M/s Guru Nanak Transmission (Pb.) Ltd., Jalandhar V. The Assistant Commissioner of Income Tax, Jalandhar

ITA 536/ASR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8794 (ITAT-AMRITSAR)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 26-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (CAMP AT JALANDH AR ) BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NOS.534 TO 539(ASR)/2016 ASSESSMENT YEARS: 2005-06 TO 2010-11 M/S. GURU NANAK TRANSMISSION (PB.) LTD. 1-C CHHOTI BARADARI, GARHA ROAD, JALANDHAR. PAN: AAACG-4934A VS. ASST. CIT, CENTRAL CIRCLE-1, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. GUNJEET SINGH SYAL (ADV. ) RESPONDENT BY: SH. BHAWANI SHANKAR (DR) DATE OF HEARING: 16.01. 2017 DATE OF PRONOUNCEMENT: 18.01.2017 ORDER PER T. S. KAPOOR (AM): THIS IS A BUNCH OF SIX APPEALS FILED BY ASSESSEE AGAINST THE SEPARATE ORDERS OF LEARNED CIT(A), ALL DATED 26.08.2016, F OR THE ASST. YEARS: 2005-06 TO 2010-11. 2. IN ALL THESE APPEALS, COMMON GROUNDS HAS BEEN TAKEN BY ASSESSEE AND WHICH IS REGARDING ITS GRIEVANCE WITH THE CONFIRMATION OF P ENALTY BY LD. CIT(A) WHICH THE ASSESSING OFFICER HAD IMPOSED U/S 271(1)(C) OF THE ACT. ITA NOS.5 34 TO 539 (ASR)/2016 ASST. YEAR: 2005-06 TO 2010-11 2 3. THESE APPEALS WERE HEARD TOGETHER, THEREFORE, FOR THE SAKE OF CONVENIENCE, A COMMON AND CONSOLIDATED ORDER IS BEING PASSED. 4. AT THE OUTSET, THE LD. AR SUBMITTED THAT ASSESSEE IS A LTD. COMPANY AND IT HAD NOT CONDUCTED ANY BUSINESS IN THESE YEARS, HOWEVER IT HAD INCURRED CERTAIN STATUTORY EXPENSES AND NECESSARY EXPENSES SUCH AS AUDIT FEE, LEGAL LAND PROFESSIONAL EXPENSES, RENT ETC. THE LD. AR IN THIS RESPECT INVITED OUR ATTENTION TO PB 3 TO 8 WHERE A COPY OF PR OFIT & LOSS ACCOUNT FOR THESE YEARS WAS PLACED. FROM THE PROFIT & LOSS ACCOUN TS, THE LD. AR INVITED OUR ATTENTION TO NATURE OF EXPENSES BOOKED IN THESE YEARS AND SUBMITTED THAT THESE WERE NECESSARY EXPENDITURE WHICH COULD NOT HAVE BEEN AVOIDED TO KEEP THE EXISTENCE OF ASSESSEE AS THE ASSESSEE WAS AN ARTIFICIAL JUDICIAL PERSON. THE LD. AR SUBMITTED THAT T HE AUTHORITIES BELOW DID NOT DOUBT THE GENUINENESS OF EXPENSES AND THESE HAVE BEEN DISALLOWED ONLY FOR THE FACT THAT ASSESSEE HAD NOT CARRIED OUT ANY BUSINESS ACTIVITY. THE LD. AR IN THIS RESPECT RELIED ON THE DECISION OF THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF CIT VS. RELINCE PETRO PRODUCT LTD. 322 ITR 158 (SC), FOR THE PROPOSITION THAT MAKING OF AN INCORRECT CLAIM WHICH IS NOT SUSTAINABLE IN LAW WILL NOT AMO UNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LD. AR SU BMITTED THAT ALL THE PARTICULARS OF INCOME WHICH HAPPENED TO BE IN N EGATIVE WERE FURNISHED, THEREFORE, IT WAS NOT A CASE WHERE ALL PARTICULARS W ERE NOT DISCLOSED. RELIANCE IN THIS RESPECT WAS PLACED ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF DEVSONS LOGISTIC PVT. LTD. VS. CIT ITA NOS.5 34 TO 539 (ASR)/2016 ASST. YEAR: 2005-06 TO 2010-11 3 (2010) 329 ITR 483(DEL.). THE LD. AR FURTHER RELIED UPON THE FOLLOWING DECISIONS, FOR THE PROPOSITIONS THAT FOR DISALLOWANCE OF EXP ENSES PENALTY U/S 271(1)(C) CANNOT BE IMPOSED. A) CIT VS. AJAIB SINGH & CO. 253 ITR 630 (P&H) B) NARAINBHAI VIMALBHAI & CO VS. CIT 203 ITR 1017 (G UJ) C) J.K. JAJOO VS. CIT 181 ITR 410 (MP) D) DELHI CLOTH & GENERAL MILLSCO. LTD. VS.CIT 157 ITR 8 22 (DEL.) 5. THE LD. DR ON THE OTHER HAND, HEAVILY PLACED HIS RELIANCE O N THE ORDER ON AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT IT IS AN ADMITTED FA CT THAT ASSESSEE COMPANY DID NOT CARRY OUT ANY BUSINESS ACTIVITY. IT IS AL SO AN ADMITTED FACT THAT THE EXPENSES INCURRED BY ASSESSEE WERE STATUTORY EXPENSES AND WERE ESSENTIAL FOR ITS EXISTENCE. THE LD. CIT(A) HAS H ELD THAT THOUGH THE EXPENSES MAY BE ESSENTIAL FOR ITS SURVIVAL BUT ALLOWABILITY OF SUCH EXPENDITURE HAS TO BE GOVERNED BY THE PR OVISIONS OF INCOME TAX ACT. HE HAS HELD THAT WHEN THERE IS NO INCOME EARNED BY THE ASSESSEE THEN NO EXPENSES CAN BE ALLOWED U/S 32 TO 43(D). WHILE HOLDI NG SUCH OBSERVATIONS THE LD. CIT(A) HAS NOT DOUBTED THE GENUINENESS OF THE EXPENSES. WE ARE NOT IN AGREEMENT WITH THE FINDINGS OF LD. CIT(A) , WHEREIN HE HAS UPHELD THE ACTION OF ASSESSING OFFICER IN CONFIRMIN G THE PENALTY U/S 27(1)(C) OF THE ACT AS THE ASSESSEE HAD FILED COMPLETE ITA NOS.5 34 TO 539 (ASR)/2016 ASST. YEAR: 2005-06 TO 2010-11 4 PARTICULARS OF ITS INCOME THOUGH IN NEGATIVE AS IT IS APPARENT FROM THE COPY OF PROFIT AND LOSS ACCOUNT PLACED AT (PB 3 TO 8). IT IS ONLY AN OPINION OF THE AUTHORITIES BELOW WHEREIN THEY HAVE HELD THAT THESE EX PENSES WERE NOT ALLOWABLE, HOWEVER, THE CLAIM OF THE ASSESSEE FOR CLAIMING CERTAI N STATUTORY EXPENSES IN THE ABSENCE OF ANY BUSINESS ACTIVITY CANNOT TANTAMOUNT TO FURNISHING OF WRONG PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS 322 ITR 158 (SC) HAS HELD THAT BY NO STRETCH OF IMAGINATION CAN THE MAKING OF INCORRECT CLAIM TANTAMOUNT T O FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE HONBLE COURT FU RTHER HELD THAT A MERE MAKING OF CLAIM WHICH IS NOT SUSTAINABLE IN LAW IN IT SELF, WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE I NCOME OF ASSESSEE. THE RELEVANT FINDINGS OF THE HONBLE COURT ARE REPRODUCED HEREIN BELOW. A GLANCE AT THE PROVISIONS OF SECTION 271(L)(C) OF THE INCOME TAX ACT , 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, T HE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(L)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKINS AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICUL ARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FI LED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE AS SESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULAR S ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE , NOT EXACT OR CORRECT , NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDIN S THAT ANY ITA NOS.5 34 TO 539 (ASR)/2016 ASST. YEAR: 2005-06 TO 2010-11 5 DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALT Y UNDER SECTION 271(L)(C). A MERE MAKING OF A CLAIM , WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF , WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND IN VIEW OF TH E JUDICIAL PRECEDENTS, WE HOLD THAT PENALTY IN THESE CASE WAS NOT I MPOSABLE AND THEREFORE, WE DELETE THE SAME. 7. IN VIEW OF THE ABOVE, THE APPEALS FILED BY THE ASSESSEE ARE ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.01. 2017. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 18.01.2017. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER