M/s Sierra Industrial Enterprises Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 4792/DEL/2010

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3356 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 27-04-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 02-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAUSHLENDRA TIWARI
• Keywords: Question of law; Wrong claim; Difference of opinion; Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SH. G.D.AGARWAL, PRESIDEN T AND SH. KUL BHARAT, JUDICIAL M EMBER ITA NO. 4792/DEL./2010 : A SSTT. YEAR : 2004-05 SIERRA INDUSTRIAL ENTERPRISES P. LTD. C/O. SSIPL RETAIL LTD., B-1/F- 4, MOHAN CO-OPERATIVE INDL. ESTATE, MAIN MATHURA ROAD, NEW DELHI PAN : AAACS3919D VS ACIT CIRCLE-9(1) C.R.BUILDING NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SU MANT CHADHA, CA RESPONDENT BY : SH. KAUSHLENDRA TIW ARI, SR. DR DATE OF HEARING : 19.02.2018 DATE OF PRONOUNCEMENT : 21.02.2018 ORDER PER KULBHARAT, J.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) XII, NEW DE LHI DATED 31.08.2010 PERTAINING TO ASSESSMENT YEAR 2004-05. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL :- 1. THE LD. CIT(A)-XII HAS WRONGLY UPHELD THE PENAL TY ON THE 5% DISALLOWANCE OF CUSTOMER CLAIM & DEFECTIVES AMOUNTING TO RS. 43,24,615. IN FACT THE ASSESSEE HAS NEITHER CON CEALED ANY INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCO ME. ITA NO.4792/DEL/2010 2 2. THE LD. CIT(A)-XII HAS WRONGLY UPHELD THE PENALT Y ON THE DISALLOWANCE RS. 12,67,949/- MADE ON ACCOUNT OF FOR EIGN TRAVEL. IN FACT THE ASSESSEE HAS NEITHER CONCEALED ANY INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME. 3. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE F ILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 1,54,23,884/-. THE AS SESSMENT WAS COMPLETED U/S 143(3) ON 15.12.2006 DETERMINING TOTAL INCOME AT RS . 3,19,93,010/- AGAINST THIS ORDER. THE ASSESSEE HAD FILED APPEAL WHICH REACHED UPTO THE STAGE OF TRIBUNAL AND THE HONBLE TRIBUNAL WAS PLEASED TO RESTORE THE ISSUES TO THE FILE OF THE ASSESSING OFFICER FOR FRESH DETERMINATION. HOWEVER, THE ASSESSING OFFICER YET AGAIN WHILE PASSING ORDER IN THE REMAND PROCEEDING S SUSTAINED THE ADDITIONS RELATED TO THE CLAIM OF DEFECTIVE GOODS AND FOREIGN TRAVELLING EXPENSES. THE PENALTY PROCEEDINGS WERE SEPARATELY INITIATED ON TH IS AMOUNT. THE ASSESSING OFFICER VIDE UNDATED ORDER IMPOSED THE PENALTY OF RS. 20,06,332/-. AGAINST THIS THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CI T(A) WHO AFTER CONSIDERING THE SUBMISSIONS SUSTAINED THE PENALTY VIDE ORDER DA TED 31.08.2010. AGGRIEVED BY THIS, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIB UNAL. 4. GROUND NO. 1 IS AGAINST SUSTAINING THE PENALTY O N THE DISALLOWANCE OF EXPENDITURE AMOUNTING RS. 43,24,615/- ON ESTIMATE BASIS. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE ADDITION ON DISALLOWANCE OF EXPENDITURE IS SUSTAINED PURELY ON THE ESTIMATION BASIS. HE SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. NOKIA INDIA PVT. LTD. (2012) 25 TAX MANN.COM 430 (DELHI) HELD THAT THE PENALTY ON ESTIMATION BASIS CANNOT BE SUSTAINED. LD. COUNSEL MADE RELIANCE ON VARIOUS DECISIONS BY THE TRIBUNAL TO BU TTRESS HIS ARGUMENTS THAT THE PENALTY OUGHT NOT TO HAVE BEEN SUSTAINED. LD. COUN SEL REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. ON THE CONTRARY, LD. ITA NO.4792/DEL/2010 3 DEPARTMENTAL REPRESENTATIVE OPPOSED THE SUBMISSIONS AND REITERATED THE SUBMISSIONS AS MADE THE WRITTEN SUBMISSIONS. 5. WE HAVE HEARD THE RIVAL CONTENTION, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THERE IS NO DISPUTE IN THIS REGARD, THE FACTS THAT THE DISALLOWANCE OF EXPENDITURE IS MADE PURELY ON BASIS OF ESTIMATION. THIS FACT IS NO DISPUTED BY T HE REVENUE. THE HONBLE HIGH COURT IN THE CASE OF CIT VS. NOKIA INDIA PVT. LTD. (SUPRA) HAS HELD AS UNDER :- 6. IT MAY BE NOTED THAT IN THE NEXT ASSESSMENT YEA R 2001- 02, THE TOTAL AMOUNT CLAIMED BY THE ASSESSEE UNDER THE HEAD PROVISION FOR OBSOLESCENCE OF INVENTORY WAS RS. 35,575/-. WHILE THE ASSESSING OFFICER DISALLOWED THE ENTIRE AMOUNT, THE COMMISSIO NER OF INCOME-TAX (APPEALS) REDUCED THE DISALLOWANCE TO 25 PER CENT, THEREOF, AMOUNTING TO RS. 8,894/-. THE S AID DISALLOWANCE HAS BEEN AFFIRMED BY THE INCOME-TAX APPELLATE TRIBUNAL AND THE HIGH COURT. 