Smt. Aabhadevi Agrawal, Burhanpur V. Income Tax Officer, Burhanpur

ITA 628/Ind/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4188 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 25-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N AGRAWAL; PANKAJ MOGRA A RS
• Keywords: Earning of tax free income
• Section: 143(3); 14A; 27

Judgement Text

[ITA 628/IND/2017] [SMT. ABHADEVI AGRAWAL, BURHANPUR] , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.628/IND/2017 ASSESSMENT YEAR: 2010-11 SMT. ABHADEVI AGRAWAL , 82, CHOWK BAZAR, BURHANPUR / VS. ITO, BURHANPUR ( APPELLANT ) ( REVENUE ) P.A. NO. ADAPA0122A APPELLANT BY SHRI S.N. AGRAWAL & SHRI PANKAJ MOGRA, A.RS RESPONDENT BY SHRI YOGESH MISHRA, DR DATE OF HEARING: 18.10.2018 DATE OF PRONOUNCEMENT: 31.10.2018 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER O F THE CIT(A)-II, INDORE DATED 8.6.2017 PERTAINING TO TH E ASSESSMENT YEAR 2010-11. ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: [ITA 628/IND/2017] [SMT. ABHADEVI AGRAWAL, BURHANPUR] 2 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY AS LEVIED BY THE LD. A.O. U/ S 271(1)(C) OF THE INCOME TAX ACT ON ACCOUNT OF FURNISHING OF INACCURATE PARTICUL ARS OF INCOME EVEN WHEN THE ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTICULA RS. HENCE, THE VERY BASIS OF LEVY OF PENALTY WAS WRONG, THE SAME NOW REQUIRES TO BE CANCELLED IN FULL. WITHOUT PREJUDICE TO THE ABOVE 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY AS LEVIED BY THE A.O. U/S 27 1(1)(C) OF THE INCOME TAX ACT ON DISALLOWANCE AS MADE U/S 14A OF THE ACT OF RS.1, 83,889/- EVEN WHEN ON THE FACTS OF THE PRESENT CASE, THE SAME IS NOT JUSTIFIE D. 3. THE ASSESSEE RESERVES ITS RIGHT TO ADD, MODIFY OR A MEND THE GROUNDS OF APPEAL AS AND WHEN REQUIRED. 2. BRIEFLY STATED FACTS ARE THAT CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLE D AS THE ACT) WAS FRAMED VIDE ORDER DATED 12.3.2013. WH ILE FRAMING THE ASSESSMENT, THE A.O. MADE ADDITION ON ACCOUNT OF CESSATION OF LIABILITY AND ADDITION ON ACCO UNT OF INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT. THE A.O. ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF TH E ACT. SUBSEQUENTLY, THE A.O. VIDE ORDER DATED 23.12.2015 LE VIED PENALTY OF RS.9,63,740/- ON THESE TWO ADDITIONS. THE ASSESSEE AGGRIEVED BY THIS, PREFERRED AN APPEAL BEFORE L D. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS, PARTL Y [ITA 628/IND/2017] [SMT. ABHADEVI AGRAWAL, BURHANPUR] 3 ALLOWED THE APPEAL. THEREBY, THE LD. CIT(A) DELETED T HE PENALTY IN RESPECT OF ADDITION MADE U/S 41(1) OF THE A CT AS IN QUANTUM PROCEEDINGS, SAME WAS DELETED BY THE TRIBUNAL. HOWEVER, THE ADDITION MADE BY INVOKING PROVISIONS OF SECTION 14A OF THE ACT OF RS.1,83,889 /- WAS RETAINED. AGAINST THIS, THE ASSESSEE IS IN PRESENT AP PEAL. 3. GROUND NO.1 OF THE ASSESSEES APPEAL READS AS UNDER: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY AS LEVIED BY THE LD. A.O. U/ S 271(1)(C) OF THE INCOME TAX ACT ON ACCOUNT OF FURNISHING OF INACCURATE PARTICUL ARS OF INCOME EVEN WHEN THE ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTICULA RS. HENCE, THE VERY BASIS OF LEVY OF PENALTY WAS WRONG, THE SAME NOW REQUIRES TO BE CANCELLED IN FULL. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE INITIATION OF PENALTY AND IMPOSITION THEREOF IS BAD IN LAW. HE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. THE SYNOPSIS OF WRITTEN SUBMISSIONS I S REPRODUCED AS UNDER: [ITA 628/IND/2017] [SMT. ABHADEVI AGRAWAL, BURHANPUR] 4 [ITA 628/IND/2017] [SMT. ABHADEVI AGRAWAL, BURHANPUR] 5 [ITA 628/IND/2017] [SMT. ABHADEVI AGRAWAL, BURHANPUR] 6 [ITA 628/IND/2017] [SMT. ABHADEVI AGRAWAL, BURHANPUR] 7 4. GROUND NO.1 OF THE ASSESSEES APPEAL IS AGAINST VALIDITY OF THE NOTICE ISSUED FOR INITIATION OF PENALT Y U/S 271(1)(C) OF THE ACT. IT IS STATED THAT THE INITIATIO N OF PENALTY IS BAD IN LAW AS THE INITIATION IS BASED ON FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT IS ALSO STATED THAT IN VIEW OF THE JUDGEMENT OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF SHRI S. CHANDRA SEKHAR VS. ACIT 336 OF 2016 DATED 15.2.2017, PENALTY CANNOT BE SUSTAINED. THE LD. COUNSEL FOR THE ASSESSEE HAS TAKEN US THROUGH THE PENALTY NOTICE, WHICH IS ENCLOSE D AT PAPER BOOK 33, WHEREIN THERE ARE THREE DEFAULTS MENTI ONED AND THE A.O. HAS FAILED TO TICK THE RELEVANT CLAUSE. 5. LD. D.R. OPPOSED THESE SUBMISSIONS. 6. UNDER THESE FACTS, WE FIND MERIT IN THE CONTENTIO N OF THE ASSESSEE THAT THE NOTICE ISSUED IS DEFECTIVE FOR INITIATION OF PENALTY AND IS AGAINST RATIO LAID DOWN BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565. THEREFORE, TH E PROCEEDING SO INITIATED IS AGAINST THE LAW LAID DOWN BY THE HON'BLE KARNATAKA HIGH COURT. ACCORDINGLY, GROUND NO. 1 IN THE APPEAL OF THE ASSESSEE IS ALLOWED. [ITA 628/IND/2017] [SMT. ABHADEVI AGRAWAL, BURHANPUR] 8 7. GROUND NO.2 IS AGAINST CONFIRMING THE PENALTY ON TH E DISALLOWANCE MADE U/S 14A OF THE ACT. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WR ITTEN SUBMISSIONS. IT IS STATED THAT THE ASSESSEE IS A PROPR IETOR OF M/S. NARENDRA COT FIBER INDUSTRIES AND DECLARED PROPRIETORSHIP CONCERN IN THE RETURN OF TOTAL INCOME OF RS.74,095,70/-. IN ADDITION TO THE ABOVE, THE ASSESSE E IS ALSO HAVING INCOME AS SHARE OF PROFIT FROM 3 DIFFERENT FIRMS. IT IS STATED THAT THE ASSESSEE IN THE RETURN OF TOTAL I NCOME HAS NOT CLAIMED ANY DEDUCTION AGAINST SHARE OF PROFIT FRO M FIRM. THESE FACTS CAN ALSO BE VERIFIED FROM THE COMPU TATION OF TOTAL INCOME. THE ASSESSEE HAS NOT ADVANCED ANY AMOUNT FROM HER PROPRIETORSHIP CONCERN AS A CAPITAL CONTRIBUTION IN ANY OF HER PARTNERSHIP FIRM. IT IS FURTHER STATED THAT IT IS INCUMBENT UPON THE A.O. TO REPORT T HE SPECIFIC REASONS WHETHER ANY EXPENSES IN CONNECTION W ITH CAPITAL CONTRIBUTION WERE DEBITED IN THE BOOKS OF ACCO UNTS OR NOT. A BEAR PERUSAL OF THE ASSESSMENT ORDER, IT IS CLEAR THAT NO SUCH FINDING WAS RECORDED BY THE A.O. IN RESP ECT OF EXPENSES SO INCURRED. LD. A.R. FURTHER REITERATED T HE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. [ITA 628/IND/2017] [SMT. ABHADEVI AGRAWAL, BURHANPUR] 9 8. LD. D.R. OPPOSED THE SUBMISSIONS AND SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS STATED BY THE ASSESSE E THAT THE A.O. BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT HAS NOT RECORDED SATISFACTION AS REQUIRED U/S 14A OF THE ACT. IT IS SUBMITTED THAT NO EXPENSES WERE INCU RRED FOR EARNING THE EXEMPT INCOME AND THEREFORE, THE A.O. WA S NOT JUSTIFIED IN INVOKING THE PROVISIONS AND IN LEVYING PENALTY. IN SUPPORT OF THIS, THE ASSESSEE HAS RELIED UPON THE DECISION OF THE COORDINATE BENCH IN THE CASE OF CIT V S. NALWA INVESTMENTS IN ITA NO.3805/DEL/2010. THE COORDINATE BENCH OF THIS TRIBUNAL HAS DECIDED THE ISSU E BY OBSERVING AS UNDER: [ITA 628/IND/2017] [SMT. ABHADEVI AGRAWAL, BURHANPUR] 10 [ITA 628/IND/2017] [SMT. ABHADEVI AGRAWAL, BURHANPUR] 11 [ITA 628/IND/2017] [SMT. ABHADEVI AGRAWAL, BURHANPUR] 12 [ITA 628/IND/2017] [SMT. ABHADEVI AGRAWAL, BURHANPUR] 13 10. THEREFORE, FOLLOWING THE DECISION OF THE TRIBU NAL, WE DIRECT THE A.O. TO DELETE THE PENALTY. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 31 . 10.2018. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 31/10/2018 VG/SPS COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE