Ideal Carpets Ltd., New Delhi V. ITO, New Delhi

ITA 4636/DEL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53399 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 21-12-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 21-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Assessee Lawyers: K R MANJANI
• Keywords: Unexplained cash credit; Business income
• Section: 80HHC

Judgement Text

ITA NO. 4636/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 4636/DEL/2010 A.Y. : 2001-02 M/S IDEAL CARPETS LIMITED, B-1, SAGAR APARTMENTS, 6, TILAK MARG, NEW DELHI VS. INCOME TAX OFFICER, WARD 11(3), NEW DELHI (PAN/GIR NO. : AAACI0157K) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. K.R. MANJANI, ADVOCATE DEPARTMENT BY : SH. B.R.R. KUMAR, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 27.9.2 010 PERTAINING TO ASSESSMENT YEAR 2001-02. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOM E TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE INCOME TAX OFFICER IMPOSING PENALTY U/S. 271(1)(C) AMOUNTING TO ` 59,036/-. 3. IN THIS CASE MATTER HAD TRAVELLED TO THE ITAT R EGARDING QUANTUM PROCEEDINGS. THE NET RESULT AFTER GIVING THE EFFE CT TO THE ITAT ORDER WAS THAT THE ASSESSEES INCOME FROM INTEREST WAS TRE ATED AS INCOME FROM OTHER SOURCES AMOUNTING TO ` 1,21,750/-. ASSES SEE HAS SHOWED BOGUS SALES OF ` 46,046/- AND HAD CLAIMED EXCESS D EDUCTION U/S. 80HHC OF ` 98,927/- AND U/S 80IA OF ` 50,339/-. TH E NET INCREASE IN ITA NO. 4636/DEL/2010 2 INCOME WAS ` 1,49,268/-. ON THIS PENALTY AMOUNTING TO ` 59,036/- WAS IMPOSED. 4. LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS CONF IRMED THE PENALTY. 5. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPE AL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTION IN LIGHT OF T HE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT ONE OF THE ADDITIONS IN THIS REGARD PERTAIN TO CLAIM OF BOGUS SALES. ON THIS ACCOUNT THE ASSESSING OFFICER HAS HELD IN ASSESSME NT ORDER THAT IN THE BOOKS OF ACCOUNT THERE IS BOGUS ENTRY OF SALE OF ` 46,046/- ON WHICH ASSESSEE HAS NO EXPLANATION ABOUT ITS NATURE OF SO URCE. THE SAME WAS, THEREFORE, TREATED AS UNEXPLAINED CREDIT U/S. 68. IN OUR CONSIDERED OPINION, THIS ENTRY OF BOGUS SALES CLEA RLY ATTRACTS PENALTY U/S 271(1)(C) OF THE ACT. HENCE, WE SUSTAIN THE PENALTY ON THIS ACCOUNT. 6.1 FURTHERMORE, PENALTY HAS ALSO BEEN LEVIED AS INT EREST AMOUNT HAS BEEN TREATED BY THE ASSESSEE AS BUSINESS INCOME AND DEDUCTION U/S 80HHC & 80IA ALSO CLAIMED. HOWEVER, ASSESSING OFF ICER HAS TREATED THE SAME AS INCOME FROM OTHER SOURCES AND DENIED THE DEDUCTION U/S 80HHC AND 80IA. IN OUR CONSIDERED OPINION, AT THE TIME OF ASSESSEES FILING OF RETURN THE ISSUE WHETHER INTEREST INCOME WAS EXIGIBLE FOR DEDUCTION U/S 80HHC AND 80IA WAS A DEBATABLE MATTER . HENCE, IN OUR CONSIDERED OPINION, PENALTY U/S 271(1)(C) ON THIS A CCOUNT IS NOT LEVIABLE. 6.2 FURTHERMORE, FREIGHT AND INSURANCE HAS BEEN INCL UDED IN THE EXPORT TURNOVER/TOTAL TURNOVER AMOUNTING TO ` 6,12,8 52/-. THIS AMOUNT ITA NO. 4636/DEL/2010 3 WAS SAID TO HAVE BEEN WRONGLY INCLUDED IN THE TOTAL SALES. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION AND PERUSED THE RECORDS. IN OUR CONSIDERED OPINION, INCLUSION OF FREIGHT/INSURANCE INTO EXPORT AND TOTAL SALES IS CLEARLY AN ACT ON WHICH PENALTY U/S 271(1) (C) IS ATTRACTED. HENCE, IN OUR CONSIDERED OPINION, IN THIS CONNECTIO N PENALTY LEVIED IS JUSTIFIED. ACCORDINGLY, THE ASSESSEES APPEAL IS PA RTLY ALLOWED AS ABOVE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/12/2011. SD/- SD/- [ [[ [C.L. SETHI C.L. SETHI C.L. SETHI C.L. SETHI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 23/12/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES