SOHAM DEVELOPERS, MUMBAI V. DCIT CIR 15(1), MUMBAI

ITA 5346/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84439 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 20-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 24-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: MOTI B TOTLANI

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI , BEFORE : SHRI I.P.BANSAL, JM & SHRI R.C.SHARMA , A M ITA NO. 5346 / MUM/20 1 2 ( ASSESSMENT YEAR : 200 7 - 200 8 ) M/S SOHAM DEVELOPERS, 105, DALAMAL CHAMBERS, 29, NEW MARINE LINES, MUMBAI - 400020 VS. DCIT, CIR.15(1), MUMBAI PAN/GIR NO. : A BBFS 3587 Q ( APPE LLANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI MOTI B. TOTLANI /REVENUE BY : SHRI NEIL PHILIP DATE OF HEARING : 20 TH OCT . 201 4 DATE OF PRONOUNCEMENT : 17 /12/ 201 4 O R D E R PER R.C.SHARMA ( A .M.) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) , DATED 5 - 6 - 2012 FOR ASSESSMENT YEAR 200 7 - 0 8 , IN THE MATTER OF IMPOSITION OF PENALTY U/S.271(1)(C) OF THE I.T. ACT . 2. RIVAL CONTEN TIONS HAVE BEEN HEARD AND RECORD PERUSED. THE AO LEVIED PENALTY WITH RESPECT TO THE DISALLOWANCE OF FOREIGN TRAVELLING EXPENSES BY THE PARTNER. IN SUPPORT OF ITS CLAIM, THE CONTENTION OF ASSESSEE AS THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BUILDER A ND DEVELOPER. IT WAS CLAIMED THAT SINCE THIS WAS THE FIRST AND ONLY PROJECT OF THE RESIDENTIAL APARTMENT OF THE ASSESSEE, THE RESPONSE WAS VERIFY POOR AND THE ASSESSEE WAS ABLE TO SELL ONLY 10 FLATS OUT OF 22 FLATS IN THE F.Y. 12005 - 06. THEREFORE, THE PART NERS, VIZ. MR. SANJAY RAHEJA AND MR. H A RISH ITA NO. 5346 /1 2 2 T ALREJA TRAVELLED TO LONDON AND DUBAI FOR TAPPING THE NRI MARKET FOR SALE PROMOTION AND MR. SUNIL RAJANI ALSO VISITED CHINA FOR THE PURPOSE OF SOURCING SUPPLIER FOR IMPORT OF TILES AND FINALIZING PRODUCTS FOR THE PROJECT. THE CONSTRUCTION OF THE FLAT WAS ALSO FOR UPPER MIDDLE CLASS FAMILY. THIS EXPLANATION WAS REJECTED BY THE AO, WHO HAS OBSERVED THAT FOR SUCH PROJECTS THERE IS NO POINT TO VISIT FOREIGN COUNTRY IN SEARCH OF A PROSPECTIVE BUYER. THUS, IT IS CLEAR F ROM THE ABOVE THAT ASSESSEE HAS FILED FULL PARTICULARS OF HIS TRAVELLING, GENUINENESS OF THE EXPENDITURE WAS NOT IN DOUBT AND THE ASSESSEE HAS FILED COMPLETE EXPLANATION WITH REGARD TO JUSTIFICATION FOR THE FOREIGN TRAVELLING, THEREFORE, MERE DISALLOWANCE OF SUCH EXPENSES WILL NOT ATTRACT PENALTY U/S. 271(1)(C) OF THE ACT. 4. AFTER GOING THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FOUND THAT IT IS NOT THE CASE WHERE NO EXPENSES WERE INCURRED AND IT IS AN ADMITTED FACT THAT THEY WERE INCURRED BY THE ASSESSEE AND SAME WAS FOR THE PURPOSE OF BUSINESS. MERELY BECAUSE THE AO HAS NOT ACCEPTED ASSESSEES EXPLANATION REGARDING REASONS OF VISIT, DISALLOWANCE OF SUCH EXPENSES WILL NOT ATTRACT PROVISIONS OF PENALTY U/S. 271(1)(C) OF THE ACT. WE ALSO FOUND THAT R ESULT OF FOREIGN TRIP PROVED FAVOURABLE BECAUSE ASSESSEE WAS ABLE TO SELL THE FLAT AT A RATE EVEN ABOVE THE RATE AS PER THE READY RECKONER ISSUED BY THE STATE GOVERNMENT. 5. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN THE ACTION OF THE AO FOR IMPOS ING PENALTY U/S. 271(1)(C) OF THE ACT. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 / 1 2 / 201 4 . ITA NO. 5346 /1 2 3 / 1 2 / 2014 SD/ - SD/ - ( ) ( I.P.BANSAL ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 17 / 1 2 /2014 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FI LE. //TRUE COPY//