M/s. Super Cassettes Industries Ltd., Noida V. DCIT, New Delhi

ITA 4520/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61684 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 24-05-2012
• Assessment Year: 1997-1998
• Appeal Filed On: 10-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURJANI MOHANTY
• Assessee Lawyers: SANJEEV KWATRA; S R CHATTERJ EE A RS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `G : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NOS.4520 & 4521/DEL./2011 (ASSESSMENT YEARS : 1997-98 & 98-99) SUPER CASSETTES INDUSTRIES LTD., VS. DCIT, CIRCLE 9(1), E-2/16, WHITE HOUSE, NEW DELHI. ANSARI ROAD, DARYAGANJ, NEW DELHI. (PAN/GIR NO.AABCS4712P) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI SANJEEV KWATRA & S.R. CHATTERJ EE, A.RS. REVENUE BY : SMT. SURJANI MOHANTY, SR.DR ORDER PER U.B.S. BEDI, J.M. THESE TWO APPEALS OF THE ASSESSEE ARE DIRECTED AGA INST THE SEPARATE ORDERS PASSED BY CIT(A)-XII, NEW DELHI, BOTH DATED 11.07.2011, W HEREBY CONFIRMATION OF PENALTIES LEVIED U/S 271(1)(C) OF THE I.T. ACT, 1961 BY THE A SSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF EXPENSES AMOUNTING TO RS.3,65,107/- AND RS.3,72,401/- CLAIMED IN PROFIT & LOSS A/C PERTAINING TO FLAT NO.21F, MAGNUM TOWER, MUMBAI FOR THE ASSESSMENT YEARS 1997-98 AND 98-99 RESPECTIVELY, (WRONGLY WRITTEN AS 1997-98) HAVE BEEN CHALLENGED. 2. AT THE VERY OUTSET, LD.ARS OF THE ASSESSEE SUBMI TTED THAT SUSTENANCE OF SIMILAR TYPE OF PENALTIES IMPOSED U/S 271(1)(C) BY THE ASSE SSING OFFICER ON ACCOUNT OF DISALLOWANCE OF EXPENSES OF RS.5,18,423/- AND RS.4, 30,383/- IN THE ASSESSMENT YEARS I.T.A. NOS.4520 & 4521/DEL./2011 (A.YS.: 1997-98 & 98-99) 2 1996-97 & 95-96, RESPECTIVELY, CAME TO BE CHALLENGE D IN THE CASE OF THE ASSESSEE WITH RESPECT TO FLAT NO.21F, MAGNUM TOWER, MUMBAI AND TH IS BENCH VIDE ITS ORDERS IN I.T.A. NO.788/DEL./2011 DATED 30.11.2011 AND I.T.A. NO.537 6/DEL./2011 DATED 2.2.2012 FOR THE ASSESSMENT YEARS 1996-97 & 95-96 RESPECTIVELY, HAS ACCEPTED THE APPEALS OF THE ASSESSEE TO DELETE THE PENALTIES AND SINCE FACTS AND CIRCUMS TANCES ARE SAME AND ISSUE INVOLVED IS IDENTICAL WITH DIFFERENCE IN AMOUNTS ONLY, THEREFOR E, PENALTIES UNDER CONSIDERATION (TO THE EXTENT SUSTAINED) ARE LIABLE TO BE DELETED BEING A COVERED MATTER. BY FILING COPIES OF THE EARLIER ORDERS (SUPRA) OF THE TRIBUNAL, LD.ARS OF T HE ASSESSEE PLEADED FOR DELETING THE IMPUGNED PENALTIES, IMPOSED BY THE ASSESSING OFFICE R AND TO THE EXTENT CONFIRMED BY THE CIT(A). 3. LD.SR.DR COULD NOT CONTROVERT THIS FACTUAL ASPEC T, BUT SHE RELIED UPON THE ORDERS OF THE ASSESSING OFFICER AS WELL AS OF CIT(A) TO PL EAD FOR CONFIRMATION OF THESE ORDERS. 4. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MAT ERIAL ON RECORD AS WELL AS PRECEDENTS RELIED UPON BY THE LD.ARS OF THE ASSESSE E AND FIND THAT ISSUE INVOLVED IN THESE APPEALS IS SIMILAR TO THE ISSUE DECIDED BY THE TRIB UNAL IN EARLIER TWO APPEALS OF THE ASSESSEE WHEN THE FACTS ARE IDENTICAL AND PENALTIE S CAME TO BE DELETED BY OBSERVING IN IDENTICAL MANNER IN PARAS. 8 TO 10 OF THESE ORDERS, WHICH READS AS UNDER: 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US. IN THE CASE OF RELIANCE PETRO PRODUCTS P VT. LTD.(SUPRA), THE HONBLE SUPREME COURT HAS CLEARLY HELD THAT IF THE ASSESSEE HAS FURNISHED WRONG PARTICULARS IN THE RETURN OF INCOME, THE PENALTY CA N BE IMPOSED. HOWEVER, IN CASE THE ASSESSEE MAKES A BONA FIDE LEGAL CLAIM, THE SAM E CANNOT BE HELD FOR PENALTY. ON THIS PRINCIPLE, HONBLE SUPREME COURT DELETED TH E PENALTY IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD.(SUPRA). I.T.A. NOS.4520 & 4521/DEL./2011 (A.YS.: 1997-98 & 98-99) 3 9. LD.DR HAS RELIED ON HONBLE DELHI HIGH COURT JUD GMENT IN THE CASE OF ZOOM COMMUNICATIONS (SUPRA). IN THIS CASE:- (A) THERE WAS NO FINDING BY THE TRIBUNAL ABOUT THE BONA FIDE OF THE ASSESSEE. (B) THE OBSERVATION OF THE TRIBUNAL WAS HELD TO BE SUFFERING FROM PERVERSITY. (C) EVERY CASE IS TO BE DECIDED CONSIDERING THE FAC TS AND CIRCUMSTANCES IN WHICH DEDUCTION IS CLAIMED TOGETHER WITH THE EXPLAN ATION. 10. IN OUR CONSIDERED VIEW, THE ASSESSEES EXPLANAT ION CANNOT BE HELD TO BE LACKING IN BONA FIDES. THE EXPENDITURE INCURRED HA S BEEN DETAILED ABOVE AND THERE IS NO EXPENDITURE WHICH INDICATES MAINTAINING ANY F ACILITIES WHICH CAN BE STRICTLY TERMED S A GUEST HOUSE. THE EXPENSES DEBITED ARE E LECTRICITY, REPAIRS, SOCIETY MAINTENANCE AND TELEPHONE. THE REGULAR FEATURES OF A GUEST HOUSE I.E. EXPENDITURE RELATING TO COOKING, MESSING, SALARY OF CARETAKING STAFF IS NOT CLAIMED. THIS IS FURTHER CORROBORATED BY THE FACT THAT THE TAX AUDIT REPORTS DID NOT CONSIDER THIS ACCOMMODATION AS A GUEST HOUSE IN NATURE AS CONTEMP LATED UNDER DISALLOWABLE SECTION 37(4). IN OUR VIEW, IF THE TAX AUDITORS FA ILED TO QUALIFY THIS EXPENDITURE, IT AMOUNTS TO PROFESSIONAL ADVISE ABOUT THE BELIEF OF THE ASSESSEE. IT HAS NOT BEEN DISPUTED THAT THE ASSESSEE DISCLOSED ALL THE FACTS ABOUT THIS CLAIM IN THE RETURN OF INCOME WHICH WAS SUBJECT TO LEGAL DEBATE AND LATER SETTLED BY HONBLE SUPREME COURT IN THE CASE OF BRITANNIA INDUSTRIES LTD. (SUP RA). LOOKING AT THE ENTIRETY OF FACTS AND CIRCUMSTANCES, NATURE OF EXPENSES AND THE FACT THAT THE AUDITORS DID NOT DISALLOW THIS EXPENDITURE IN THE AUDIT REPORT, WE H OLD THE ASSESSEES EXPLANATION TO BE BONA FIDE. THE SAME IS TO BE TERMED AS MAL FIDE AND IS TO BE HELD AS BONA FIDE. IN VIEW THEREOF, RESPECTFULLY FOLLOWING THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. (SUPR A), WE DELETE THE PENALTY. 5. SINCE THE DEPARTMENT HAS NOT BEEN ABLE TO PLACE ANY CONTRARY MATERIAL ON RECORD OR HIGHER COURTS DECISION REVERSING SUCH EARLIER DECI SIONS OF THE TRIBUNAL, THEREFORE, WE ARE LEFT WITH NO ALTERNATIVE, BUT TO FOLLOW THE PRECEDE NTS RELIED UPON BY THE LD.ARS OF THE ASSESSEE AND TO DELETE THE IMPUGNED PENALTIES IMPOS ED BY THE ASSESSING OFFICER AND TO THE EXTENT CONFIRMED BY THE CIT(A) FOR BOTH THE YEA RS. WE DIRECT ACCORDINGLY. I.T.A. NOS.4520 & 4521/DEL./2011 (A.YS.: 1997-98 & 98-99) 4 6. AS A RESULT, BOTH THE APPEALS OF THE ASSESSEE G ET ACCEPTED. ORDER PRONOUNCED IN OPEN COURT SOON AFTER THE CON CLUSION OF THE HEARING ON 24.05.2012. SD/- SD/- (B.C. MEENA) ACCOUNTANT EMBER (U.B.S. BEDI) JUDICIAL MEMBER DATED : MAY 24 , 2012 SKB COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XII, NEW DELHI. 5. CIT(ITAT) DEPUTY REGISTRAR, ITAT