7. THE TRIBUNAL, WHILE DEALING WITH THE QUESTION OF PENALTY UNDER SECTION 271(1)(C) ON THE G ROUND OF OBSOLESCENCE, HAS HELD AS UNDER (PAGE 801 OF 10 ITR (TRIB) : 'WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 4 IT IS NOT IN DISPUTE THAT DISALLOWANCE HAS BEEN MA DE BY THE REVENUE ONLY TO THE EXTENT OF 25 PER CENT, OF THE T OTAL CLAIM ON ACCOUNT OF PROVISION FOR OBSOLESCENCES OF INVENTORY AMOUNTING TO RS.4,94,66,656. IN OTHER WORDS, THE ASSESSING OFFIC ER HAS ALLOWED 75 PER CENT, OF THE CLAIM AND DISALLOWED ONLY 25 PE R CENT, THEREOF. THE ASSESSING OFFICER HAS DISALLOWED 25 PET CENT, O F THE CLAIM ON THE GROUND THAT THE OLD MODEL COULD EASILY BE SOLD IN THE MARKET TO THE CUSTOMERS SINCE THE CUSTOMERS OF THIS LINE ALSO PURCHASED OLD MODEL EVEN AFTER LAUNCHING NEW MODEL IN THE MARKET. THIS MAKES ITA NO.4792/DEL/2010 4 IT CLEAR THAT THE ASSESSEE'S CLAIM HAS NOT BEEN FUL LY REJECTED. IT IS ONLY ON ESTIMATE THAT THE ASSESSING OFFICER HAS DIS ALLOWED 25 PER CENT. OF THE TOTAL CLAIM. THE ASSESSING OFFICER HAS NOT GIVEN ANY SUCH FINDING THAT THE ASSESSEES CLAIM WAS OTHERWIS E A FALSE CLAIM. THE ADDITION MADE BY THE ASSESSING OFFICER COULD AT BEST BE CONSIDERED DUE IN DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE DEPARTMENT BUT CANNOT BE SAID TO BE A CLAIM OF SUCH A NATURE WHICH COULD BE CONSIDERED TO BE FALSE AND IN RESPEC T OF WHICH THE PENALTY UNDER SECTION 271(L)(C) IS TO BE LEVIED. WE , THEREFORE, UPHOLD THE ORDER OF THE LEARNED COMMISSIONER OF INC OME-TAX (APPEALS) IN DELETING THE PENALTY ON THIS ITEM ALSO .' 8. LOOKING AT THE REASONING GIVEN BY THE INCOME-TAX APPELLATE TRIBUNAL, NATURE OF DISALLOWANCE AND THE FINDING OF THE ASSESSING OFFICER/COMMISSIONER OF INCOME-TAX (APPEA LS) MAKING AD HOC DISALLOWANCE OF 25 PER CENT., WE DO NOT THIN K ANY SUBSTANTIAL QUESTION OF LAW ARISES IN THE PRESENT A PPEALS AND THE SAME ARE ACCORDINGLY DISMISSED . 6. WE FIND THAT THE CASE LAWS AS RELIED BY THE LD. DEPARTMENTAL REPRESENTATIVE DO NOT APPLY ON THE FACTS OF THE PRE SENT CASE AND AS SUCH ARE DISTINGUISHABLE. WE, THEREFORE, RESPECTFULLY FOLLOW ING THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN COMMISSIONER O F INCOME TAX VS. NOKIA INDIA PVT. LTD. (SUPRA) DIRECT THE ASSESSING OFFICE R TO DELETE THIS PENALTY. 7. GROUND NO. 2 IS AGAINST CONFIRMING THE PENALTY A GAINST THE SUSTENANCE OF DISALLOWANCE IN RESPECT OF MADE ON ACCOUNT OF FORE IGN TRAVEL. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT TH E DISALLOWANCE WAS MADE PURELY ON THE BASIS OF SUSPICION ON THE BASIS THAT THE ASSESSEE COULD NOT FURNISH THE REQUISITE DETAILS. LD. COUNSEL SUBMITTE D THAT THE SUPPORTING EVIDENCES WERE DESTROYED IN FIRE , HE SUBMITTED THA T THE TRAVEL BY THE DIRECTORS OF THE COMPANY ABROAD WAS FOR THE BUSINESS PURPOSE . THE CLAIM OF THE ITA NO.4792/DEL/2010 5 ASSESSEE WAS BONA FIDE. LD. AO HAS NOT BROUGHT ON RECORD ANY ADVERSE MATERIAL AGAINST THE ASSESSED. ON THE CONTRARY, LD . DR OPPOSED THE SUBMISSIONS AND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTION PERUSED THE M ATERIAL AVAILABLE ON RECORD, THE FACTUM OF THE DESTRUCTION OF EVIDENCE I N FIRE IS NOT REBUTTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. WE, THEREFORE, UNDER THE FACTS OF THE PRESENT CASE HOLD THAT THE CLAIM OF TH E ASSESSEE WAS BONA FIDE AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 21 /02/2018). SD/- SD/- (G.D.AGARWAL) (KUL BHARAT) PRESIDENT JUDICIAL MEMBER DATED: 21 / 02/2018 *BINITA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGI STRAR DATE INITIAL 1. DRAFT DICTATED ON 19.02.2018 2. DRAFT PLACED BEFORE AUTHOR 19.02.2018 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. ITA NO.4792/DEL/2010 6 10. DATE OF DISPATCH OF ORDER.