M/s International Aircon, New Delhi V. ACIT, New Delhi

ITA 5525/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4622 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 17-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJESH GUPTA
• Keywords: Wrong claim; Notional interest
• Section: 143(3)

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL, DELHI BENCH B , NEW DELHI BEFORE : SHRI I.C. SUDHIR , JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 5525/DEL./2015 ASSESSMENT YEAR: 2011 - 12 INTERNATIONAL AIRCON, 10179, G - 1, MALL, W.E.A. ABDUL AZIZ ROAD, KAROL BAGH, NEW DELHI. PAN - AACFI2081H (APPELLANT) VS. A.C.I.T., CIRCLE 33(1), NEW DELHI. (RESPONDENT) APPELLANT BY SH. RAJESH GUPTA, C.A. RESPONDENT BY SH. ANSHU PRAKASH, SR. DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 06.08.2015 OF LD. CIT(A) - 17, NEW DELHI FOR THE ASSESSMENT YEAR 2011 - 12 ON THE FOLLOWING GROUNDS : 1. THAT THE LEARNED CIT (APPEALS) GROSSLY ERRED AND ACTED UNREASONABLY IN UPHOLDING THE IMPOSITION OF PENALTY ON RS. 2,88,320/ - BEING THE NOTIONAL INTEREST CHARGED BY THE ASSESSING OFFICER WITHOUT CONSIDERING THE FACTS OF THE CASE & DOCUMENTS ON RECORD. 2. THAT THE LEARNED CIT (APPEALS) HAS GRO SSLY ERRED AND ACTED UNREASONABLY IN NOT CONSIDERING THE FACT THAT THE ADDITIONS MADE DURING THE COURSE OF PROCEEDINGS UNDER 143(3) ARE NOT IN NATURE OF CONCEALMENT. DATE OF HEARING 29.08.2017 DATE OF PRONOUNCEMENT 19 .09.2017 ITA NO. 5525/DEL./2015 2 3. THAT THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED AND ACTED UNREASONABLY IN NOT CONSIDERING THE FACT THAT NO INTEREST WAS RECEIVED BY THE APPELLANT & ONLY NOTIONAL INTEREST HAS BEEN LEVIED BY THE ASSESSING OFFICER & THEREFORE THERE IS NO CONCEALMENT AND NO WRONG INFORMATION HAS BEEN FURNISHED. 4. THAT THE IMPUGNED ORDER OF THE CIT (APPEALS) IS LIABLE TO BE QUASHED INTER ALIA BEING HIGHLY ARBITRARY, UNLAWFUL & INJUDICIOUS. 5. THAT THE ORDER OF THE LEARNED CIT (APPEALS) IS AGAINST THE LAW & FACTS OF THE CASE. 2. AS PER ABOVE GROUNDS OF APPEAL, THE ASSESSEE HAS CHALLENGED THE SUSTE NANCE OF PENALTY U/S. 271(1)(C) OF THE IT ACT ON ADDITION OF RS.2,88,320/ - AS NOTIONAL INTEREST ON ADVANCES GIVEN BY THE APPELLANT. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME DECLARING AN INCOME OF RS.1,42,97,970/ - . THE ASSESS MENT WAS COMPLETED AT RS.1,50,72,200/ - AFTER MAKING ADDITIONS OF RS.2,88,320/ - ON ACCOUNT OF NOTIONAL INTEREST ON ADVANCES, RS.46,550/ - ON ACCOUNT OF CASH PAYMENT TO EMPLOYEES AND RS.4,39,360/ - ON ACCOUNT OF 10% DISALLOWANCE OUT OF EXPENDITURE UNDER VARIOU S OTHER HEADS . BASED ON THESE ADDITIONS, THE AO IMPOSED PENALTY OF RS.2,39,737/ - U/S. 271(1)(C) OF THE ACT. IN APPEAL, THE LD. CIT(A) DELETED THE PENALTY IMPOSED WITH RESPECT TO ADDITIONS MADE ON ACCOUNT OF CASH PAYMENT TO EMPLOYEES AND ADHOC DISALLOWANCE OF EXPENSES. HOWEVER, HE SUSTAINED THE PENALTY ON DISALLOWANCE OF INTEREST CLAIMED U/S. 36(1)(III) OF THE ACT OBSERVING THAT THE ASSESSEE DID NOT CHALLENGE THIS ADDITION AND HA S FURNISHED INACCURATE ITA NO. 5525/DEL./2015 3 PARTICULARS OF INCOME BY MAKING WRONG CLAIM OF INTEREST. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE PENALTY IGNORING THE SUBMISSIONS OF THE ASSESSEE THAT THE ADDITION MADE BY THE AO IS NOT IN THE NATURE OF CONCEALMENT; THAT NO WRONG INFORMATION HAS BEEN FUR NISHED NOR ANY BOGUS EXPENDITURE HAS BEEN CLAIMED BY THE ASSESSEE; THAT ALL THE FACTS HAVE BEEN DULY DECLARED IN THE RETURN OF INCOME AND NO CONCEALMENT HAS BEEN MADE IN REGARD TO THE ABOVE EXPENDITURE; THAT THERE IS NO FINDING THAT ANY DETAILS FILED BY TH E ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR FALSE; THAT SIMPLY BECAUSE THE ADDITION WAS NOT FURTHER CHALLENGED, PENALTY IS NOT LEVIABLE; AND THAT MERE REJECTION OF APPELLANT S CLAIM BY THE REVENUE DOES NOT WARRANT TO HOLD THAT APPELLANT HAS FURN ISHED INACCURATE PARTICULARS OF INCOME. RELIANCE WAS PLACED ON THE CIT VS. RELIANCE PETROPRODUCTS PVT. LTD., 322 ITR 158(SC) AND SEVERAL OTHER DECISIONS OF HON BLE DELHI HIGH COURT. 4. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDER OF LD. CIT(A) AND S UBMITTED THAT SINCE THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS OF INCOME BY MAKING INADMISSIBLE CLAIM OF INTEREST EXPENDITURE, THEREFORE, THE AO WAS JUSTIFIED TO IMPOSE PENALTY U/S. 271(1)(C) OF THE ACT. ITA NO. 5525/DEL./2015 4 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD INCLUDING THE IMPUGNED ORDER AND THE CASE LAWS CITED ON BEHALF OF THE ASSESSEE. WE FIND THAT IT IS NOT A FIT CASE, WHERE THE APPELLANT SHOULD BE SADDLED WITH PENALTY FOR FURNISHING I NACCURATE PARTICULARS OF INCOME. IT IS NOTABLE THAT THAT APPELLANT HAS GIVEN ALL THE DETAILS OF INTEREST EXPENDITURE INCURRED ALONGWITH RETURN OF INCOME FILED. THE DETAILS SO FURNISHED ARE NOT POINTED OUT BY THE DEPARTMENT TO BE FALSE. IN VIEW OF VARIOUS D ECISIONS OF HON BLE SUPREME COURT AND DELHI HIGH COURT, MERE REJECTION OF A PARTICULAR CLAIM OF ASSESSEE, CANNOT BE PUT AT PAR WITH CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LD. CIT(A) APPEARS TO HAVE SUSTA INED THE PENALTY SIMPLY ON THE PREMISE THAT THE ASSESSEE DID NOT CHALLENGE THE IMPUGNED ADDITION ON WHICH THE PENALTY WAS IMPOSED, WHICH IN ITSELF IS NO GOOD GROUND FOR PENAL ACTION AGAINST THE ASSESSEE. NO DISTINGUISHING FACTORS OF THE CASE LAWS CITED BY THE ASSESSEE HAVE BEEN GIVEN IN THE IMPUGNED ORDER BEFORE HOLDING THE SAME AS INAPPLICABLE IN THE ASSESSEE S CASE. THEREFORE, LAYING OUR HANDS ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCT (SUPRA) AND OF HON BLE PUNJ AB & HARYANA HIGH COURT IN CIT VS. SHAHAB AD COOPERATIVE SUGAR MILLS LTD., 315 ITR 351 (P&H) CITED BY THE ASSESSEE, WE DO NOT FIND ANY JUSTIFICATION TO SUSTAIN THE PENALTY IN THE INSTANT CASE. ACCORDINGLY, THE ITA NO. 5525/DEL./2015 5 IMPUGNED ORDER DESERVES TO BE SET ASIDE AND THE IMPUGNED PENALTY DESERVES TO BE CANCELLED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.09.2017 . SD/ - SD/ - ( I.C. SUDHIR ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19.09.2017 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI