Dr. Raka Guleria, New Delhi V. ACIT, New Delhi

ITA 5738/DEL/2011

• Counselvise Citation: 573820114 RSA 2011
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 09-07-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 23-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VEENA JOSHI
• Keywords: Business income; Salary income; Difference of opinion; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI I.C.SUDHIR, JUDICIAL MEMBER AND SHRI T.S.KAPOOR, ACCOUNTANT MEMBER I.T.A .NO.5738/DEL/2011 ASSESSMENT YEAR-2005-06 DR. RAKA GULERIA, VS. ACIT, C-291, SARITA VIHAR, CIRCLE 41(1), NEW DELHI NEW DELHI-110020. PAN : ADBPG6519Q (APPELLANT) (RESPONDENT) APPELLANT BY:- SH. ASHWANI KUMAR, FCA RESPONDENT BY:-SMT. VEENA JOSHI, SR. DR ORDER PER T.S.KAPOOR, AM THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE OR DER OF CIT(A) DATED 16.11.2011. THE GROUNDS OF APPEAL TAKEN BY THE ASS ESSEE ARE AS UNDER :- THAT THE ORDER DATED 16.11.2011 PASSED U/S 250 OF THE INCOME TAX ACT, 1961 BY THE LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) V, NEW DELHI IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS HE WAS NOT JUSTIFIED TO UPHOLD THE ACTION O F THE LEARNED ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE 41(1), NE W DELHI IN LEVYING PENALTY OF RS.46,297/- U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. I.T.A .NO.5738/DEL/2011 2 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A DOCTOR, WORKING WITH HOLY FAMILY HOSPITAL. DURING THE YEAR UNDER CONSID ERATION, THE ASSESSEE FILED THE RETURN OF INCOME COMPRISING INCOME FROM S ALARY, INCOME FROM PROFESSION AND INCOME FROM OTHER SOURCES. DURING T HE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT PROFE SSIONAL INCOME WAS SHOWN AT RS.79,406/- WHICH WAS ARRIVED AT AFTER CLA IMING EXPENSES AGAINST GROSS INCOME OF RS.1,95,800/- RECEIVED FROM THE HOL Y FAMILY HOSPITAL. THE ASSESSEE HAD CLAIMED AN EXPENDITURE OF RS.1,16,394/ - AGAINST THE ABOVE INCOME. THE ASSESSING OFFICER HELD THAT ONE PERSO N CANNOT BE AN EMPLOYEE AS WELL AS A PROFESSIONAL CONSULTANT TO THE SAME CO NCERN AT THE SAME TIME. THEREFORE, WHOLE OF EXPENSES WERE DISALLOWED AND A SUM OF RS.1,95,800/- WAS ASSESSED TOGETHER WITH OTHER SALARY INCOME. TH E PENALTY PROCEEDINGS U/S 271(1)(C) WERE ALSO INITIATED VIDE ISSUE OF SHO W CAUSE NOTICE DATED 14.12.2007 FIXING THE CASE FOR 31.12.2007. THERE W AS NO COMPLIANCE ON THIS DATE AND, THEREFORE, NOTICE DATED 09.04.2008 WAS IS SUED AND CASE WAS FIXED FOR 23.04.2008 AND AGAIN NOBODY APPEARED ON THAT DA TE. THEREFORE, THE ASSESSING OFFICER PROCEEDED TO DECIDE THE ISSUE ON MERITS AS PER MATERIAL AVAILABLE ON THE RECORD. THE ASSESSING OFFICER IN THE PENALTY ORDER OBSERVED THAT ASSESSEE WAS A WELL-EDUCATED EMPLOYEE AND CANN OT SAID TO BE NON- CONVERSANT WITH THE FACT THAT EMPLOYEE RECEIVING OV ER-TIME ALLOWANCE FROM I.T.A .NO.5738/DEL/2011 3 HIS EMPLOYER IS PART OF SALARY ONLY. RELYING UPON VARIOUS HIGH COURT AND SUPREME COURT DECISIONS, THE ASSESSING OFFICER LEVI ED A PENALTY OF RS.46,297/- AS PENALTY BEING 100 % OF TAX SOUGHT TO BE EVADED U/S 271(1)(C) OF THE ACT. 3. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE LD. CIT(A) AND SUBMITTED THAT PENALTY PROCEEDINGS UNDER THE ACT ARE QUASI-CR IMINAL IN CHARACTER AND THE SAME DEGREE OF PROOF WHICH IS REQUIRED TO DECID E CIVIL DISPUTES BETWEEN THE PARTIES IS REQUIRED TO DECIDE SUCH PROCEEDINGS AND PENALTY SHOULD NOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO AND NO R IT SHOULD BE IMPOSED FOR HONEST AND BONA FIDE OMISSIONS. THE LD. AR FUR THER SUBMITTED THAT IN THE INSTANT CASE, THE DIFFERENCE BETWEEN THE RETURN ED INCOME AND ASSESSED INCOME WAS ONLY ON ACCOUNT OF TREATMENT OF A PARTIC ULAR SOURCE OF INCOME UNDER A DIFFERENT HEAD. 4. THE LD. CIT(A) AFTER HEARING THE SUBMISSIONS OF ASSESSEE, UPHELD THE PENALTY IMPOSED BY ASSESSING OFFICER, THE RELEVANT PARAGRAPH OF CIT(A)S ORDER IS REPRODUCED AS BELOW:- I HAVE GONE THROUGH THE FINDINGS OF THE AS SESSING OFFICER IN THE PENALTY ORDER, WRITTEN SUBMISSION OF THE LD. AR , WHEREIN, HE HAS ALSO RELIED ON VARIOUS CASE LAWS WHICH ARE DIST INGUISHABLE ON THE FACTS. IN THIS REGARD ASSESSING OFFICER HAS DI SCUSSED THE ISSUE IN DETAILS AND HE HAS RELIED ON CASE LAWS WHICH ARE VERY MUCH RELEVANT ON THE FACTS OF THE CASE. RELIANCE OF CAS E LAWS BY THE ASSESSING OFFICER IS APPRECIATED AND IT IS FOUND TH AT ASSESSEE HAS COME FORWARD FOR THE SURRENDER AFTER DETECTION OF T HE SAME BY THE I.T.A .NO.5738/DEL/2011 4 ASSESSING OFFICER. SO ELEMENT OF MENS-REA IS INVOL VED. IN THIS REGARD, RELIANCE IS PLACED ON THE JUDGEMENT OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ZOOM COMMUNICATION (20 10) 327 ITR 510 (DELHI), WHEREIN, IN THE RELEVANT PARA 2, T HE HONBLE DELHI HIGH COURT HAS HELD AS UNDER :- 20. THE COURT CANNOT OVERLOOK THE FACT THAT ONLY A SMALL PERCENTAGE OF THE INCOME-TAX RETURNS ARE PICKED UP FOR SCRUTINY. IF THE ASSESSEE MAKES A CLAIM WHICH IS N OT ONLY INCORRECT IN LAW BUT IS ALSO WHOLLY WITHOUT ANY BAS IS AND THE EXPLANATION FURNISHED BY HIM FOR MAKING SUCH A CLAI M IS NOT FOUND TO BE BONA FIDE, IT WOULD BE DIFFICULT TO SAY THAT HE WOULD STILL NOT BE LIABLE TO PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IF WE TAKE THE VIEW THAT A CLAIM WHICH IS WHOLLY UNTENABLE IN LAW AND HAS ABSOLUTELY NO FOUNDATION O N WHICH IT COULD BE MADE, THE ASSESSEE WOULD NOT BE LIABLE TO IMPOSITION OF PENALTY, EVEN IF HE WAS NOT ACTING BONE FIDE WHI LE MAKING A CLAIM OF THIS NATURE THAT WOULD GIVE A LICENSE TO U NSCRUPULOUS ASSESSES TO MAKE WHOLLY UNTENABLE AD UNSUSTAINABLE CLAIMS WITHOUT THERE BEING ANY BASIS FOR MAKING THEM, IN T HE HOPE THAT THEIR RETURN WOULD NOT BE PICKED UP FOR SCRUTI NY AND THEY WOULD BE ASSESSED ON THE BASIS OF SELF ASSESSMENT U NDER SECTION 143(1) OF THE ACT AND EVEN IF THEIR CASE IS SELECTED FOR SCRUTINY, THEY CAN GET AWAY MERELY BY PAYING TH E TAX, WHICH IN ANY CASE, WAS PAYABLE BY THEM. THE CONSEQUENCE WOULD BE THAT THE PERSONS WHO MAKE CLAIMS OF THIS NATURE, AC TUATED BY A MALA FIDE INTENTION TO EVADE TAX OTHERWISE PAYABLE BY THEM WOULD GET AWAY WITHOUT PAYING THE T AX LEGALLY PAYA BLE BY THEM, IF THEIR CASES ARE NOT PICKED UP FOR SCRUTINY . THIS WOULD TAKE AWAY THE DETERMENT EFFECT WHICH THESE PENALTY PROVISIONS IN THE ACT HAVE. 5. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THIS TRIBUNAL. AT THE OUTSET, THE LD. AR FILED COPY OF JUDGMENT OF HONBL E ITAT, DELHI IN THE CASE OF DCIT VS M/S JMD ADVISORS (P) LTD [(2010) 12 4 ITD 223 (DELHI)] AND COPY OF JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. I.T.A .NO.5738/DEL/2011 5 BHARTESH JAIN [(2010) 323 ITR 358 (DELHI)] AND ARGU ED THAT MERE CHANGE OF HEAD OF INCOME BY ASSESSING OFFICER CANNOT BE CONST RUED AS CONCEALMENT OF INCOME LIABLE FOR PENALTY U/S 271(1)(C). 6. THE LD. DR, ON THE OTHER HAND, ARGUED THAT THE A SSESSEE HAD DELIBERATELY CLAIMED A PART OF HER SALARY INCOME AS PROFESSIONAL INCOME AND HAD WRONGLY CLAIMED EXPENSES AGAINST THAT INCOME. THEREFORE, SHE ARGUED THAT THE CASE OF ZOOM COMMUNICATION APPLIED BY LD. CIT(A) SQUARELY FIT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT EXPENSES CLAIMED BY ASSESSEE WERE NOT BONA FIDE AS SHE WAS AN EMPLOYEE AND THE GROSS RECEIPTS IN THE FORM OF SALARY WERE SPLIT ONLY TO LOWER THE INCOME-TAX EFFECT. THE CAS E LAWS RELIED UPON BY LD. AR, ARE DISTINGUISHABLE FROM THE FACTS AND CIRCUMST ANCES OF THE CASE. IN THE CASE OF M/S JMD ADVISORS (P) LTD., THE ASSESSING OF FICER HAD TREATED THE CLAIM OF BUSINESS INCOME OF ASSESSEE AS CAPITAL GAI N AND THERE WAS NO CONCEALMENT OF INCOME AS ALL NECESSARY PARTICULARS WERE FILED AND THE MATTER RELATED TO DIFFERENCE IN OPINION WITH RESPECT TO HE ADS OF INCOME. SIMILARLY, IN THE OTHER CASE OF BHARTESH JAIN RELIED UPON BY L D. AR, THE FACTS WERE DIFFERENT WHEREIN THE ASSESSING OFFICER HAD HELD SP ECULATION LOSS AS BUSINESS LOSS OF THE ASSESSEE. THE PRESENT CASE IS NOT A ME RE CASE OF CHANGE OF HEAD I.T.A .NO.5738/DEL/2011 6 OF INCOME BUT IT IS A CASE OF DELIBERATE ATTEMPT TO EVADE INCOME TAX BY SPLITTING THE SALARY INCOME INTO SALARY INCOME AND PROFESSIONAL INCOME AND THEN CLAIMING EXP. AGAINST PROFESSIONAL INCOME. I N VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED OPINION THAT LD. CIT(A) HAS R IGHTLY UPHELD THE PENALTY AND WE DO NOT SEE ANY REASON TO INTERFERE IN THE MA TTER. 8. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE AS SESSEE IS DISMISSED. SD/- SD/- (I.C.SUDHIR) (T.S.KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31/08/2012 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI