M/s. Ruchi Fabrics Ltd., Indore V. The DCIT, Indore

ITA 499/IND/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9480 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-03-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 27-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESHAVE SAXENA
• Assessee Lawyers: SSH H P VERMA
• Section: 271(1)(c); 143(3); 115JB

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.499/IND/2009 A.Y. 2003-04 M/S. RUCHI FABRICS LTD., PLOT NO.32, SECTOR D-2, SANWER ROAD, INDORE PAN AAACR 9428 E APPELLANT VS DCIT-1(1), INDORE RESPONDENT APPELLANT BY : S/SH. H.P. VERMA & ASHISH GOYAL RESPONDENT BY : SH. KESHAVE SAXENA, CIT(DR) O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THIS APPEAL IS BY THE ASSESSEES AGAINST THE ORDER O F THE LEARNED CIT(A)-I, INDORE, DATED 28.8.2009 WITH REGARD TO CO NFIRMING THE PENALTY OF RS.1,10,000/- IMPOSED U/S 271(1)(C) OF THE I.T. ACT. 2. DURING HEARING OF THE APPEAL, WE HAVE HEARD SHRI H.P. VERMA ALONG WITH SHRI ASHISH GOYAL, LD. COUNSEL FOR THE ASSESSEE AND SHRI KESHAVE SAXENA, LD. CIT(DR). THE CRUX OF ARGUM ENTS ON BEHALF OF 2 THE ASSESSEE IS THAT THE PENALTY WAS MADE BY THE AS SESSING OFFICER BROADLY ON THE DISALLOWANCE MADE U/S 40A(2)(B) OF T HE ACT FOR WHICH RELIANCE WAS PLACED UPON THE DECISION IN JHAVAR PRO PERTIES P. LTD. VS. ACIT (2009) (124 TTJ 858) (MUM). ON THE OTHER HAND, THE LD. CIT (DR) DEFENDED THE IMPOSITION/CONFIRMATION OF PENALTY. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. BRIEF FACTS ARE THAT THE ASSESSEE IS ENGAGE D IN MANUFACTURING OF COTTON, BELTING, CANVASS CLOTHS DISCLOSED NIL INCOM E IN ITS RETURN FILED ON 27.11.2003 AFTER SETTING OFF BROUGHT FORWARD LOSSES OF RS.4,81,757/-. THE ASSESSEE DISCLOSED TOTAL INCOME OF RS.2,58,389/- UN DER THE MAT PROVISIONS OF SEC. 115JB OF THE ACT. THE LD. ASSESS ING OFFICER COMPLETED THE ASSESSMENT VIDE ORDER DATED 7.3.2006, FRAMED U/ S 143(3) OF THE ACT AT A TOTAL INCOME AT NIL, AS RETURNED BY THE ASSESS EE, AFTER SETTING OFF OF BROUGHT FORWARD LOSSES OF RS.12,02,576/-. SUBSEQUEN TLY, THE ASSESSEE COMPANY PREFERRED APPEAL BEFORE THE LD. CIT(A) WHER E IT WAS PARTLY ALLOWED ON VEHICLE HIRE CHARGES, VEHICLE EXPENSES A ND TELEPHONE EXPENSES ETC. AND FULL RELIEF IN JOB WORK WAS EXTEN DED TO THE ASSESSEE. THE SECOND APPEAL WAS PREFERRED BEFORE THE TRIBUNAL . DURING THE PENDENCY OF THE APPEAL, THE LD. ASSESSING OFFICER I MPOSED PENALTY OF RS.1,10,000/- VIDE ORDER DATED 28.3.2008 WHICH IS U NDER APPEAL BEFORE THIS TRIBUNAL. THE CASE OF THE ASSESSEE IS THAT SIN CE THE DISALLOWANCE 3 WAS MADE U/S 40A(2)(B), THEREFORE, IN THE ABSENCE O F ANY CONCEALMENT OF INCOME, NO PENALTY CAN BE LEVIED U/S 271(1)(C). UNDER THE FACTS NARRATED ABOVE, WE FIND THAT THE ASSESSEE DECLARED NIL INCOME AFTER CLAIMING CERTAIN ALLOWANCES ETC. HOWEVER, THE LD. A SSESSING OFFICER MADE CERTAIN DISALLOWANCES OUT OF THE CLAIM MADE BY THE ASSESSEE. IN SUCH A SITUATION, WE ARE OF THE VIEW THAT SINCE THE ASSESSEE NEITHER CONCEALED ITS INCOME NOR FURNISHED INACCURATE PARTI CULARS OF ITS INCOME, THEREFORE, MERELY ON THE BASIS OF DISALLOWANCE MADE U/S 40A(2)(B), NO PENALTY IS LEVIABLE. THE ASSESSEE IS FORTIFIED BY T HE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE JHAVAR PRO PERTIES P. LTD. (SUPRA). IT IS NOT THE CASE THAT THE ASSESSEE CONCE ALED ANYTHING OR FURNISHED INACCURATE PARTICULARS. DISALLOWANCE OF E XPENSES WILL NOT PER SE TANTAMOUNT TO FURNISHING INACCURATE PARTICULAR O F INCOME AND MERE CLAIM OF EXPENDITURE, EVEN IF NOT ACCEPTATION TO TH E REVENUE, IN ITSELF WOULD NOT ATTRACT PENALTY U/S 271(1)(C). OUR PROPOS ITION IS FORTIFIED BY THE DECISION IN CIT VS. RELIANCE PETRO PRODUCTS P. LTD. (CIVIL APPEAL NO.2463 OF 2010 DATED 17.3.2010) (SC) AND CIT VS. A JAYAB SINGH & COMPANY (253 ITR 630) (P & H). THE RATIO LAID DOWN IN HARIGOPAL SINGH VS. CIT (258 ITR 85) (P & H) FURTHER FORTIFIES THE CASE OF THE ASSESSEE. IN THE PRESENT APPEAL, THE GENUINENESS OF THE EXPENDIT URE WAS NOT DOUBTED BY THE ASSESSING OFFICER RATHER THE AMOUNT SO PAID/ CLAIMED WAS RESTRICTED BY INVOKING THE PROVISIONS OF SEC. 40A(2 )(B) OF THE ACT. THE 4 RATIO LAID DOWN IN SHANKAR GHOSH (214 ITR 349) (CAL ) FURTHER FORTIFIES THE CASE OF THE ASSESSEE. THE PROVISIONS OF SEC. 40A(2) OF THE ACT, BY ITS VERY NATURE, IS SOMETHING WHICH THE ASSESSING OFFIC ER HAS TO DETERMINE BY USING ITS DISCRETION, SUBJECT TO THE LIMITATION LAID DOWN IN THE PROVISION. IT IS ALWAYS NOT POSSIBLE FOR AN ASSESSEE TO ANTICI PATE WHETHER THE ASSESSING OFFICER WOULD INVOKE HIS DISCRETION AND S HALL MAKE A DISALLOWANCE UNDER THE SAID PROVISION. IN THE PRESE NT APPEAL, NEITHER THERE IS CONCEALMENT OF INCOME NOR FURNISHING INACC URATE OF PARTICULARS, THEREFORE, NO PENALTY IS LEVIABLE U/S 271(1)(C). FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH THE SIDES AT THE CONCLUSION OF THE HEARING ON 29 TH MARCH, 2011. (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29.3.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, G UARD FILE !VYAS!