LTD. EROSION IN THE VALUE OF ITS SHARES WA S MAINLY ATTRIBUTABLE TO THE EROSION IN THE VALUE OF SHARES OF THE COMPANIES WHEREIN IT HAD INVESTED. THERE WAS SIMILAR EROSION IN THE VALUE OF INVESTMENT OF THE OTHER COMPANIES. THERE ARE ALSO INSTANCES OF CROSS INVEST MENT. OVERALL, IT APPEARS THAT THE GROUP ITSELF HAD SUFFERED EROSION IN THE VALUE OF ITS SHARE CAPITAL. TO THAT EXTENT, THE ASSESSEE S PLEA THAT THE EROSION IN THE VALUE OF ITA NO. 441/KOL/20 10 3 ITS SHARE INVESTMENT WAS GENUINE AND THAT THERE WAS NO INTENTION TO CONCEAL PARTICULARS OF ANY INCOME OR EVADE TAX APPE ARS TO BE CORRECT. THE COMPANY HAS ALMOST WIPED OUT ITS NET WORTH AND IS U NDER LIQUIDATION. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTA NCES OF THE CASE DISCUSSED ABOVE AND THE CASE LAW RELIED UPON BY THE ASSESSEE, IT IS HELD THAT THERE WAS REASONABLE CAUSE FOR PROVIDING FOR D IMINUTION IN THE VALUE OF THE ASSETS AND CLAIMING IT AS AN EXPENDITURE. SI NCE THE RELEVANT PARTICULARS WERE FURNISHED IN THE RETURN OF INCOME AND ALLOWABILITY OF DEDUCTION WAS A DEBATABLE CASE FOR IMPOSITION OF PE NALTY U/S. 271(1)(C) OF THE INCOME TAX ACT. CONSEQUENTLY, THE PENALTY IS CA NCELLED. KEEPING IN VIEW OF THE FACT THAT IN THIS CASE ALSO THE RELEVANT PARTICULARS WERE FURNISHED IN THE RETURN OF INCOME AND ALLOWABILITY OF DEDUCTION WAS A DEBATABLE ISSUE. IT WAS NOT A FIT CASE FOR IMPOSITION OF PENALTY U/S. 271(1)(C) OF THE INCOME TAX ACT. THEREFORE, WE FIND NO JUSTIFICATION ON THE PART OF THE REVENUE AUTHORITIES IN LEVY OF P ENALTY. IN VIEW OF THIS, WE SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED BY HIM. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 25. 02. 2011. SD/- SD/- [ B. R. MITTAL ] [ C. D. RAO ] JUDICIAL MEMBER ACCOUN TANT MEMBER DATED : 25TH FEBRUARY, 2011. COPY FORWARDED TO THE - 1. M/S. BLISS INVESTMENT CENTRE (P) LTD., C/O. SA LARPURIA JAJODIA & CO., 7, C.R. AVENUE, KOLKATA-700 072. 2. INCOME TAX OFFICER, WARD-5(3), AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069. 3. CIT(A)- (4) CIT- 5. D.R., I.T.A.T., KOLKATA. [TRUE COPY] BY ORDER DEPUTY/ASSISTANT REGISTRAR (KKC) I .T.A.T., KOLKATA.