Guraka Prakash Reddy, CHENNAI V. DCIT, CHENNAI

ITA 515/CHNY/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3515 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 01-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Business expenditure; TDS
• Section: 22

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI , , BEFORE SHRI V. DURGA RAO , JUDICIAL MEMBER AND SHRI G. MANJUNATHA , ACCOUN TANT MEMBER ITA NO . 515 /CHNY/ 20 1 7 ASSESSMENT YEAR: 20 12 - 2013 SHRI. GURAKA PRAKASH REDDY, NO.41/5, PARIANNA MAISTRY STREET, PERIAMET, CHENNAI 600 0 03 . [PAN: A CTPG 4297N ] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, NON - CORPORATE CIRCLE 5 (1), CHENN AI - 600 0 06 . ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S. SRIDHAR, ADVOCATE /RESPONDENT BY : MR. A.R.V. SREENIVASAN, J CIT / DATE OF HEARING : 2 7 .0 8 .2020 / DATE OF PRONO UNCEMENT : 22. 10 .2020 / O R D E R PER V. DURGA RAO , JUDICIAL MEMBER : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 5 , CHENNAI IN I.T.A NO. 1 17/CIT(A) - 5 / 15 - 16 DATED 17.10.2016 FOR THE ASSESSMENT YEAR 2012 - 2013 . 2 . THERE IS A DELAY OF SIXTY - FIVE DAYS IN THIS APPEAL. THE ASSESSEE HAS FILED A DELAY CONDONATION PETITION, WHEREIN HE HAS STATED THAT THE ORDER UNDER APPEAL WAS HANDED OVER TO THE CHARTERED ACCOUNTANT, M/S. VENKATAGIRI & CO. A ND UNFORTUNATELY THE SAID APPELLATE ORDER WAS MISPLACED WHILE NOT BRINGING ITA NO. 515 /CHNY/20 1 7 : - 2 - : THE FACT OF THE RECEIPT OF THE APPELLATE ORDER TO THE NOTICE OF THE SENIOR PARTNER. IT IS FURTHER SUBMITTED THAT THE COUNSEL ON RECORD MADE A FURTHER REMINDER THEREBY THE SAME WAS NOTICED IN THE OFFICE OF THE CHARTERED ACCOUNTANT DURING THE PERIOD FEBRUARY 2017, THEREAFTER IMMEDIATELY THE APPEAL WAS FILED. IN THE ABOVE CIRCUMSTANCES, THERE IS A DELAY WHICH IS BEYOND THE CONTROL OF THE ASSESSEE, PRAYED THAT THE DELAY MAY BE CONDONED . 3 . T HE LEARNED DEPARTMENTAL REPRESENTATIVE HAD STRONGLY OPPOSED THE CONDONATION OF DELAY. 4 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE AFFIDAVIT FILED BY THE ASSESSEE. FROM THE AFFIDAVIT, WE FIND THAT THE COUNSEL OF THE ASSESSEE WHO APPEARED BEFORE TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAD HANDED OVER THE APPELLATE ORDER TO M/S. VENKATAGIRI & CO. WHO IS SUPPOSED TO FILE THE APPEAL BEFORE THE TRIBUNAL. ON REPEATED REQUESTS MADE BY THE COUNSEL FOR THE ASSESSEE, THE SENIOR PARTNER OF M/S. VENK ATAGIRI & CO. HAS SAID THAT THE APPELLATE ORDER COPY WAS MISPLACED BUT THEREAFTER THE SAME IS TRACED OUT AND THE APPEAL FILED IMMEDIATELY. FROM THE ABOVE, WE FIND THAT THE DELAY OF FILING THE APPEAL IN THE SE CIRCUMSTANCES WAS BEYOND THE CONTROL OF THE ASS ESSEE. IN OUR OPINION, THERE IS A SUFFICIENT CAUSE TO CONDONE THE DELAY, ACCORDINGLY THE DELAY IS CONDONED. 5 . IN SO FAR AS THE MERITS OF THE CASE IS CONCERNED, THE FACTS IN BRIEF IS THAT THE ASSESSEE IS IN THE BUSINESS OF TRADING IN LEATHER AND HAD FIL ED HIS RETURN OF INCOME BY DECLARING A TOTAL INCOME OF RS.17,47,220/ - . IN THE ASSESSMENT ITA NO. 515 /CHNY/20 1 7 : - 3 - : ORDER, THE ASSESSING OFFICER HAS MADE THE FOLLOWING ADDITIONS BASED ON THE BOOKS OF ACCOUNTS , BANK STATEMENT, BILLS AND VOUCHERS FILED BY THE ASSESSEE. 4. IN RESP ONSE TO THIS THE ASSESSEE HAS FILED A REPLY ON 10.06.2015 AND THE SAME IS PRODUCED AS UNDER: FOR THE ASSESSMENT YEAR 2012 - 2013, THE ASSESSMENT WAS FRAMED 17 TH MARCH, 2015 AND WHEREAS THE INCOME DECLARED AS RS.17,47,220/ - WAS ENHANCED AND ASSESSED AT RS.20 ,87,252/ - . WHILE DOING SO, THERE WERE ADDITIONS MADE IN THE TOTAL INCOME ADDITION TO THE TOTAL INCOME IS BASED ON THE FOLLOWING: (A) THE INTEREST PAID TO KOTAK MAHINDRA PRIME AMOUNTING TO RS.40,514/ - ON CAR LOAN TAKEN FROM THE FINANCIAL INSTITUTION HAS BEEN DISALLOWED AS PER OF THE INCOME TAX ACT, 1961 EVEN THOUGH IT WAS A FINANCIAL INSTITUTION. (B) TRAVELLING AND CONVEYANCE EXPENSES AMOUNTING TO RS.1,99,302/ - WAS DISALLOWED ON THE GROUND THAT IT IS NOT RELATED TO BUSINESS. (C) BUSINESS PROMOTION EXPENSES AMOUNTING TO RS.1,00,216/ - WAS DISALLOWED ON IT IS AN EXPENDITURE OF PERSONAL NATURE. ALL THESE ADDITIONS WERE MADE BASED ON THE ASSUMPTIONS AND THE SAID MATTER IS A WILL NOT LEAD TO AUTOMATIC CONCLUSION IN THE CONCEALMENT OF INCOME INACCURATE PARTICULARS OF INCOME . SUBSEQUENTLY, INITIATED A PENALTY PROCEEDINGS U/S.271(1)(C) OF THE INCOME TAX ACT, 1961. 6 . DURING THE COURSE OF THE PENALTY PROCEEDINGS, THE ASSESSING OFFICER HAS ASKED THE ASSESSEE THAT YOU HAVE NOT DEDUCTED TDS IN RESPECT OF THE PAYMENT MADE TO K OTAK MAHINDRA PRIME AMOUNTING TO RS.40,514 AND IN RESPECT OF THE TRAVELLING EXPENSES OF YOUR WIFE WHICH IS NOT FOR THE BUSINESS PURPOSE AMOUNTING TO RS. 1,99,302/ - AND IN RESPECT OF THE BUSINESS PROMOTION EXPENSES AMOUNTING TO RS.4,00,864/ - HAS BEEN INCURRE D OUT OF WHICH 25% AMOUNTING TO RS.1,00,216 IS NOT FOR THE BUSINESS PURPOSE. THEREFORE, THE SAME IS DISALLOWED AND THEREBY YOU HAVE CONCEALED THE INCOME. IN RESPONSE, THE ASSESSEE HAS SUBMITTED BEFORE THE ASSESSING OFFICER AS UNDER: ITA NO. 515 /CHNY/20 1 7 : - 4 - : 4. IN RESPONSE TO THIS THE ASSESSEE HAS FILED A REPLY ON 10.06.2015 AND THE SAME IS PRODUCED AS UNDER: FOR THE ASSESSMENT YEAR 2012 - 2013, THE ASSESSMENT WAS FRAMED 17 TH MARCH, 2015 AND WHEREAS THE INCOME DECLARED AS RS.17,47,220/ - WAS ENHANCED AND ASSESSED AT RS.20,87,252 / - . WHILE DOING SO, THERE WERE ADDITIONS MADE IN THE TOTAL INCOME ADDITION TO THE TOTAL INCOME IS BASED ON THE FOLLOWING: (A) THE INTEREST PAID TO KOTAK MAHINDRA PRIME AMOUNTING TO RS.40,514/ - ON CAR LOAN TAKEN FROM THE FINANCIAL INSTITUTION HAS BEEN DISALL OWED AS PER OF THE INCOME TAX ACT, 1961 EVEN THOUGH IT WAS A FINANCIAL INSTITUTION. (B) TRAVELLING AND CONVEYANCE EXPENSES AMOUNTING TO RS.1,99,302/ - WAS DISALLOWED ON THE GROUND THAT IT IS NOT RELATED TO BUSINESS. (C) BUSINESS PROMOTION EXPENSES AMOUNTING TO RS.1 ,00,216/ - WAS DISALLOWED ON IT IS AN EXPENDITURE OF PERSONAL NATURE. ALL THESE ADDITIONS WERE MADE BASED ON THE ASSUMPTIONS AND THE SAID MATTER IS A WILL NOT LEAD TO AUTOMATIC CONCLUSION IN THE CONCEALMENT OF INCOME INACCURATE PARTICULARS OF INCOME. 7 . AFTER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE, THE ASSESSING OFFICER IS OF THE OPINION THAT THE ASSESSEE HAD CONCEALED THE INCOME AND HAD IMPOSED PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT, 1961. 8 . ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 9. ON BEING AGGRIEVED, THE ASSESSEE HAD CARRIED THE MATTER IN THE APPEAL BEFORE THIS TRIBUNAL. 10 . THE LEARNED COUNSEL FOR THE ASSESSEE HAD SUBMITTED THAT THE ADDITION MADE BY THE ASSESSING OFFICE R WERE BASED ON THE BOOKS OF ACCOUNTS, BILLS AND INVOICES AND THAT NEITHER THE ASSESSEE HAD CONCEALED THE INCOME NOR HAD FILED INACCURATE PARTICULARS. ITA NO. 515 /CHNY/20 1 7 : - 5 - : 11. THE ADDITIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IS ONLY ON ESTIMATION AND THER EFORE THE PENALTY LEVIED U/S.271(1) (C) CANNOT BE IMPOSED AS IT WAS ONLY BASED ON ESTIMATION AND HAD SUBMITTED THAT THE PENALTY MAY BE DELETED. 1 2 . THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORT ED THE ORDER PASSED BY THE LOWER AUTHORITIES. 1 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 1 4 . IN THIS CASE, THE PENALTY LEVIED BY THE ASSESSING OFFICER I S ON THREE COUNTS. IN THE CASE OF THE ASSESSING OFFICER IS THAT THE ASSESSEE HAD PAID INTEREST OF RS.40,514/ - TO M/S. KOTAK MAHINDRA PRIME AND NO TDS WAS DEDUCTED. THEREFORE, THE SAME IS TO BE DISALLOWED AND ADDED BACK TO THE ASSESSEE AND THE ADDITION WAS MADE. THE SECOND ADDITION THAT WAS MADE BY THE ASSESSING OFFICER IS THAT THE ASSESSEE HAS INCURRED A TRAVEL AND FINANCIAL EXPENSE OF RS.5,81,628/ - OUT OF WHICH TRAVELLING EXPENSES OF THE ASSESSEES WIFE WAS AMOUNTING TO RS.1,35,L788/ - TO S INGAPORE AND RS.37,348/ - TO PUNE AND RS.26,166/ - TO HYDERABAD, TOTALING TO AN AMOUNT OF RS.1,99,302/ - THAT ARE NOT BUSINESS EXPENDITURE. HE ADDED THE SAME TO THE INCOME OF THE ASSESSEE. THE THIRD ADDITION MADE BY THE ASSESSING OFFICER IS THAT THE ASSESSEE HAS DEBITED RS.4,00,864/ - TOWARDS BUSINESS PROMOTION EXPENSES. THE EXPE NDITURE CONTAIN ELEMENTS OF PERSONAL USE AND UNVERIFIABLE IN NATURE. THEREFORE, 25% OF THE BUSINESS PROMOTION IS DISALLOWED AND ADDED BACK TO THE INCOME OF THE ITA NO. 515 /CHNY/20 1 7 : - 6 - : ASSESSEE. ACCORDINGLY, THE PENALTY LEVIED IN RESPONSE TO THE NOTICE ISSUED BY THE ASSESSING OF FICER, THE ASSESSEE HAD SUBMITTED DETAILED EXPLANATIONS COUPLED IN DETAIL BEFORE THE ASSESSING OFFICER. THE INTEREST PAID TO KOTAK MAHINDRA PRIME AMOUNTING TO RS.40,514 AND CASH LOAN TAKEN FROM THE FINANCIAL INSTITUTIONS AND THEREFORE NO TDS IS TO BE DEDU CTED. TRAVEL AND FINANCIAL EXPENSES AMOUNTING TO RS.1,99,302/ - WAS RELATED TO THE BUSINESS. THE BUSINESS PROMOTION EXPENSES AMOUNTING IS RS.1,00,216/ - IS DISALLOWED AS THE EXPENDITURE WAS PERSONAL IN NATURE. ALL THE ADDITIONS MADE BY THE ASSESSING OFFICE R ARE MADE ON ASSUMPTIONS AND THAT IT WOULD NOT LEAD TO CONCEALMENT OF INCOME NOR FILING OF INACCURATE PARTICULARS. THE ASSESSING OFFICER AFTER CONSIDERING THE SAME HAD LEVIED PENALTY AND WAS CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 1 5 . WE FIND THAT THE ABOVE THREE ADDITIONS MADE BY THE ASSESSING OFFICER IN THIS CASE, THE ASSESSEE HAS FILED ALL THE DETAILS BEFORE THE ASSESSING OFFICER SUCH AS THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS. BASED ON THE BOOKS OF ACCOUNTS AND THE BILLS AN D VOUCHERS, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAS INCURRED SUCH AN EXPENDITURE AND HAD COME TO A CONCLUSION THAT SOME OF THE EXPENDITURE IS PERSONAL IN NATURE AND THAT SOME OF THE EXPENDITURE WAS NOT RELATING TO THE BUSINESS AND THEREFORE HE WAS OF THE OPINION THAT THERE IS CONCEALMENT OF INCOME AND HENCE LEVIED PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT, 1961. WE HAVE GONE THROUGH THE ASSESSMENT ORDER AND ALSO THROUGH THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND AFT ER ITA NO. 515 /CHNY/20 1 7 : - 7 - : CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS CLEAR THAT THE ASSESSING OFFICER HAD FAILED TO UNDERSTAND THAT THERE WAS NEITHER CONCEALMENT OF INCOME NOR FILED INACCURATE PARTICULARS BUT SIMPLY LEVIED PENALTY U/S.271(1)(C) OF THE INCO ME TAX ACT, 1961. IN THIS CASE, WE FIND THAT THE ASSESSEE HAD NEITHER CONCEALED THE INCOME NOR FILED INACCURATE PARTICULARS. IF THE ASSESSING OFFICER HAD MADE SOME DISALLOWANCE, IT IS NEITHER AUTOMATICALLY AMOUNTING TO NEITHER CONCEALMENT NOR FILING OF INACCURATE PARTICULARS. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT NO PENALTY CAN BE LEVIED IN THE CASE AND THEREFORE THE PENALTY IS DELETED AND THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS REVERSED. 1 6 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 22 ND OCTOBER , 2020 IN CHENNAI. SD/ - ( ) ( G. MANJUNATHA ) /ACCOUNTANT MEMBER / CHENNAI, / DATED: 22 ND OCTOBER , 2020 IA, SR. PS SD/ - ( ) ( V. DURGA RAO ) /JUDICIAL MEMBER / COPY TO: 1. / APPELLANT 2. / RESPONDENT 3. ( ) / CIT(A) 4. / CIT 5. / DR 6. / GF