Bhavya Business Strategies (P) Ltd., New Delhi V. ITO, Ward-2(4), New Delhi

ITA 6079/DEL/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2192 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 28-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S ANANT
• Keywords: Business income; Capital expenditure
• Section: 143(3); 14A; 263; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 6079/DEL/2017 ASSESSMENT YEAR: 2008-09 BHAVYA BUSINESS STRATEGIES VS. ITO, WARD 2(4), PVT. LTD. C.R. BUILDING, 306, VIKRAM TOWERS, NEW DELHI RAJENDRA PLACE, NEW DELHI 110 008 (PAN: AAACB5307M) (ASSESSEE) (RESPONDENT) ASSESSEE BY : SH. V.P. GUPTA, ADV. & SH. ANUNAV KUMAR, ADV. REVENUE BY : SH. B.S. ANANT, SR. DR. ORDER THIS APPEAL IS FILED BY ASSESSEE AGAINST THE ORDE R DATED 24.5.2017 PASSED BY THE LD. CIT(A)-2, NEW DELHI REL ATING TO ASSESSMENT YEAR 2008-09. 2. THE GROUNDS RAISED READ AS UNDER:- 1. THAT THE LD. CIT(A) ERRED IN UPHOLDING PENALTY U/S. 271(1)(C) OF THE INCOME TAX ACT, OF RS. 3,26,483/- WITHOUT APPRECIATING:- A) THE FACTS AND THE CASE LAW SUBMITTED BY THE APPELLANT; 2 B) THAT ORDER U/S. 143(3) OF THE ACT HAD EARLIER BEEN PASSED ACCEPTING RETURNED INCOME AND ADDITIONS HAVE BEEN MADE ONLY IN THE ORDER PASSED SUBSEQUENTLY U/S. 263/143(3) OF THE ACT; C) THAT THE APPELLANT HAS BEEN REGULARLY FOLLOWING SAME ACCOUNTING PRACTICE AS REGARDS LOSS OF RS. 9,49,398/- INCURRED ON SHARE TRANSACTIONS; D) THAT SIMILAR ADDITION IN RESPECT OF LOSS ON SHARES HAD BEEN DELETED BY CIT(A) IN APPEAL FOR AYT 2007-08; E) THAT DISALLOWANCE OF RS. 1,02,886/- U/S. 14A WITH REFERENCE TO DIVIDEND INCOME OF RS. 4,300/- HAD BEEN WRONGLY MADE AND UPHELD BY CIT(A). F) THAT IN ANY CASE THE APPELLANT HAD MADE FULL DISCLOSURE IN RESPECT OF ADDITIONS MADE BY THE AO AND UPHELD BY CIT(A). 2. THAT THE ORDER PASSED BY CIT(A) IS BAD IN LAW IN VIEW OF THE FACTS AND LEGAL POSITION AND, THEREFOR E, SAME DESERVES TO BE SET ASIDE AND PENALTY NEEDS TO BE CANCELLED. 3 THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR MODIFY ANY OF THE GROUNDS OF APPEAL AT ANY TIME HEREINAFTER. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FI LED RETURN OF INCOME DECLARING AT RS. 67,780/- ON 29.9.2008 WHICH WAS PROCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTE R REFERRED AS THE ACT). THE ORIGINAL ASSESSMENT WAS COMPLETED U/S. 14 3(3) OF THE ACT ON 29.7.2010 AT INCOME OF RS. 67,780/-. LATER ON, THE MATTER WAS REVIEWED BY THE LD. CIT, DELHI-I AND ORDER U/S. 263 OF THE ACT WAS PASSED ON 8.1.2013. THE ASSESSMENT ORDER WAS SET ASIDE TO BE DONE DENOVO AFTER TAKING ALL THE MATERIAL OF FACTS ON RE CORD BY THE AO. THE LD. CIT HAS OBSERVED THAT THE PROVISION OF SECTION 14A OF THE INCOME TAX ACT READ WITH RULE 8D OF INCOME TAX RULES HAD N OT BEEN EXAMINED PROPERLY. HE FURTHER OBSERVED THAT THE E XPENDITURE CLAIMED BY THE ASSESSEE OF RS. 9,49,398/- ON ACCOUNT OF LOS S ON SALE OF INVESTMENT SHOULD NOT HAVE BEEN ALLOWED AS THIS WA S BEING THE CAPITAL EXPENDITURE. WITH REGARD TO CLAIM OF EXEMPT ION U/S. 10 OF THE ACT OF RS. 4300/-, HE NOTED THAT IT SHOULD NOT HAV E BEEN ALLOWED AS ASSESSEE ITSELF SURRENDERED THE SAME FOR TAXATION V IDE HIS LETTER DATED 14.12.2012. ACCORDINGLY, FRESH NOTICE WAS ISSUED T O THE ASSESSEE AND FINALLY THE CASE WAS COMPLETED U/S. 143(3)/263 OF T HE ACT ON 31.1.2014 AT AN INCOME OF RS. 11,24,364/- BY MAKING VARIOUS ADDITIONS. IN APPEAL PROCEEDINGS, THE AO OBSERVED THAT SINCE THE 4 ASSESSEE HAS FILED THE INACCURATE PARTICULARS, PENA LTY PROCEEDINGS U/S. 271(1)(C) WAS ALSO INITIATED ON 31.1.2014. IN COMPL IANCE OF THE INITIATION OF PENALTY, NEITHER ANY REPLY WAS FILED NOR ANY ADJOURNMENT LETTER WAS FILED. ANOTHER SHOW CAUSE NOTICE DATED 9 .7.2014 WAS ALSO ISSUED TO THE ASSESSEE AND ASKED TO COMPLIANCE BY 1 8.2.2014 U/S. 271(1)(C), BUT ON THIS DATE ALSO, NO REPLY WAS FILE D BY THE ASSESSEE. HENCE, THE AO OBSERVED THAT ASSESSEE HAS NO EXPLANA TION TO OFFER FOR FURNISHING INACCURATE PARTICULARS OF HIS INCOME. H E FURTHER OBSERVED THAT IT IS A GROSS OR WILFUL NEGLECT ON THE PART OF THE ASSESSEE IN NOT DISCLOSING THE CORRECT INCOME WITHIN THE MEANING OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE I.T. ACT. HENCE, HE IMPOSE D THE PENALTY OF RS. 3,26,483/- @ 100% VIDE HIS ORDER DATED 24.7.20 14 PASSED U/S. 271(1)(C) OF THE ACT. AGAINST THE PENALTY ORDER, THE ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 24.5.2018 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. AGG RIEVED WITH THE IMPUGNED ORDER, THE ASSESSEE IS IN APPEAL BEFORE TH E TRIBUNAL. 3. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER U/S. 143(3) OF THE ACT HAD EARLIER BEEN PASSED ACCEPTI NG RETURNED INCOME AND ADDITIONS HAVE BEEN MADE ONLY IN THE ORDER PA SSED SUBSEQUENTLY U/S. 263/143(3) OF THE ACT. IT WAS FUR THER SUBMITTED THAT THE ASSESSEE HAS BEEN REGULARLY FOLLOWING SAME ACCOUNTING PRACTICE AS REGARDS LOSS OF RS. 9,49,398/- INCURRED ON SHARE TRANSACTIONS; THAT SIMILAR ADDITION IN RESPECT OF L OSS ON SHARES HAD 5 BEEN DELETED BY THE LD. CIT(A) IN APPEAL FOR AY 20 07-08 AND DISALLOWANCE OF RS. 102886/- U/S. 14A WITH REFERENC E TO DIVIDEND INCOME OF RS. 4300/- HAD BEEN WRONGLY MADE AND UPH ELD BY THE LD. CIT(A) AND THAT THE ASSESSEE HAD MADE FULL DISCLOSU RE IN RESPECT OF ADDITIONS MADE BY THE AO AND UPHELD BY THE LD. CIT( A). IT WAS FURTHER SUBMITTED THAT SINCE IN AY 2007-08, LD. CI T(A) HAD UPHELD THE CONTENTION OF THE ASSESSEE COMPANY THAT LOSS W AS IN THE NATURE OF BUSINESS LOSS WHERE LD. CIT(A) IN AY 2008-09 HAS HE LD THAT IT WAS LOSS ON INVESTMENT, IT CAN BE SAID TO BE A DEBATABLE ISS UE AND THEREFORE, PENALTY CANNOT BE LEVIED. HENCE, THE PENALTY IN DI SPUTE MAY BE DELETED. 4. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS, ESPECIALLY THE ORDER OF THE AUTHORITIES BELOW. IT IS NOT DISP UTED THAT CONSISTENTLY THE COMPANY HAS BEEN CONSIDERING INCOME / LOSS FROM TRADING ACTIVITIES IN THE NATURE OF BUSINESS INCOME OR LOSS . THE POSITION AS SUCH HAS ALREADY BEEN ACCEPTED IN ASSESSMENTS PRIOR TO AY 2007-08. IN AY 2007-08 ADDITION WAS MADE BY THE AO BUT LD. C IT(A) HAS DELETED THE ADDITION CONSIDERING THE NATURE OF ACTIVITIES A S BUSINESS ACTIVITIES IN THE CASE OF THE COMPANY. SIMILARLY, THE AO IN ORIGINAL ASSESSMENT ORDER PASSED IN AY 2008-09 HAD ACCEPTED THE COMPUTA TION MADE BY THE COMPANY, AS WERE ACCEPTED IN EARLIER YEARS. ACC ORDINGLY, AN ORDER 6 WAS SUBSEQUENTLY PASSED U/S. 143(3)/263 OF THE ACT CONSIDERING THE AMOUNT AS CAPITAL LOSS. I NOTE THAT LD. CIT(A) IN A PPEAL OF THE ASSESSEE ON MERITS FOR AY 2008-09 HAS UPHELD THE ADDITION ON LY FOR THE REASON THAT THE COMPANY HAD NOT SHOWN TOTAL AMOUNT OF SALE CONSIDERATION IN PROFIT AND LOSS ACCOUNT BUT ONLY NET AMOUNT HAS BE EN REFLECTED IN THE PROFIT AND LOSS ACCOUNT. SHE HAS HELD THAT THE AC TIVITIES WERE NOT IN THE NATURE OF TRADING ACTIVITIES. IT WAS ALSO NOTED THAT THE TRANSACTIONS HAVE BEEN BEFORE THE AO IN EARLIER YEARS AS WELL AS IN THE YEAR UNDER APPEAL. THE AMOUNT OF INCOME / LOSS HAS BEEN SEPARA TELY AND SPECIFICALLY REFLECTED IN THE P&L ACCOUNTS. THEREF ORE, IT CANNOT BE ALLEGED THAT COMPANY HAD CONCEALED THE PARTICULAR S OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. IT IS ALSO NOTED THAT SINCE AY 2007-08 LD. CIT(A) HAD UPHELD THE CONTENTION OF THE ASSESSEE THAT LOSS WAS IN THE NATURE OF BUSINESS LOSS WHERE LD. C IT(A) IN AY 2008-09 HAS HELD THAT IT WAS LOSS ON INVESTMENT, IT CAN BE SAID TO BE A DEBATABLE ISSUE AND THEREFORE, PENALTY CANNOT BE LE VIED. IN VIEW OF ABOVE, AO OBSERVED THAT ASSESSEE FURNISHED INACCUR ATE PARTICULARS OF ITS INCOME AND IS LIABLE FOR PENALTY U/S 271(1)(C), WHICH DID NOT ESTABLISH FROM THE FACTS AND CIRCUMSTANCES OF THE C ASE THAT HOW THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IT S INCOME. HOWEVER, SECTION 271(1)(C) POSTULATES IMPOSITION OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS AND CONCEALMENT OF INCOME. IN THIS REGARD, I DRAW MY SUPPORT FROM THE DECISION OF THE HON'BLE AP EX COURT IN THE 7 CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2 010) 322 ITR-158 (SC) WHEREIN THE HON'BLE SUPREME COURT HAS HELD TH AT 'WHERE THERE IS NO FINDINGS THAT ANY DETAILS SUPPLIED BY THE ASSESS EE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE, THERE IS NO QUESTION OF INVITING THE PENALTY U/SEC. 271(1)(C) OF THE ACT. A MERE MAKING A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NO T AMOUNT OF FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING A IN ACCURATE PARTICULARS OF INCOME. AS THE ASSESSEE HAS FURNISHED ALL THE DE TAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COU LD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY, BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WA S NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINI ON, ATTRACT THE PENALTY U/SEC. 271(1)(C). IF WE ACCEPT THE CONTENTION OF TH E REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTE D BY THE ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PE NALTY U/SEC. 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLAT URE'. 6. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS A ND RESPECTFULLY FOLLOWING THE AFORESAID PRECEDENT, I AM OF THE CON SIDERED VIEW THAT THE ASSESSEE HAS NOT FURNISHED INACCURATE PARTICULARS O F INCOME. UNDER THESE CIRCUMSTANCES, IN MY VIEW THE PENALTY IN DISP UTE IS TOTALLY 8 UNWARRANTED AND DESERVE TO BE DELETED. ACCORDINGLY , I DELETE THE PENALTY IN DISPUTE MADE U/S. 271(1)(C) OF THE I.T. ACT AND CANCEL THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE IN DIS PUTE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED ON 16/11/2018. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE 16/11/2018 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES