BT Telecom India Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 605/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58570 (ITAT-DELHI)
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 30-01-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 03-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS ANUSHA KHURANA
• Assessee Lawyers: ARIJIT CHAKRAVORTY
• Keywords: Initiation of penalty proceedings; Reasonable cause; Corroborative evidences; Capital receipt; Revenue expenditure
• Section: 69C; 234B; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA NO.605/DEL/2011 ASSESSMENT YEAR : 2007-08 BT TELECOM INDIA PVT. LTD., 11 TH FLOOR, EROS CORPORATE TOWER, OPP. INTERNATIONAL TRADE TOWER, NEHRU PLACE, NEW DELHI. PAN : AACCB7236Q VS. ITO, WARD 3 (1), CR BUILDING, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ARIJIT CHAKRAVORTY, AR REVENUE BY : MRS. ANUSHA KHURANA, SR.DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT (A) DATED 18 TH NOVEMBER, 2010 FOR ASSESSMENT YEAR 2007-08. THE GROUNDS OF APPEAL READ AS UNDER:- THE APPELLANT RESPECTFULLY SUBMITS THAT BASED ON THE FA CTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSI ONER OF INCOME TAX (APPEALS)-VI, NEW DELHI ['CIT(A)'] WHILE PASSING THE ORDER UNDER SECTION 250 OF THE INCOME TAX ACT, 1961 (' ACT'), HAS ERRED IN: 1. UPHOLDING THE ACTION OF THE INCOME TAX OFFICER, WA RD 3(1), C.R BUILDING, NEW DELHI ('LEARNED ASSESSING OFFICER ') OF TREATING EXPENSE OF RS 277,400 (BEING 50% OF THE OPERATING AND OTHER EXPENSES CHARGED TO THE PROFIT AND LOSS ACCOUNT) AS INC OME OF THE APPELLANT UNDER THE PROVISIONS OF SECTION 69C OF THE ACT ON THE BASIS THAT SOURCE OF THE SAID EXPENDITURE COULD NOT B E ITA NO.605/DEL/2011 2 EXPLAINED IN THE ABSENCE OF BOOKS OF ACCOUNT AND OTHER SUPPORTING EVIDENCE IN RESPECT OF THE SAID EXPENDITURE. 1.1 IN DOING SO, THE LEARNED CIT(A) HAS COMPLETELY I GNORED THAT: (A) BOOKS OF ACCOUNTS AND OTHER SUPPORTING DOCUMENTS ON LY DEMONSTRATE THE INCURRENCE OF THE SAID EXPENDITURE, WHIC H HAS ALREADY BEEN ADMITTED AS A FACT IN HER IMPUGNED APPELL ATE ORDER AND IS DULY REFLECTED IN THE AUDITED FINANCIAL STATEMENTS OF THE APPELLANT. (B) WITHOUT PREJUDICE TO (A) ABOVE, THE APPELLANT HAS NO T CLAIMED ANY DEDUCTION/ BENEFIT IN RESPECT OF THE SAID EXPENDITUR E SINCE IT DID NOT COMMENCE ITS BUSINESS DURING THE SUBJECT ASSESS MENT YEAR. (C) SOURCE OF THE SAID EXPENDITURE IS EVIDENT FROM THE AUDITED FINANCIAL STATEMENTS OF THE APPELLANT, THAT REFLECT EQUITY S HARE CAPITAL INVESTMENT OF RS 99,900,000 MADE BY M/S JUBILA NT ENPRO PVT LTD (RS 25,900,000) AND M/S BT GLOBAL COMMUNICATIO NS (MAURITIUS) LTD (RS 74,000,000) DURING THE SUBJECT ASSE SSMENT YEAR. (D) HER OFFICE HAS HERSELF ACCEPTED THAT NATURE AND SOU RCE OF THE ABOVE INVESTMENT MADE IN THE EQUITY SHARE CAPITAL OF THE APPELLANT DURING THE SUBJECT ASSESSMENT YEAR HAS BEEN COMPLETELY EXPLAINED BY THE APPELLANT. 2. CONFIRMING THAT FAILURE TO PRODUCE BOOKS OF ACCOUNTS / COPIES OF BILLS & VOUCHERS BY THE APPELLANT WAS A VAL ID REASON FOR THE LEARNED ASSESSING OFFICER TO INVOKE THE PROVISIONS OF SECTION 144 OF THE ACT FOR THE SUBJECT ASSESSMENT YEAR, WITHOUT APPRECIATING THAT THE APPELLANT HAD FILED DULY AUDITED FI NANCIAL STATEMENTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS A ND HAD NOT CLAIMED ANY DEDUCTION/ BENEFIT IN RESPECT OF AN Y EXPENDITURE CHARGED TO THE PROFIT AND LOSS ACCOUNT. 3. UPHOLDING THE COMPUTATION OF INTEREST UNDER SECTION 23 4B OF THE ACT, IN RESPECT OF THE ADJUSTMENT OF RS 277,400 UN DER SECTION 69C OF THE ACT. 4. DISMISSING THE APPELLANT'S GROUND AS REGARDS INITIA TION OF PENALTY PROCEEDINGS BY THE LEARNED ASSESSING OFFICER UNDER SECTION 271(L)(B) AND 271 (L)(C) OF THE ACT. ALL OF THE ABOVE GROUNDS OF APPEAL ARE INDEPENDENT AN D WITHOUT PREJUDICE AND NOTWITHSTANDING EACH OTHER. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, VARY, OMIT O R SUBSTITUTE ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL, A T ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. ITA NO.605/DEL/2011 3 THE APPELLANT PRAYS THAT ANY CONSEQUENTIAL RELIEF, TO WH ICH THE APPELLANT MAY BE ENTITLED UNDER LAW IN PURSUANCE OF THE AFORESAID GROUNDS OF APPEAL, OR OTHERWISE, MAY THUS B E GRANTED. 2. DURING THE COURSE OF HEARING, IT WAS OBSERVED THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS U/S 144. T HE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNT BEFORE THE ASSESSI NG OFFICER. FROM THE PROFIT & LOSS ACCOUNT THE ASSESSING OF FICER OBSERVED THAT IT SHOWED EXPENDITURE OF ` 5,54,799/- UNDER THE HEAD OPERATING AND OTHER EXPENSES. AS THE ASSESSEE HAD FAILED TO PRODUC E ITS BOOKS OF ACCOUNT AND VOUCHERS WITHOUT REASONABLE CAUSE, THE ASSESSING OFFICER OBSERVED THAT THE SOURCE OF PAYMENT OF THESE E XPENDITURES COULD NOT BE VERIFIED. HE, THEREFORE, DISALLOWED 50 % OF THE SAID EXPENDITURE. 3. BEFORE THE CIT (A), IT WAS SUBMITTED THAT SINCE THE ASSESSEE HAD NOT COMMENCED ITS BUSINESS DURING THE YEAR, NO TAX DEDU CTION WAS CLAIMED FOR ANY REVENUE EXPENDITURE CHARGED TO ITS B OOKS OF ACCOUNT, THEREFORE, COPIES OF BOOKS OF ACCOUNT/VOUCHERS FOR VAL IDATING THE EXPENSES BOOKED UNDER THE HEAD OPERATING AND OTHER E XPENSES ARE NOT RELEVANT. IN THE ALTERNATIVE, IT WAS SUBMITTED T HAT THE ALLEGATION OF THE ASSESSING OFFICER IS THAT THE SOURCE OF PAYMENT OF TH E EXPENSES COULD NOT BE VERIFIED. IT WAS SUBMITTED THAT THE ASSESSEE WAS NOT PROVIDED WITH THE OPPORTUNITY TO EXPLAIN THE SOURCE OF INCOME THROUGH WHICH THESE EXPENSES WERE INCURRED. IT WAS SUBMITTED TH AT THE ASSESSEE WAS HAVING SHARE CAPITAL RECEIPTS OF ` 10 CRORE I N THE YEAR ITSELF. THEREFORE, THE SOURCE OF INCURRING THESE EXPE NDITURES CANNOT BE DOUBTED. LEARNED CIT (A) HAS CONFIRMED THE ABOVE AD DITION ON THE GROUND THAT IN THE ABSENCE OF DETAILS AND DOCUMENTS OF THOSE EXPENDITURES AND IN THE ABSENCE OF OTHER RELEVANT REC ORDS, THE ASSESSEE HAS NOT LINKED UP THE SOURCE OF THESE EXPENDITURE S WITH THE ITA NO.605/DEL/2011 4 SHARE CAPITAL, HENCE, THE ASSESSING OFFICER WAS RIGHT IN MAKING THE DISALLOWANCE. 4. AFTER NARRATING THE FACTS, IT WAS SUBMITTED BY THE LEARNED AR THAT SECTION 69-C COULD NOT BE INVOKED TO MAKE THE AFORE MENTIONED DISALLOWANCE. THE ASSESSEE WAS HAVING AMPLE FINANCE TO M EET THOSE EXPENDITURES, THEREFORE, THE DISALLOWANCE HAS WRONGLY BEEN MADE AND SUSTAINED. 5. ON THE OTHER HAND, RELYING UPON THE ORDER OF ASSESSI NG OFFICER AND CIT (A), IT WAS PLEADED BY THE LEARNED DR THAT I N THE ABSENCE OF BOOKS OF ACCOUNT AND OTHER DETAILS THE DISALLOWANCE HA S RIGHTLY BEEN SUSTAINED BY LEARNED CIT (A). 6. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENTI ONS HAVE CAREFULLY BEEN CONSIDERED. WE FOUND SUBSTANCE IN THE PROPOSITION OF THE REVENUE THAT IN THE ABSENCE OF DETAILS AND OTHER RELEVANT RECORDS AND BOOKS OF ACCOUNT, THE ASSESSEE CANNOT CLAIM THAT DISA LLOWANCE HAS WRONGLY BEEN MADE. THEREFORE, CONSIDERING THE ENTIR ETY OF THE FACTS AND IN THE INTEREST OF JUSTICE, WE RESTORE THIS ISSUE TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO GIVE THE ASSESSEE A R EASONABLE OPPORTUNITY OF HEARING TO PRODUCE EVIDENCE IN THIS R EGARD AND IF THE ASSESSEE IS ABLE TO PRODUCE EVIDENCE IN THIS REGARD AND T HAT EVIDENCE SUPPORT THE CASE OF THE ASSESSEE, THEN, HE WILL GIVE PROP ER RELIEF TO THE ASSESSEE. WE DIRECT ACCORDINGLY. 7. IN THE GROUNDS OF APPEAL LEVY OF INTEREST U/S 234B AND INITIATION OF PENALTY PROCEEDINGS ARE ALSO CHALLENGED. SO AS IT RELATES TO THE LEVIABILITY OF INTEREST U/S 234B, WE ARE OF THE OPINI ON THAT IT IS MANDATORY AND HAS TO BE CALCULATED WITH REFERENCE TO DETERMINED INCOME. SINCE WE HAVE RESTORED THE FIRST ISSUE TO THE FILE OF THE ITA NO.605/DEL/2011 5 ASSESSING OFFICER, WE DIRECT THE ASSESSING OFFICER TO RE-CO MPUTE INTEREST U/S 234B AS PER THE PROVISIONS OF LAW. THIS GRO UND IS ALLOWED FOR STATISTICAL PURPOSES. 8. SO FAR AS IT RELATES TO THE GROUND RELATING TO INI TIATION OF PENALTY PROCEEDINGS, WE ARE OF THE OPINION THAT INITIATION I TSELF CANNOT BE CHALLENGED UNLESS THE PENALTY IS LEVIED. THE ASSESSEE HAS A RIGHT TO CHALLENGE THE LEVY OF PENALTY IN CASE THE PENALTY IS LEVIED ON THE ASSESSEE. THEREFORE THIS GROUND IS PREMATURE AND IS DISMISSE D. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AFORESAID. THE ORDER PRONOUNCED IN THE OPEN COURT ON 03.02.20 12. SD/- SD/- [K.G. BANSAL] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 03.02.2012. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES