The ITO, Ward-8(2), Ahmedabad V. Sunrise Fincap Ltd., Ahmedabad

ITA 542/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 7760 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-07-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 19-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P M SHUKLA
• Assessee Lawyers: S N DIVETIA
• Keywords: Business income; Speculation loss; Bad and doubtful debts; Difference of opinion
• Section: 271(1)(c); 250

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, A - BENCH,AHMEDABAD . BEFORE : SHRI T.K.SHARMA, JUDICIAL MEMBER , AND SHRI N.S.SAINI, ACCOU NTANT MEMBER. ITA NO. 542/AHD/2009 (ASSESSMENT YEAR 2003 - 04) ITO, WARD 8(2), AHMEDABAD VERSUS SUNRISE FINCAP LTD., B - 802, P REMIUM GHOUSE, NAVRANGPURA, AHMEDABAD PAN AAACCS 7346 E (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI P.M.SHUKLA, DR FOR THE RESPONDENT SHRI S.N.DIVETIA, AR ORDER SHRI T.K.SHARMA, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE RE VENUE AGAINST THE ORDER DT. 3.12.2008 OF THE COMMISSIONER OF INCOME - TAX (APPEALS) XIV, AHMEDABAD CANCELLING THE PENALTY OF RS.6,00,000 LEVIED U/S.271(1)(C) OF THE INCOME - TAX ACT,1961 FOR THE ASSESSMENT YEAR 2003 - 04. 2. HEARD BOTH THE PARTIES AND PERUSED TH E IMPUGNED ORDERS OF THE AUTHORITIES BELOW. THE UNDISPUTED FACTS ARE THAT THE ASSESSING OFFICER HAS LEVIED PENALTY OF RS.6,00,000 U/S.271(1)(C) OF THE ACT ON ACCOUNT OF DISALLOWANCES OF RS.4,72,603 ON ACCOUNT OF INTEREST EXPENSES AND RS.14,00,000 ON ACCOU NT OF DISALLOWANCE OF BAD DEBTS. AGAINST THE ADDITION IN THE QUANTUM ASSESSMENT, MATTER WENT UPTO THE TRIBUNAL AND THE TRIBUNAL VIDE ORDER DT.24.8.2007 IN ITANO.903/AHD/2007 AND OTHERS (COPY PLACED ON RECORD) HELD THAT THE ASSESSING OFFICER SHOULD CONSIDE R THE CLAIM OF R S.14 LAKHS AS LOSS UNDER THE HEAD SPECULATION LOSS TO BE CARRIED FORWARD. AS REGARDS THE CLAIM DISALLOWANCE OF RS.4,72,603 ON ACCOUNT OF INTEREST, THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT SINCE THE S AID LOSS IS SET OFF AGAINST THE INCOME OF THE ASSESSEE FROM BROKERAGE INCOME WHICH IS A BUSINESS INCOME THE SAME IS NOT ALLOWED TO BE SET OFF AGAINST THE SAME. IN APPEAL, THE CIT(A) NOTICED THAT THE PERCENTAGE OF 29.18 WORKED OUT BY THE ASSESSING OFFICER O N THE BASIS OF TURNOVER OF 2 MONTHS TRANSACTION WHICH ACCORDING TO HIM WAS SNOT CORRECT. HE, THEREFORE, TAKEN THE ENTIRE YEARS TRANSACTION AND FOUND THAT 13.06% ARE THE EXPENDITURE RELATABLE TO OWN ITA NO. 542/AHD/2009 2 BUSINESS AND DIRECTED THE ASSESSING OFFICER TO TREAT THAT PART OF THE EXPENDITURE AND AGAINST SPECULATIVE BUSINESS AND ALLOW THE SAME. AGAINST THIS THE REVENUE PREFERRED APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL UPHELD THE ORDER OF THE LEARNED CIT(A). CONSIDERING THE ABOVE, THE LEARNED CIT(A) IN THE APPEAL FIL ED AGAINST LEVY OF PENALTY I.E., IN THE IMPUGNED ORDER, CANCELLED THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT OBS ER V ING, VIDE PARAGRAPH 2.3, AS UNDER : 2.3. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AS WELL AS THE SUBMISSIONS ADVANCED BY THE AR. OF THE APPELLANT. I T IS SEEN THAT THAT THE A.O. LEVIED THE PENALTY ON THE GROUND THAT DISA LLO WANCE MADE BY THE A.O. HAS BEEN CONFIRMED BY THE CIT.(APPEA1S). HOW EVER, AS PER THE DIRECTIONS OF THE HONBLE ITAT , THE CLAIM OF BAD DEBT RS. 14 L AKHS COULD NOT BE ALLOWED U/S. 36(2), BUT THE SAME WAS DIRECTED TO BE ALLOWED AS SPECULATION LOSS TO BE CARRIED FORWARD AND HENCE IT CAN BE SEEN THAT THE GROUND ON WH ICH THE PENALTY HAS BEEN INITIATED AND THE PENALTY ULTIMATELY LEVIED ARE QUITE DIFFERENT. FU RTHER AS REGARD S THE DISALLOWANCE OF INTEREST, A PORTION O F INTEREST HAD BEEN ALLOWED BY THE CIT(A) AND THE APPEAL OF REVENUE HAS BEEN REJECTED BY THE I.T.A.T. ON VERIFICATION O F DETAILS/EVIDENCES NOW FURNISHED BY THE A.R IT CAN BE SEEN THAT THE CLAIM OF BAD DEBTS AND IN TERE ST EXPENSES WAS GENUINE AND THE ADDITIONS WERE MADE TO THE TOTAL INCOME, B ECAUSE OF DIFFERENCE OF OPINION AND HENCE, I AM IN AGREEMENT WITH THE ARGUMENT OF THE APPELLANT THAT BY REJECTION OF ASSESSEES CLAIM BY RELYING ON DIFFERENT INTERPRETATION, IT C OULD NOT BE SAID THAT PARTICULARS OF INCOME HAD BEEN CO NCEALED. THE DECISION OF DELHI HI GH COURT IN CIT VS. EICHER GOODEARTH LTD., REPORTED IN 170 TAXMAN 27 (DEL), WHEREIN IT WAS HELD THAT THERE IS NO JUSTIFICATION TO LEVY PENALTY WHEN THE AO HAD NOT FOUND P ARTICULARS FURNISHED BY THE ASSESSEE TO BE FALSE AND HAD ALSO NOT UNEARTHED ANY MATERIAL FAC TS OR PARTICULARS WHICH ASSESSEE HAD NOT DISCLOSED IS SQUARELY APPLICABLE T O THE FACTS OF THE CASE OF THE APPELLANT, AS THE PARTICULARS FURNISHED BY THE APPELLANT HAVE NOT BEEN FOUND T O BE FALSE BY THE A.O. THE ADDITION IS FOUND TO HAVE BEEN MADE BY REJECTING THE DETAILS/ E VIDENCES FURNISHED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. FURTHER, BY FOLLOWING SEVERAL CASE LAWS, AS RELIED UPON BY THE A R. OF THE APPELLANT, I AM O F THE VIEW THAT MERELY GETTING AN ADDITION CONFIRMED AT FIRST APPELLATE STAGE WOULD NOT IT SELF AMOUNT TO CONCEALMENT OF INCOME, WHICH ULTIMATELY ATTRACTS THE PROVISIONS OF SEC. 271(1)(C) OF THE I.T. ACT. IN VIEW OF THE ABOVE FACT S AND THE DECISION OF GUJARAT CREDIT CORPN. LTD., 302 ITR 250 (AT) (AHD) WHEREIN IT HAS BEEN HELD THAT MERE REJECTION OF ASSESSEES CLAIM OF LOSS ON A DIFFERENT GRO UND BY THE APPELLATE AUTHORITY CAN NOT BE E QUATED WITH CONCEALMENT, I HOLD THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY FOR CO NCEALMENT, HENCE I DIRECT THE AO TO DELETE THE PENALTY LEVIED IN THIS CASE. ITA NO. 542/AHD/2009 3 HAVING CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE LEARNED CIT(A) HAS PASSED A VERY REASONED ORDER WHICH WE MAKE PART OF OUR ORDER. THE LEARNED DR ARGUED BEFORE US THAT EVEN IF THE SET - OFF OF CAPITAL LOSS AGAINST BUSINESS PROFITS WAS BY NEGLIGENCE OR MISTAKE, THE FACT REMAINS THAT THE PARTICULARS OF INCOME FURNISHED WERE NOT CORRECT AND WILLFUL CONCEALMENT NOT BEING AN E SSENTIAL REQUIREMENT FOR LEVY OF PENALTY U/S 271(1)( C) AS HELD BY THE SUPREME COURT IN UOI VS. DHARMENDRA TEXTILE PROCESSORS 306 ITR 277, PENALTY COU LD NOT BE DELETED. WE FIND THAT SIMILAR ARGUMENT WAS MADE BY THE REVENUE IN THE CASE OF CIT VS. M/S SIDHARTHA ENTERPRISES AND HONBLE PUNJAB & HARYANA HIGH COURT REJECTING THE PLEA HELD : THE JUDGMENT IN DHARMENDRA TEXTILE CANNOT BE READ AS LAYING DOWN THAT IN EVERY CASE WHERE PARTICULARS OF INCOME ARE INACCURATE, PENALTY MUST FOLLOW . WHAT HAS BEEN LAID DOWN IS THAT QUALITATIVE DIFFERENCE BETWEEN CRIMINAL LIABILITY U/S 276C AND PENALTY U/S 271(1) ( C) HAD TO BE KEPT IN MIND AND APPROACH ADOPTED TO THE TR IAL OF A CRIMINAL CASE NEED NOT BE ADOPTED WHILE CONSIDERING THE LEVY OF PENALTY. EVEN SO, THE CONCEPT OF PENALTY HAS NOT UNDERGONE CHANGE BY VIRTUE OF THE SAID JUDGMENT . PENALTY IS IMPOSED ONLY WHEN THERE IS SOME ELEMENT OF DELIBERATE DEFAULT AND NOT A ME RE MISTAKE . IN VIEW OF THE FINDING THAT THE FURNISHING OF INACCURATE PARTICULARS WAS SIMPLY A MISTAKE AND NOT A DELIBERATE ATTEMPT TO EVADE TAX, PENALTY WAS NOT LEVIABLE . (EMPHASIS SUPPLIED) IN VIEW OF THE ABOVE, AND CONSIDERING THE FACTS AND CIRCUMSTAN CES OF THE CASE, SINCE THERE IS NO CONCEALMENT OF INCOME OR SUBMISSION OF INACCURATE PARTICULARS OF INCOME, THE LEARNED CIT(A) HAS RIGHTLY CANCELLED THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT. WE UPHOLD THE SAME AND DISMISS THE APPEAL OF THE REVENUE. 3. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 24.07.09 SD/ - SD/ - ( N.S.SAINI) ACCOUNTANT MEMBER. (T.K.SHARMA) JUDICIAL MEMBER DATE: 24.07.09 (H.K.PADHE E) SENIOR PRIVATE SECRETARY. ITA NO. 542/AHD/2009 4 COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5. THE DR, AHMEDABAD 6. GUARD FILE (IN DUPLICATE) TRUE C OPY, BY ORDER, DEPUTY.REGISTRAR.