M/s. R.H. Agro Overseas (P) Ltd., New Delhi V. DCIT, New Delhi

ITA 5233/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3744 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 25-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; Onus to prove
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F: NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 5233/DEL /2014 ASSESSMENT YEAR: 2008-09 R.H. AGRO OVERSEAS (P) LTD., C/O RAJ KUMAR & ASSOCIATES, CHARTERED ACCOUNTANTS, 4435/7, ANSARI ROAD, DARYA GANJ, NEW DELHI-110002 PAN: AADCR1069G VS DCIT, CENTRAL CIRCLE-19, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJ KUMAR, CA RESPONDENT BY : SHRI ATIQ AHMAD, SR. DR DATE OF HEARING : 06.09.2017 DATE OF PRONOUNCEMENT: 31.10.2017 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AND CHALLENGES THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) XXX III, NEW DELHI WHEREIN VIDE HIS ORDER DATED 26 TH MAY 2014, THE LD. CIT (APPEALS) HAS CONFIRMED THE PENALTY OF I.T.A. NO. 5233/DEL/2014 ASSESSMENT YEAR 2008-09 RS. 3,28,716/- IMPOSED UNDER SECTION 271 (1) (C) OF THE INCOME TAX ACT, 1961 FOR ASSESSMENT YEAR 2008 09. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSM ENT IN THIS CASE WAS COMPLETED UNDER SECTION 153A OF THE INCOME TAX ACT, 1961 AT RS. 4,34,53,780 AFTER MAKING AN ADDITION OF RS. 10,63,807/- ON ACCOUNT OF DISALLOWANCE OUT OF FOREI GN TRAVELLING EXPENSES. THE ASSESSEE PREFERRED AN APPEAL BEFORE T HE LD. CIT (APPEALS) AGAINST THE QUANTUM ADDITION WHICH WAS DI SMISSED. 2.1 THE ASSESSEE DID NOT PREFER ANY FURTHER APPEAL AGAINST THE QUANTUM ADDITION. MEANWHILE, PENALTY PROCEEDINGS WE RE INITIATED AGAINST THE ASSESSEE. IT WAS THE ASSESSEES PLEA BE FORE THE AO THAT THE FOREIGN TRIPS WERE TO GULF COUNTRIES AND G ENEVA AND PERTAINED TO THE TRIPS MADE BY THE TWO DIRECTORS AN D ALSO ONE OF THE KEY EMPLOYEES AS WELL AS THE WIFE AND CHILDREN OF THESE THREE PERSONS. IT WAS SUBMITTED THAT THESE WERE THE BUSIN ESS TRIPS AND WERE NOT PLEASURE TRIPS AND THAT THERE WAS NO DISPU TE THAT THESE EXPENSES WERE ACTUALLY INCURRED. IT WAS FURTHER SUB MITTED THAT IN THE PRESENT CORPORATE CULTURE, SPOUSES, AND AT TIME S THE CHILDREN, ALSO ACCOMPANIED THEIR HUSBAND/FATHER ON BUSINESS T RIPS AND THAT IT WAS A MATTER OF COMMON KNOWLEDGE THAT IN FO REIGN I.T.A. NO. 5233/DEL/2014 ASSESSMENT YEAR 2008-09 COUNTRIES, THE SPOUSES ARE ALSO INVITED IN BUSINESS CONFERENCES. IT WAS ALSO SUBMITTED THAT THERE WAS NO CONCEALMENT ON THE PART OF THE ASSESSEE AND NOR WAS IT A CASE OF FURNISHING OF INACCURATE PARTICULARS. 2.2 HOWEVER, THE ASSESSING OFFICER PROCEEDED TO IMP OSE PENALTY OF RS. 3,28,716/- WHICH, ON FURTHER APPEAL BY THE A SSESSEE, WAS CONFIRMED BY THE LD. CIT (APPEALS). NOW, THE ASSESS EE HAS APPROACHED THE ITAT AND HAS CHALLENGED THE CONFIRMA TION OF THE PENALTY BY RAISING THE FOLLOWING GROUND OF APPEAL 1. THAT UNDER THE FACTS AND CIRCUMSTANCES, LEVY OF PENALTY OF RS. 3,28,716/- U/S 271(1)(C) OF THE ACT IS ABSOLUTELY UNSUSTAINABLE IN LAW AS WELL AS ON MERIT S. 3. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT MERELY BECAUSE AN EXPENDITURE HAD BEEN DISALLOWED IN THE H ANDS OF THE ASSESSEE, IT DOES NOT AUTOMATICALLY MAKE IT ELIGIBL E FOR LEVY OF PENALTY UNDER SECTION 271 (1) (C) OF THE INCOME TAX ACT, 1961, ESPECIALLY, AS NO EVIDENCE HAD BEEN ADDUCED TO ESTA BLISH THAT THE ASSESSEE HAD EITHER CONCEALED ITS INCOME OR FURNISH ED INACCURATE PARTICULARS THEREOF. IT WAS ALSO SUBMITTED THAT ALL THE RELEVANT DETAILS AND INFORMATION HAD BEEN DULY FURNISHED DUR ING THE I.T.A. NO. 5233/DEL/2014 ASSESSMENT YEAR 2008-09 COURSE OF ASSESSMENT PROCEEDINGS AND THAT NO FALSE OR INCORRECT DETAILS HAD BEEN FILED. IT WAS ALSO SUBMITTED THAT THE EXPENSES WERE CLAIMED AS A DEDUCTION AS THE EXPENDITURE WAS GENUINELY INCURRED AND THAT MERELY BECAUSE THERE WAS A DISALL OWANCE OUT OF EXPENSES, THE PENALTY COULD NOT BE IMPOSED. RELIANC E WAS PLACED ON A PLETHORA OF CASE LAWS AND IT WAS SUBMITTED THA T EVEN IF THE CLAIM FOR DEDUCTIBILITY OF EXPENSES WAS NOT ACCEPTE D, IT WAS NOT A FIT CASE FOR THE IMPOSITION OF PENALTY. 4. THE LD. SENIOR DEPARTMENTAL REPRESENTATIVE READ OUT EXTENSIVELY FROM THE ORDER OF THE LD. CIT (APPEALS) AND SUBMITTED THAT AS THE EXPENSES RELATED TO THE FOREIGN TRAVEL OF THE SPOUSES/CHILDREN WERE NOT ALLOWABLE, THE CLAIM OF T HESE EXPENSES AS A DEDUCTION WAS BLATANTLY WRONG AND IT WAS VERY MUCH OBVIOUS THAT THE SAME WAS A DELIBERATE ATTEMPT BY T HE ASSESSEE TO REDUCE ITS TAXABLE INCOME BY MAKING A WRONG CLAI M OF EXPENSES BY FILING INACCURATE PARTICULARS. IT WAS S UBMITTED THAT THE PENALTY HAD BEEN CORRECTLY IMPOSED AND THAT THE SAME SHOULD BE UPHELD. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE HONBLE SUPREME COURT, IN THE CASE OF I.T.A. NO. 5233/DEL/2014 ASSESSMENT YEAR 2008-09 HINDUSTAN STEEL LTD. V. STATE OF ORISSA 83 ITR 26, HAD LAID DOWN THE POSITION OF LAW BY HOLDING THAT THE ASSESSING O FFICER IS NOT BOUND TO LEVY PENALTY AUTOMATICALLY SIMPLY BECAUSE THE QUANTUM ADDITION HAS BEEN SUSTAINED. ALSO, IN THE CASE OF C IT V. KHODAY ESWARA (83 ITR 369) (SC), IT IS HELD THAT PENALTY C ANNOT BE LEVIED SOLELY ON BASIS OF REASONS GIVEN IN ORIGINAL ORDER OF ASSESSMENT. THE HONBLE SUPREME COURT HAS REITERATED THE LAW I N CASE OF DILIP N. SHROFF V. JT. CIT REPORTED IN 291 ITR 519 BY HOLDING IN PARA 62 THAT FINDING IN ASSESSMENT PROCEEDINGS CANN OT AUTOMATICALLY BE ADOPTED IN PENALTY PROCEEDINGS AND THAT THE AUTHORITIES HAVE TO CONSIDER THE MATTER AFRESH FROM DIFFERENT ANGLE. 5.1 FURTHER, T HE STATUTE REQUIRES A SATISFACTION ON THE PART OF THE ASSESSING OFFICER. HE IS REQUIRED TO ARRIVE AT A SATISFACTION SO AS TO SHOW THAT THE ASSESSEE CONCEALED THE AMOUNT O R FURNISHED INACCURATE PARTICULARS AND THIS ONUS IS TO BE DISCH ARGED BY THE DEPARTMENT. WHILE CONSIDERING WHETHER THE ASSESSEE HAS BEEN ABLE TO DISCHARGE HIS BURDEN, THE ASSESSING OFFICER SHOULD NOT BEGIN WITH THE PRESUMPTION THAT HE IS GUILTY. SINCE THE BURDEN OF PROOF IN PENALTY PROCEEDINGS VARIES FROM THAT IN TH E ASSESSMENT PROCEEDINGS, A FINDING IN THE ASSESSMENT PROCEEDING S THAT A I.T.A. NO. 5233/DEL/2014 ASSESSMENT YEAR 2008-09 PARTICULAR RECEIPT IS INCOME CANNOT AUTOMATICALLY B E ADOPTED, THOUGH A FINDING IN THE ASSESSMENT PROCEEDINGS CONS TITUTES GOOD EVIDENCE IN THE PENALTY PROCEEDINGS. IN THE PENALTY PROCEEDINGS THE AUTHORITIES MUST CONSIDER THE MATTER AFRESH AS THE QUESTION HAS TO BE CONSIDERED FROM A DIFFERENT ANGLE. IT IS IMPORTANT TO KEEP IN MIND THE FUNDAMENTAL LEGAL PROPOSITION THAT ASSESSMENT PROCEEDINGS ARE NOT CONCLUSIVE. ASSESSMENT PROCEEDI NGS AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT. FIND INGS IN ASSESSMENT PROCEEDINGS DONT OPERATE AS RES JUDICATA IN PENALTY PROCEEDINGS AS WAS HELD BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. DHARAMCHAND L. SHAH REPORTED IN 204 ITR 462 (BOM). FURTHER, IN VIJAY POWER GENERATORS LTD VS. ITO (200 8)6 DTR 64 (DEL) IT WAS HELD THAT IT IS WELL SETTLED THAT THOUGH THEY CONSTITUTE GOOD EVIDENCE, THEY DO NOT CONSTITUTE CONCLUSIVE EV IDENCE IN PENALTY PROCEEDINGS. 5.2 IT IS WELL SETTLED THAT D URING PENALTY PROCEEDINGS, THERE HAS TO BE A REAPPRAISAL OF THE VERY SAME MATERIAL ON TH E BASIS OF WHICH THE ADDITION WAS MADE AND IF FURTHER MATERIAL IS ADDUCED BY THE ASSESSEE IN THE COURSE OF THE PENALTY PROCEE DINGS, IT IS ALL THE MORE NECESSARY THAT SUCH FURTHER MATERIAL SHOUL D ALSO BE EXAMINED IN AN ATTEMPT TO ASCERTAIN WHETHER THE ASS ESSEE I.T.A. NO. 5233/DEL/2014 ASSESSMENT YEAR 2008-09 CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTIC ULARS. THUS, UNDER PENALTY PROCEEDINGS ASSESSEE CAN DISCHARGE HI S BURDEN BY RELYING ON THE SAME MATERIAL ON THE BASIS OF WHICH ASSESSMENT IS MADE BY CONTENDING THAT ALL NECESSARY DISCLOSURES W ERE MADE AND THAT ON THE BASIS OF MATERIAL DISCLOSED THERE C ANNOT BE A CASE OF CONCEALMENT OF INCOME OR FURNISHING INACCUR ATE PARTICULARS OF INCOME. FURTHER, IF THERE IS ANY MAT ERIAL OR ADDITIONAL EVIDENCE WHICH WAS NOT PRODUCED DURING A SSESSMENT PROCEEDINGS SAME CAN BE PRODUCED IN PENALTY PROCEED INGS AS BOTH ASSESSMENT AND PENALTY PROCEEDINGS ARE DISTINC T AND SEPARATE. 5.3 IN CIT VS. M/S SIDHARTHA ENTERPRISES REPORTED IN 18 4 TAXMAN 460 (P & H), IT WAS HELD THAT THE JUDGMENT I N DHARMENDRA TEXTILE CANNOT BE READ AS LAYING DOWN TH AT IN EVERY CASE WHERE PARTICULARS OF INCOME ARE INACCURATE, PE NALTY MUST FOLLOW. EVEN SO, THE CONCEPT OF PENALTY HAS NOT UND ERGONE CHANGE BY VIRTUE OF THE SAID JUDGMENT. PENALTY IS IMPOSED ONLY WHEN THERE IS SOME ELEMENT OF DELIBERATE DEFAULT. 5.4 REVERTING TO THE FACTS OF THE PRESENT CASE, THE PEN ALTY ORDER IS WOEFULLY SILENT ON THE ISSUE AS TO HOW THIS SATI SFACTION OF FURNISHING OF INACCURATE WAS ARRIVED AT. THE QUANTU M ADDITION ON I.T.A. NO. 5233/DEL/2014 ASSESSMENT YEAR 2008-09 WHICH THE PENALTY HAS BEEN IMPOSED PERTAINS TO DISA LLOWANCE OUT OF FOREIGN TRAVEL EXPENSES BUT THE LD. CIT (A) HAS NOT EXAMINED THE ISSUE IN DETAIL BUT HAS SIMPLY CONFIRMED THE PE NALTY BY RELYING ON THE FINDINGS OF THE AO AND THE LD. CIT ( A) IN THE QUANTUM PROCEEDINGS. THERE IS NO FINDING BY THE AU THORITIES BELOW ON THE ISSUE AS TO HOW THE FURNISHING OF INA CCURATE PARTICULARS HAS COME TO BE ESTABLISHED SO AS TO WA RRANT THE IMPOSITION OF PENALTY. THUS, IT IS APPARENT THAT TH E PENALTY HAS BEEN IMPOSED AS AN AUTOMATIC OUTCOME OF THE CONFIRM ATION OF THE QUANTUM ADDITION. CONSIDERING THE ENTIRETY OF THE CIRCUMSTANCES, IN OUR VIEW THE IMPUGNED DISALLOWANCE DOES NOT INVI TE THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. ACCOR DINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT (APPEALS) AND DIRECT THE AO TO DELETE THE ENTIRE PENALTY. 6. IN THE FINAL RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2017. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DATED: 31 ST OCTOBER, 2017 GS I.T.A. NO. 5233/DEL/2014 ASSESSMENT YEAR 2008-09 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGISTRAR