Alang Auto & General Engineering, New Delhi V. DCIT, Circle- 2, Ghaziabad

ITA 6368/DEL/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7665 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 16-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed dividend; Revenue expenditure; Set aside
• Section: 271(1)(c); 143(3); 2(22)(e)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI A BEN CH, NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI LALIET KUMAR, JUDICIAL MEMB ER ITA NO. 6368/DEL/2017 [ASSESSMENT YEAR: 2010-11] ALANG AUTO & GENERAL ENGINEERING VS. THE DY. C.I .T 4, NAVYUG MARKET CIRCLE 2 GHAZIABAD GHAZIABAD PAN : AABCA 9279 R [APPELLANT] [RESPONDENT] DATE OF HEARING : 22.07.2019 DATE OF PRONOUNCEMENT : 22 .07.2019 ASSESSEE BY : SHRI SATYAJEET GOYAL , CA REVENUE BY : SMT. RINKU SINGH, SR. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, WITH THIS APPEAL THE ASSESSEE HAS CHALLENGED THE OR DER OF THE CIT(A), GHAZIABAD DATED 05.07.2017 PERTAINING TO A. Y 2010-11. 2 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT T HE CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 3. ROOTS FOR LEVY OF PENALTY LIE IN THE ASSESSMENT ORDER DATED 19.02.2013 FRAMED U/S 143(3) OF THE ACT. THE ASSES SEE IS IN THE BUSINESS OF SHIP BREAKING AND TRADING OF FERROUS AN D NON-FERROUS METAL. RETURNED INCOME OF RS. 1,22,23,430/- WAS ASSESSED A T RS. 1,96,20,289/- AFTER MAKING THE ADDITION ON ACCOUNT OF FEES PAID TO ROC RS. 7,500/-, ADDITION ON ACCOUNT OF PRIOR PERIOD EX PENSES RS. 31,710/- AND DEEMED DIVIDEND U/S 2(22)(E) AT RS. 73,57,649/- . 4. PENAL PROCEEDINGS WERE SEPARATELY INITIATED U/S 271(1)(C) OF THE ACT AND PENALTY WAS WORKED OUT AT RS. 34,28,445/-, BEING 150% OF THE TAX SOUGHT TO BE EVADED. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A ) AND THE CIT(A) REDUCED THE PENALTY TO 100% OF THE TAX SOUGHT TO BE EVADED INSTEAD OF 150%. 6. BEFORE US, THE LD. AR, AT THE VERY OUTSET, STATE D THAT THE ADDITION ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE A CT AMOUNTING TO 3 RS. 73,57,649/- WAS DELETED BY THE TRIBUNAL. THE L D. COUNSEL FOR THE ASSESSEE SUPPLIED COPY OF THE ORDER OF THE TRIBUNAL . 7. IN SO FAR AS THE REMAINING TWO ADDITIONS ARE CON CERNED, THE LD. AR STATED THAT THE ASSESSING OFFICER HAS DISALLOWED THE EXPENDITURE WITHOUT DOUBTING THE GENUINENESS OF THE EXPENDITURE AND, THEREFORE, NO PENALTY IS LEVIABLE IN THE LIGHT OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS LTD 322 ITR 158. 8. PER CONTRA, THE LD. DR STRONGLY SUPPORTED THE FI NDINGS OF THE ASSESSING OFFICER. IT IS THE SAY OF THE LD. DR THA T THE ASSESSEE WAS FULLY AWARE THAT FILING FEES PAID TO THE ROC WAS OF CAPIT AL IN NATURE AND YET IT CLAIMED IT AS REVENUE EXPENDITURE. THE LD. DR F URTHER STATED THAT SIMILAR IS THE CASE WITH PRIOR PERIOD EXPENSES WHEN THE ASSESSEE WAS AWARE THAT PRIOR PERIOD EXPENDITURE CANNOT BE CLAIM ED DURING THE YEAR UNDER CONSIDERATION. 9. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW. IN SO FAR AS THE ADDITION OF RS . 73,57,649/- IS CONCERNED, WE FIND THAT THE CO-ORDINATE BENCH IN IT A NO. 4 3574/DEL/2014 VIDE ORDER DATED 03.04.2018 HAS DELET ED THE ADDITION. THE RELEVANT FINDINGS OF THE CO-ORDINATE BENCH READ AS UNDER: 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE ARE IN COMPLETE AG REEMENT WITH THE AVERMENTS OF THE LD. AR THAT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT WOULD NOT BE ATTRACTED IN THIS CASE AS THE ASSESSEE COMPANY IS NOT A SHAREHOLDER IN THE COMPAN Y M/S DAYAL STEELS PVT. LTD WHO HAD GIVEN ADVANCE TO THE ASSESS EE COMPANY AND WE NOTE THAT THE ASSESSEE COMPANY'S NAME DOES N OT FIGURE IN THE LIST OF THE SHAREHOLDERS. THE LD. CIT (A) AS WELL AS THE ASSESSING OFFICER HAVE NOT DISPUTED THAT THE ASSESS EE COMPANY WAS NOT A SHAREHOLDER IN M/S DAYAL STEELS PVT. LTD. WE FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASS ESSEE BY THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANKITECH (P) LTD . (SUPRA). WE ALSO NOTE THAT THIS JUDGMENT OF THE HON'BLE DELHI HIGH COURT WAS LATER FOLLOWED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. A.R. MAGNETICS PVT. LTD . REPORTED IN 220 TAXMAN 209 (DEL) WHEREIN THE HON'BL E DELHI HIGH COURT HELD THAT THE PROVISIONS RELATING TO DEE MED DIVIDEND COULD NOT BE INVOKED MERELY BECAUSE THE SHAREHOLDER S WERE COMMON. IN THIS CASE, IT IS ITA NO. 3574/DEL/2014 A SSESSMENT YEAR 2010-11 SEEN THAT THE SOLE GROUND FOR MAKING T HE ADDITION WAS THAT MRS RANI CHAWDHARI WAS A COMMON SHAREHOLDE R IN BOTH THE COMPANIES. THEREFORE, WE ARE UNABLE TO CONCUR W ITH THE 5 FINDINGS OF THE LD. CIT (A) ON THIS ISSUE AND RESPE CTFULLY FOLLOWING THE RATIO OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANKITECH (P) LTD . (SUPRA), WE SET ASIDE THE ORDER OF THE LD. CIT (A) ON THIS ISSUE AND DIRECT THE ASSESS ING OFFICER TO DELETE THIS ADDITION. 10. SINCE THE FOUNDATION HAS BEEN REMOVED, THE SUPE R STRUCTURE MUST FALL. 11. COMING TO THE REMAINING ADDITIONS OF RS. 7,500/ - BEING ROC FEE AND RS. 31,710/- BEING PRIOR PERIOD EXPENSES, THERE IS NO QUARREL THAT THE GENUINENESS OF THESE EXPENSES HAVE NOT BEEN QUE STIONED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER, WHILE FR AMING THE ASSESSMENT ORDER WAS OF THE CONSIDERED VIEW THAT THESE EXPENSE S CANNOT BE ALLOWED ONE BEING OF CAPITAL IN NATURE, AND THE O THER BEING NOT PERTAINING TO THE YEAR UNDER CONSIDERATION. BUT IN NEITHER CASE, THE GENUINENESS HAS BEEN QUESTIONED. 12. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD. [SUPRA] HAS HELD AS UNDER: 6 A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD 'PARTICULARS ' USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND T O BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY O F FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASS ESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISH ING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHIN G WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAU SE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PA RTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE I NACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETA ILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRE CT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. 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 QUESTION OF INVITING THE PENALTY UNDER SECTION 271 (1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING IN ACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INAC CURATE PARTICULARS. 7 13. ADVERTING TO THE FACTS OF THE CASE, IN THE LIGH T OF THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT, WE DO NOT FIND ANY MERIT IN THE LEVY OF PENALTY U/S 271(1)(C) OF T HE ACT IN SO FAR AS THESE TWO DISALLOWANCES OF EXPENSES ARE CONC ERNED. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DEL ETE THE PENALTY SO LEVIED U/S 271(1)(C) OF THE ACT. 21. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO. 6368/DEL/2017 IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 22.07. 2019. SD/- SD/- [ LALIET KUMAR ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22 ND JULY, 2019 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 8 ASST. REGISTRAR, ITAT, NEW DELHI DATE OF DICTATION 2 2 . 0 7 . 2 0 1 9 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 2 2 . 0 7 . 2 0 1 9 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 2 2 . 0 7 . 2 0 1 9 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS 2 2 . 0 7 . 2 0 1 9 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 2 2 . 0 7 . 2 0 1 9 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS 2 2 . 0 7 . 2 0 1 9 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 2 3 . 0 7 . 2 0 1 9 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER