Appeal Details
Counselvise Citation
[2017] 127 COUNSELVISE.COM (IT) 5111 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 9 month(s) 16 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
08-08-2017
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
C
Assessment Year
2010-2011
Appeal Filed On
22-10-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.5721/DEL./2014 (ASSESSMENT YEAR : 2010-11) M/S. PERFECT HOMFIN PRIVATE LIMITED, VS. DCIT, CIRC LE 14 (1), B 102, NEETI BAGH, NEW DELHI. NEW DELHI 110 001. (PAN : AAACP7930M) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SATYAJEET GOEL, CA REVENUE BY : SHRI ARUN KUMAR YADAV, SENIOR DR DATE OF HEARING : 31.07.2017 DATE OF ORDER : 08.08.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. PERFECT HOMFIN PVT. LTD. (HEREINAF TER REFERRED TO AS THE ASSESSEE), BY FILING THE PRESE NT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 18.07.2014 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-XVII, NEW DELH I, AFFIRMING THE PENALTY ORDER DATED 29.07.2013 PASSED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT), QUA THE ASSESSMENT YEAR 2010-11 ON THE GROUNDS INTER ALIA T HAT :- ITA NO.5721/DEL./2014 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE PENALTY OF RS.181800 IMPOSED U/S 271(1)(C) BY THE A.O. FOR A.Y. 2010-11. 2. THAT THE PENALTY IS BASE ON DISALLOWANCE OF PROFESSIONAL AND MANAGEMENT EXPENSES AND PENALTY FOR DISALLOWANCE OF EXPENSES PER SE CANNOT LEAD TO CONCEALMENT. 3. THAT THE A.O. HAS GROSSLY FAILED IN RECORDING JUSTIFICATION FOR INITIATION AND FINALIZATION OF PE NALTY PROCEEDINGS. 4. THAT THE BONAFIDE EXPLANATION OFFERED BY THE 'A' [(AS PER EXPLANATION TO SECTION 271(1)] HAS WRONGLY BEING REJECTED BY THE A.O. AND REJECTION UPHELD BY THE CIT(A). 5. THAT THE CASES REFERRED TO AND RELIED UPON BY THE A.O. AND CIT(A) ARE NOT RELEVANT TO MY THIS CASE HENCE THE ORDER IS NOT AS PER MERITS OF THE CA SE. 6. THAT THE PENALTY OF RS.181800 IMPOSED U/S 271(1(C) BY THE A.O. AND UPHELD U/S 250 BY THE CIT(A) BE DELETED IN THE INTEREST OF EQUITY AND MERITS OF THE CASE. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ON THE BASIS OF COMPLETED ASSESSMENT UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (F OR SHORT THE ACT) AT THE TOTAL INCOME OF RS.60,43,239/- AS AGAI NST THE RETURNED INCOME OF RS.46,81,685/- AND TAXABLE INCOME U/S 115 JB OF THE ACT ON BOOK PROFIT OF RS.3,64,48,077/-, PENALTY PROCEED INGS WERE INITIATED U/S 271(1)(C) OF THE ACT BY WAY OF ISSUAN CE OF NOTICE U/S ITA NO.5721/DEL./2014 3 274 OF THE ACT. BUT, DESPITE ISSUANCE OF NOTICE, A SSESSEE HAS NOT PREFERRED TO CONTEST THE PENALTY PROCEEDINGS. 3. DURING THE ASSESSMENT PROCEEDINGS, ASSESSING OFF ICER NOTICED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.11,00,000/- ON ACCOUNT OF PROFESSIONAL AND MANAGEMENT CHARGES P AID TO TWO PERSONS INCLUDING ONE MS. DIVYA KHANNA. MS. DIVYA KHANNA ADMITTED TO HAVE RECEIVED THE PROFESSIONAL FEES BUT HAS FAILED TO PRESENT IN THE OFFICE FOR CROSS EXAMINATION. SO, AO PROCEEDED TO CONCLUDE THAT THE ASSESSEE BOOKED THESE EXPENSES JU ST TO REDUCE HIS INCOME AS MS. DIVYA KHANNA, A 20 YEARS OLD STUDENT, WAS NOT HAVING ANY ACTIVE PARTICIPATION IN THE BUSINESS OF THE SHARE MARKET AND MOREOVER, THERE WAS NO OTHER TRANSACTION IN THE BANK ACCOUNT OF MS. DIVYA KHANNA OTHER THAN AN AMOUNT OF RS.6,00 ,000/- DEBITED BY THE ASSESSEE UNDER THE HEAD PROFESSIONAL FEES. CONSEQUENTLY, THE AO SOUGHT TO INITIATE PENALTY PRO CEEDINGS U/S 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PART ICULARS OF INCOME. 4. DURING THE PENALTY PROCEEDINGS, THE AO CAME TO T HE CONCLUSION THAT THE ASSESSEE HAS DEBITED INADMISSIB LE EXPENSES AND THEREBY FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF ADDITION / DISALLOWANCE AND THEREBY IMPOSED PENALTY TO THE TUNE OF RS.1,81,800/- @ 100% OF THE TAX SOUGHT TO BE PAID B Y THE ASSESSEE. ITA NO.5721/DEL./2014 4 5. ASSESSEE CHALLENGED THE PENALTY ORDER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS DISMISSED THE APPEAL . FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIB UNAL BY CHALLENGING THE PENALTY ORDER PASSED U/S 271(1)(C) OF THE ACT. 6. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. UNDISPUTEDLY, THE ASSESSEE IS ENGAGED IN THE BUS INESS OF DERIVATIVES, JOBBING AND INVESTMENT; THAT THE ASSES SMENT ORDER PASSED U/S 143 (3) OF THE ACT HAS SINCE ATTAINED FI NALITY HAVING NOT BEEN CHALLENGED FURTHER BY THE ASSESSEE; THAT THE A SSESSEE DEBITED AN AMOUNT OF RS.11,00,000/- ON ACCOUNT OF PROFESSIO NAL AND MANAGEMENT CHARGES PAID TO MS. DIVYA KHANNA AND MR. SANJEEV KHURANA TO THE TUNE OF RS.6,00,000/- AND RS.5,00,00 0/- RESPECTIVELY, OUT OF WHICH AO HAS ONLY DISALLOWED T HE AMOUNT OF RS.6,00,000/- PAID TO MS. DIVYA KHANNA; THAT THESE CHARGES WAS CLAIMED TO BE PAID TO AFORESAID MS. DIVYA KHANNA AN D MR. SANJEEV KHURANA AS COMMISSION FOR PROVIDING TIPS TO THE ASS ESSEE. 8. FROM THE GROUNDS OF APPEAL, ARGUMENTS ADDRESSED BY LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE AP PEAL AND FACTS & ITA NO.5721/DEL./2014 5 CIRCUMSTANCES OF THE CASE, THE SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS :- AS TO WHETHER AO / CIT (A) HAVE ERRED IN IMPOSING / AFFIRMING THE PENALTY OF RS.6,00,000/- ON THE GROUND THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME BY DEBITING INADMISSIBLE EXPENSES ON ACCOUNT OF MAKING COMMISSION PAYMENT OF RS.6,00,000/- TO MS. DIVYA KHANNA FOR PROVIDING TIPS FOR PURCHASING SHARES? 9. OPERATIVE PART OF THE PENALTY ORDER IMPOSING PEN ALTY OF RS.1,81,800/- ON THE ASSESSEE IS REPRODUCED AS UNDE R FOR READY REFERENCE :- IN VIEW OF THIS IT IS CLEAR THAT ASSESSEE HAS DEBITED INADMISSIBLE EXPENSES AND THEREBY FURNISHED INACCURATE PARTICULARS OF ITS INCOME IN RESPECT OF THE ADDITION/DISALLOWANCE AS DISCUSSED ABOVE AND ACCORDINGLY, IT IS FOUND TO BE A FIT CASE FOR IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT R.W. EXPLANATIONS THERETO. MOREOVER, INSPITE OF GIVING TWO OPPORTUNITIES VIDE PENALTY NOTICES U/S. 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 WAS ISSUED ON 08.01.201.3 AND 19.07.2013, ASSESSEE HAS NOT FURNISHED ANY REPLY NOR ATTENDED ANY PROCEEDINGS. AT THE TIME OF ASSESSMENT PROCEEDINGS ALSO MS. DIVYA KHANNA WAS NOT PRODUCED RATHER HER FATHER ATTENDED THE PROCEEDINGS. I AM CONVINCED THAT WITH A CLEAR VIEW TO REDUCE TAX LIABILITY ASSESSEE HAS DEBITED THIS INADMISSIBLE EXPENSES OF RS. 600000/-. 10. BARE PERUSAL OF THE PENALTY ORDER APPARENTLY GO ES TO PROVE THAT THERE IS NO FINDING WHATSOEVER ON THE PART OF THE REVENUE AUTHORITIES THAT ANY DETAILS SUPPLIED BY ASSESSEE I N HIS RETURN IS ITA NO.5721/DEL./2014 6 FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. IN CAS E THE ASSESSEE HAS CLAIMED ANY DEDUCTION OR EXEMPTION, IT IS FOR THE T AX AUTHORITIES TO EXAMINE IF THE SAME IS SUSTAINABLE OR NOT. 11. WHEN WE EXAMINE THE PENALTY ORDER IN THE LIGHT OF THE DECISION RENDERED BY HONBLE SUPREME COURT IN CASE TITLED AS CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (SC ) , THE PENALTY PROCEEDINGS ARE NOT SUSTAINABLE. OPERATIVE PART OF THE DECISION RENDERED BY HONBLE SUPREME COURT IN RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) IS REPRODUCED FOR READY REFERENCE AS UNDER :- A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE I.T. ACT, 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF T HE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUS T HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME . THE MEANING OF THE WORD PARTICULARS USED IN SECTI ON 271(1)(C) WOULD EMBRACE THE DETAIL OF THE CLAIM MAD E. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND T O BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HEL D GUILTY OF FURNISHING INACCURATE PARTICULARS. IN OR DER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKIN G AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCUR ATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHI NG WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSE E CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SU CH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILI TY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPL IED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRE CT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. ITA NO.5721/DEL./2014 7 WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTIO N OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A ME RE 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. 12. IN THE INSTANT CASE, WHEN THE AO HAS NOT DISPUT ED THE PARTICULARS OF INCOME FURNISHED BY THE ASSESSEE NOR HE HAS DISPUTED THE AMOUNT ON WHICH COMMISSION IS CLAIMED TO HAVE B EEN PAID BY THE ASSESSEE, THE DISALLOWANCE ON THE GROUND OF CHA LLENGING THE CAPABILITIES OF MS. DIVYA KHANNA TO PROVIDE TIPS FO R PURCHASING SHARES ETC. IS MERELY A SUBJECTIVE FINDINGS WHICH A RE NOT SUSTAINABLE. THESE DAYS IT IS A MATTER OF COMMON K NOWLEDGE THAT PERSONS OF 20 YEARS OF AGE ARE CAPABLE ENOUGH TO AD VICE AND CARRY ON SUCH BUSINESS EVEN ON THEIR OWN. 13. MOREOVER, WHEN THE AO HIMSELF HAS ALLOWED THE COMMISSION OF RS.5,00,000/- HAVING BEEN PAID TO MR. SANJEEV KHURANA, MERELY DISALLOWING THE COMMISSION PAYMENT ON THE BASIS OF SUBJECTIVE SATISFACTION WITHOUT CALLING UPON THE ASSESSEE AS TO WHAT TYPE OF ADVICE AND KNOW-HOW HAS BEEN PROVIDED BY MS. DIVYA KHANNA TO EARN THE BUSINESS INCOME ON WHICH T AX HAS ALREADY BEEN PAID, THE PENALTY CANNOT BE IMPOSED NO R DOES IT ITA NO.5721/DEL./2014 8 AMOUNT TO FURNISHING OF INACCURATE PARTICULARS. SO , IN THE GIVEN CIRCUMSTANCES, WE ARE UNABLE TO HOLD THAT THE ASSES SEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME FOR MAKI NG PAYMENT OF RS.6,00,000/- TO MS. DIVYA KHANNA SO AS TO ATTRACT THE PENALTY U/S 271(1)(C) OF THE ACT, HENCE WE HEREBY DELETE THE PE NALTY OF RS.1,81,800/- BY ALLOWING THE APPEAL FILED BY THE A SSESSEE. ORDER PRONOUNCED IN OPEN COURT ON THIS 8 TH DAY OF AUGUST, 2017. SD/- SD/- (N.K. SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 8 TH DAY OF AUGUST, 2016 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XVII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.
Mehul