Shri Rajesh Jain, Dehradun V. ACIT, Dehradun

ITA 528/DEL/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6935 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 09-12-2015
• Assessment Year: 1997-1998
• Appeal Filed On: 02-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V R SONBHADRA
• Assessee Lawyers: JEETAN NAGPAL
• Keywords: Salary income; Bonafide belief
• Section: 143(3)

Judgement Text

1 ITA NO. 52 8/DEL/2012 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT ME MBER & SMT. BEENA PILLAI, JUDICIAL MEMBER I.T.A .NO.-528/DEL /2012 (ASSESSMENT YEAR-1997- 98) RAJESH JAIN, 154, RAJPUR ROAD, DEHRADUN. AEOPJ7200B VS ACIT, CIRCLE 2, DEHRADUN. APPELLANT BY SH. JEETAN NAGPAL, FCA RESPONDENT BY SH. V.R. SONBHADRA, SR. DR ORDER PER BEENA PILLAI, JUDICIAL MEMBER : THE PRESENT PENALTY APPEAL HAS BEEN FILED BY THE A SSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-II, DEHRADUN, V IDE ORDER DATED 16/11/2011 ON THE FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER DT. 16.11.2011 (HEREINAFTER REFERRED TO AS THE IMPUGNED APPELLATE ORDER), PASSED U/S 250(6) OF THE ACT BY THE LD. CIT(A)-II, DEHRADUN IS ERRONEOUS, AR BITRARY, WITHOUT JURISDICTION, ILLEGAL AND BAD IN LAW. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A) HAS ERRED IN HOLDING THAT THE APPELLANT DELI BERATELY SUBMITTED INACCURATE PARTICULARS OF HIS INCOME AND CONFIRMING THE PENALTY IMPOSED U/S 271(1)(C) OF THE IT ACT, DATE OF HEARING 15.12.2015 DATE OF PRONOUNCEMENT 12.02.2016 2 ITA NO. 52 8/DEL/2012 1961 ON ADDITION MADE BY LD. ASSESSING OFFICER IN ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT. 2.1 THAT THE CIT(A) FAILED TO APPRECIATE THAT THERE WAS NO CONCEALMENTS ON THE PART OF THE APPELLANT IN HIS RE TURN OF INCOME NOR HAS THE APPELLANT FURNISHED INACCURAT E PARTICULARS OF THE INCOME. 2.2 THAT THE CIT(A) HAVE IGNORED THE FACT THAT THE ADDI TION OF RS. 42,302 (BEING 50% OF 86405, ON ACCOUNT OF PURCHASES), 53000 (BEING 1% OF TOTAL EXPENSES ON RUNNING OF TRUCKS), 57000 (ON ACCOUNT OF AGRICULTUR E INCOME) MADE BY LD. ASSESSING OFFICER WERE ON ADHOC BASIS OR SAME WAS ON ACCOUNT OF DIFFERENCE IN OPINI ON ON INTERPRETATION ON LAW. THERE WAS NO EVIDENCE TO SUGGEST EITHER CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS BY APPELLANT. 2.3 IT WAS INCUMBENT UPON THE LD. ASSESSING OFFICER TO TAKE COGNIZANCE OF THE VARIOUS JUDICIAL PRONOUNCEMENT SUPPORTING THE APPELLANTS CONTENTION WHICH WERE DUL Y BROUGHT TO THE NOTICE AT THE TIME OF HEARING BUT HA VE BEEN TOTALLY DISREGARDED AND IGNORED BY HIM. MEREL Y MENTIONING THAT CASE LAW EXPOUND GENERAL PRINCIPLE S WHICH ARE NOT GERMANE FOR THE ISSUES AT HAND. THE LD. CIT(A) HAS NOT ABSOLVED HIMSELF OF THE ONUS TO PROV E HOW THOSE JUDGMENT WERE NOT APPLICABLE TO THE APPELLANT CASE. 2.4 THAT THE APPELLANT WAS UNDER A BONA FIDE BELIEF THA T ALL THE EXPENDITURE CLAIMED WAS IN NORMAL COURSE OF BUSINESS AND SHOULD BE ALLOWED. THE ABOVE GROUNDS OF OBJECTIONS ARE WITHOUT PREJUDI CE TO EACH OTHER. THAT THE APPELLANT RESERVES ITS RIGHT TO ADD, ALTER , AMEND OR WITHDRAW ANY GROUND OF APPEAL EITHER BEFOR E OR AT THE TIME OF HEARING. 2. THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 3 1/10/1997 DECLARING THE TOTAL INCOME OF RS. 3,03,440/-. THIS CASE WAS SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) WAS IS SUED. IT WAS FOUND DURING THE ASSESSMENT PROCEEDINGS THAT THE AS SESSEE DERIVES 3 ITA NO. 52 8/DEL/2012 ITS INCOME FROM SALARY, HOUSE PROPERTY AS WELL AS B USINESS INCOME FROM ITS PROPRIETARY SHIP CONCERN NAMELY M/S BICK F ORD FUSES COMPANY, GARUDA SHAKTI TRANSPORT COMPANY. IN THE A SSESSMENT PROCEEDINGS THE AO HAD MADE AN ADHOC DISALLOWANCE O F EXPENSES CLAIMED BY THE ASSESSEE TO AN EXTENT OF RS. 43,302/ - IN THE BOOKS OF BRICK FORD FUSES COMPANY AND AN AMOUNT OF RS. 53 ,000/- BEING 1% OF THE TOTAL EXPENSES ON RUNNING OF TRUCKS IN THE BOOKS OF GARUDA SHAKTI TRANSPORT COMPANY. 3. AGGRIEVED BY THE ORDER OF THE LD. AO THE ASSESSE E WENT INTO APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) CONFI RMED THE ADHOC ADDITIONS MADE BY THE AO AGAINST THE LD. CIT(A) THE ASSESSEE PREFERRED AN APPEAL BEFORE THIS TRIBUNAL WHICH WAS DISMISSED EX- PARTE AND NO MISCELLANEOUS APPLICATION HAS BEEN PRE FERRED BY THE ASSESSEE CONSIDERING THE AMOUNT OF ADDITION BEING V ERY LESS. THE LD. AO SIMULTANEOUSLY HAD INITIATED PENALTY PROCEED INGS AGAINST THE SAID ADDITIONS MADE IN THE ASSESSMENT ORDER. I N THE PENALTY ORDER THE AO LEVIED A PENALTY OF RS. 3,30,000/-. 4. AGGRIEVED BY THE PENALTY ORDER OF THE LD. AO, TH E ASSESSEE WENT INTO APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE LD. AO ON THE BASIS THAT ASSES SEE HAS DELIBERATELY SUBMITTED INACCURATE PARTICULARS OF IN COME. 5. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 6. WE HAVE PERUSED THE ORDER OF THE AUTHORITIES BEL OW AND THE ARGUMENTS PLACED BY THE ASSESSEE IN RESPECT OF THE PENALTY LEVIED. THE LD. AR SUBMITTED THAT THE AO HAS MADE ADHOC ADD ITIONS. THE 4 ITA NO. 52 8/DEL/2012 LD.AR SUBMITTED THAT THE ASSESSEE AT THE TIME OF AS SESSMENT PROCEEDINGS HAD FURNISHED ALL THE FACTUAL DETAILS I N RESPECT OF THE SAID ADDITIONS. HE ALSO SUBMITTED THAT THE ASSESSE E WAS UNDER A BONAFIDE BELIEF THAT ALL THE EXPENDITURES CLAIMED B Y THE ASSESSEE WAS IN THE NORMAL COURSE OF THE BUSINESS. THE LD. AR PLACED ITS RELIANCE UPON THE JUDGMENTS OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. R EPORTED IN 322 ITR 158 AND THE DECISION OF HONBLE JURISDICTION HI GH COURT IN THE CASE OF MISS MADHUSHREE GUPTA VS. UNION OF INDIA RE PORTED IN 317 ITR 107. 6.1. IT IS OBSERVED THAT THE AO HAS DISALLOWED THE EXPENDITURE CLAIMED BY THE ASSESSEE AND HAS MADE AN ADHOC DISAL LOWANCE. IT IS NOT A CASE THAT THE ASSESSEE HAS FILED INACCURAT E PARTICULARS OF INCOME. MERELY BECAUSE THE EXPENDITURE CLAIMED BY THE ASSESSEE IS NOT ACCEPTABLE TO THE AO DOES NOT AMOUNT TO CONC EALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. IT IS OBSERVED FROM THE ORDER OF THE ASSESSMENT U/S 143(3) THAT THE LD. AO HAS SIMPLY INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WITHOUT RECORDING ANY SATISFACTION AS TO UNDER WHICH LIMB T HE PENALTY COULD BE SUSTAINED. EVEN FROM THE PENALTY ORDER PASSED B Y THE LD. AO THE SAID SATISFACTION HAS NOT BEEN RECORDED. THE L D. AO HAS MERELY INITIATED THE PENALTY PROCEEDINGS ON AN UNACCEPTABL E EXPENDITURE CLAIMED BY THE ASSESSEE. IN OUR VIEW THIS DOES NOT AMOUNT TO FILING OF WRONG PARTICULARS OF INCOME OR CONCEALMENT OF IN COME BY THE ASSESSEE. 5 ITA NO. 52 8/DEL/2012 7. THE ASSESSEE UNDER BONAFIDE BELIEF HAD CLAIMED T HESE EXPENDITURES IN THE NORMAL COURSE OF THE BUSINESS. FURTHER THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF MA DHUSHREE GUPTA (SUPRA) HAS HELD THAT THE AO WILL HAVE TO ARR IVE AT A PRIMA FACIE SATISFACTION DURING THE COURSE OF PROCEEDINGS WITH REGARD TO THE ASSESSEE HAVING CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS BEFORE HE INITIATES THE PENA LTY PROCEEDINGS. THE PRIMA FACIE SATISFACTION BY THE AO THAT THE CAS E MAY DESERVE IMPOSITION OF PENALTY SHOULD BE DISCERNABLE FROM TH E ORDER PASSED DURING THE COURSE OF THE PROCEEDINGS. THE HONBLE COURT HAS FURTHER HELD THAT A DUE COMPLIANCE WOULD BE REQUIRE D TO BE MADE IN RESPECT OF THE PROVISIONS OF SECTIONS 274 AND 27 5 OF THE ACT. 8. WE, THEREFORE, FOLLOWING THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT AND ON THE BASIS OF DISCU SSION HELD ABOVE ALLOW THE GROUND RAISED BY THE ASSESSEE. 9. ACCORDINGLY, THE APPEAL FILED BY THE ASSESSEE ST ANDS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 12.02.2016 SD/- SD/- (N.K. SAINI) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12.02.2016 *KAVITA, P.S. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT 6 ITA NO. 52 8/DEL/2012 ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 21.12.15 2. DRAFT PLACED BEFORE AUTHOR 28.12.15 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 12.2.16 6. KEPT FOR PRONOUNCEMENT ON 12.2.16 7. FILE SENT TO THE BENCH CLERK 12.2.16 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.