CHETAN P. VAKHARIA, MUMBAI V. ITO WD 18(1)(3), MUMBAI

ITA 5460/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62553 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2001-2002
• Appeal Filed On: 22-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M MURALI
• Keywords: Salary income; Bonafide belief; Difference of opinion
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI RAJENDRA (A.M.) ITA NO. 5460/MUM/2011 ASSESSMENT YEAR : 2001-02 CHETAN P. VAKHARIA, 13, CAMA INDUSTRIES ESTATE,SUNMILL COMPOUND, LOWER PAREL, MUMBAI. 400 013. PAN : AAACPV 7506 J VS. ITO WARD 18(1)(3), MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI M. MURALI DATE OF HEARING 11.06.2012 DATE OF PRONOUNCEMENT 15.06.2012 O R D E R PER DINESH KUMAR AGARWAL, J.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 21-04-2011 PASSED BY THE LD. CIT (A) - 29, MU MBAI FOR THE A.Y. 2001-02. 2. AT THE TIME OF HEARING, NONE ATTENDED ON BEHALF OF THE ASSESSEE NOR FILED ANY APPLICATION FOR THE ADJOURNMENT OF THE CA SE, THEREFORE, IT WAS DECIDED TO DISPOSE OF THE APPEAL EX PARTE, QUA THE ASSESSEE, ON MERITS, AFTER HEARING THE LD. D.R. ITA NO. 5460/MUM/2011 2 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE AN INDIVIDUAL DERIVES INCOME FROM SALARY, INCOME FROM BUSINESS IN CLUDING INTEREST AND REMUNERATION FROM FIRM ETC. THE RETURN OF INCOME WA S FILED DECLARING A TOTAL INCOME AT RS. 5,06,410/-. HOWEVER THE ASSESSM ENT WAS COMPLETED AT AN INCOME OF RS. 10,76,270/- VIDE ORDER DTD. 30- 3-2004 PASSED U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (THE ACT). IN THE ASSESSMENT, THE A.O., OUT OF EXPENSES CLAIMED, DISA LLOWED THE ASSESSEES CLAIM OF INTEREST RS. 1,50,000/- FOR ACQUIRING NEW HOUSE AS THE ASSESSEE WAS NOT BROUGHT ON RECORD ANY MATERIAL EVIDENCE IN SUPPORT OF HIS CLAIM. SIMILARLY, INTEREST CLAIMED AS DEDUCTION OF RS. 3,0 5,305/- WAS ALSO DISALLOWED AS THE ASSESSEE HAS NOT FILED ANY DOCUME NTARY EVIDENCE TO ESTABLISH THE NEXUS. THE A.O. FURTHER RESTRICTED T HE EXPENSES CLAIMED FOR EARNING COMMISSION FROM RS. 84,251/- TO RS. 25,000/ - ONLY FOR WANT OF PROPER DETAILS. THE INCOME FROM HOUSE PROPERTY WAS ALSO BROUGHT TO TAX AT RS. 56,250/- AFTER GIVING THE DEDUCTION WHICH HAS NOT BEEN DECLARED BY THE ASSESSEE IN THE RETURN. ON APPEAL, THE LD. CIT(A) ALLOWED RELIEF TO THE ASSESSEE TO THE EXTENT OF RS. 56,251/- IN RESPE CT OF EXPENSES DISALLOWED BY THE A.O. AND CONFIRMED THE OTHER ADDI TIONS TO THE EXTENT OF RS. 5,11,555/-. WHILE MAKING THE ASSESSMENT, THE A .O. ALSO INITIATED PENALTY PROCEEDING U/S 271(1)(C) OF THE ACT. IN RE SPONSE TO SHOW CAUSE NOTICE AS TO WHY PENALTY SHOULD NOT BE IMPOSED, IT WAS INTER ALIA SUBMITTED BY THE ASSESSEE THAT THE ASSESSEE HAS DIS CLOSED ALL THE MATERIAL FACTS, THE ADDITIONS MADE IN THE ASSESSMEN T ARE ON ACCOUNT OF ITA NO. 5460/MUM/2011 3 DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE A.O. AND THUS IT WOULD NOT RESULT IN CONCEALMENT OF INCOME OR FURNIS HING INACCURATE PARTICULARS OF INCOME AND ACCORDINGLY IT WAS SUBMIT TED THAT THE PENALTY PROCEEDING INITIATED BE DROPPED. HOWEVER, THE A.O. DID NOT ACCEPT THE ASSESSEES SUBMISSION AND OBSERVED THAT THE ASSESSE E HAS FAILED TO DISCHARGE THE ONUS WHICH IS VESTED UPON HIM AND HEN CE THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME WHER EBY CONCEALING THE INCOME AND, ACCORDINGLY, HE IMPOSED PENALTY OF RS. 1,79,556/- VIDE ORDER DTD. 27-3-2007 PASSED U/S 271(1)(C) OF THE ACT. ON APPEAL, THE LD. CIT(A) WHILE AGREEING WITH THE VIEWS OF THE A.O. CONFIRMED THE PENALTY IMPOSED BY THE A.O. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN BOTH THE GROUNDS TH E SUSTENANCE OF PENALTY IMPOSED BY THE A.O. 5. AT THE TIME OF HEARING THE LD. D.R. SUPPORTS THE ORDER OF THE A.O. AND THE LD. CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. D.R. AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS DISCLOSED ALL THE MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. THE A.O. HAS IMPOSED THE PENALTY ON THE GROUND THAT THE DISA LLOWANCE MADE IN THE ASSESSMENT ORDER HAS BEEN CONFIRMED BY THE LD. CIT(A). IN ORDER TO ITA NO. 5460/MUM/2011 4 APPLY THE PROVISIONS OF SECTION 271(1)(C) OF THE AC T THERE HAS TO BE CONCEALMENT OF PARTICULARS OF INCOME OF THE ASSESSE E. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. 7. IN A RECENT JUDGMENT OF THE HONBLE APEX COURT I N CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158(SC) THEI R LORDSHIPS, AFTER CONSIDERING VARIOUS DECISIONS INCLUDING DILIP N. SH ROFF VS. JCIT (2007) 291 ITR 519(SC) AND UNION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277(SC) HAVE OBSERVED AND HELD (PAGE 158 HEAD NOTES) AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(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, THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS F OUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HEL D GUILTY OF FURNISHING INACCURATE PARTICULARS IN ORDER TO EXPOS E 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 MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISH ING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THA T EVERYTHING WOULD DEPEND UPON THE RETURN FILED Y THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH TH E PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO B E INACCURATE, THE LIABILITY COULD ARISE. TO ATTRACT PENALTY, TH E DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRE CT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOU S OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 2 71(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RE TURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS ITA NO. 5460/MUM/2011 5 8. RESPECTFULLY FOLLOWING THE ABOVE DECISION AND KE EPING IN VIEW THAT IT IS NOT THE CASE OF THE REVENUE THAT THE CLAIM MA DE BY THE ASSESSEE WAS FOUND TO BE FALSE OR UNTRUE BASED ON NO MATERIAL OR BONAFIDE BELIEF, WE ARE OF THE VIEW THAT THERE IS NO CONCEALMENT ON THE PART OF THE ASSESSEE WHICH MAY CALL FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AND ACCORDINGLY THE PENALTY IMPOSED BY THE A.O. AND SUSTAINED BY TH E LD. CIT(A) IS DELETED. THE GROUNDS TAKEN BY THE ASSESSEE ARE THE REFORE ALLOWED. 9. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 15-6-12. SD/- (RAJENDRA) ACCOUNTANT MEMBER SD/- (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED 15 TH JUNE, 2012. RK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 18, MUMBAI 4. COMMISSIONER OF INCOME TAX (A) - 29, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH C, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI