GAUTAM AHUJA, MUMBAI V. DCIT 10(1)4), MUMBAI

ITA 6622/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1803 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 15-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATISH RAJORE
• Assessee Lawyers: REEPAL TRAALSHAWALA
• Keywords: Reasonable cause
• Section: 271(1)(c); 143(3); 11

Judgement Text

1 IN THE INCOME-TAX APPELLATE TRIBUNAL G BENCH MUMB AI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 6622/MUM/2017 (ASSESSMENT YEAR 2010-11 ) GAUTAM AHUJA A/201, RAJPIPLA, OPP. STANDARD CHARTERED BANK, LINKING ROAD, SANTACRUZ (W), MUMBAI-400054 . PAN: AGAPA3935E VS. ITO WARD-10(1)(4), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 APPELLANT RESPONDE NT APPELLANT BY : SHRI REEPAL TRAALSHAWALA (C.A) RESPONDENT BY : SHRI SATISH RAJORE (SR. DR) DATE OF HEARING : 11.06.2019 DATE OF PRONOUNCEMEN T : 11.06.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-17 [THE LD. CIT(A)], MUMBAI DA TED 02.08.2017 FOR ASSESSMENT YEAR 2010-11. THE ASSESSEE HAS RAISED T HE FOLLOWING GROUNDS OF APPEAL: PENALTY U/S.271(1)(C) CONFIRMED OF RS.3,10,926/- MA Y BE DELETED 1. THE LD. CIT(A) ERRED IN CONFIRMING THE LEVY OF P ENALTY U/S.271(1)(C) OF THE ACT TO THE EXTENT OF RS.3,10,926/- BY UPHOLDING THE LEVY OF PENALTY IN RESPECT OF DISALLOWANCE OF EXPENSES OF RS.10,36,420/- INCURRED FOR APPELLANT'S OWN EDUCATION AT HARWARD BUSINESS SCHOOL WITHOUT APPREC IATING THAT THERE WAS NO INACCURATE PARTICULARS OF INCOME FURNISHED AND HENC E, THE PENALTY RESTRICTED ON THIS DISALLOWANCE IS UNJUSTIFIED AND LIABLE TO BE D ELETED. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT MER ELY BECAUSE THE DISALLOWANCE OF EXPENSES IS CONFIRMED BY THE LD. CIT(A) IN QUANT UM ORDER AND NO FURTHER APPEAL IS FILED IN RESPECT OF THE SAME, THE PENALTY COULD NOT BE AUTOMATICALLY ITA NO. 6622 MUM 2017-GAUTAM AHUJA 2 CONFIRMED AND HENCE, THE PENALTY RESTRICTED TO RS.3 ,10,926/- IS WITHOUT ANY JUSTIFICATION AND LIABLE TO BE DELETED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS DI RECTOR OF M/S KEEPSADE PROPERTIES PRIVATE LIMITED, FILED HIS RETURN OF INC OME FOR ASSESSMENT YEAR 2010-11 ON 06.10.2010 DECLARING TOTAL INCOME AT RS. 69,84,169/-. THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORD ER UNDER SECTION 143(3) ON 30.11.2012, BESIDES THE OTHER ADDITION AND DISAL LOWANCES DISALLOWED EDUCATION EXPENSES PAID TO HARWARD BUSINESS SCHOOL OF RS. 12,86,675/-. THE EXPENSES WERE DISALLOWED HOLDING THAT THERE IS NO N EXUS WITH THE INCOME AGAINST WHICH EXPENDITURE IS CLAIMED. THE ASSESSING OFFICER INITIATED PENALTY UNDER SECTION 271(1)(C) FOR FURNISHING INACCURATE P ARTICULARS. ON APPEAL BEFORE THE LD. CIT(A), THE ADDITION/DISALLOWANCE WA S RESTRICTED TO RS. 10,36,420/- VIDE ORDER DATED 17.01.2013 . ON RESPEC T OF ORDER OF LD. CIT(A) IN QUANTUM ASSESSMENT, THE ASSESSING OFFICER ISSUED SHOW-CAUSE NOTICE DATED 19.02.2015. THE ASSESSEE FILED ITS REPLY DATED 15.0 3.2015. IN THE REPLY, THE ASSESSEE STATED THAT PENALTY PROCEEDING IS TIME BAR RED. THE REPLY OF ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER HOLDING THAT AS PER THE PROVISION OF SECTION 275, THE PENALTY IS IMPOSABLE WITHIN ONE YE AR FROM THE END OF FINANCIAL YEAR DURING WHICH THE APPELLATE ORDER IS RECEIVED. THEREFORE, THE PENALTY ORDER HAS TO BE PASSED ON OR BEFORE 31.03.2 015. THE ASSESSING OFFICER PASSED THE PENALTY ORDER ON 31.03.2015 AND LEVIED THE PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED. THE ASSESSING OFFICER LEVIED THE ITA NO. 6622 MUM 2017-GAUTAM AHUJA 3 PENALTY OF RS. 3,86,003/- UNDER SECTION 271(1)(C). ON FURTHER APPEAL BEFORE THE LD. CIT(A), THE ACTION OF ASSESSING OFFICER IN LEVYING THE PENALTY WAS CONFIRMED. THE LD. CIT(A) WHILE CONFIRMING THE PENA LTY ORDER CONCLUDED THAT ASSESSEE HIMSELF HAS GONE FOR HIGHER STUDIES TO HAR WARD BUSINESS SCHOOL FOR REAL ESTATE AND FINANCE. THE ASSESSEE HAS NOT PROVE D THAT IN FACT THE EXPENDITURE WAS INCURRED FOR THE PURPOSE OF BUSINES S OF THE ASSESSEE AND THAT THE EXPENDITURE REMAINED UNEXPLAINED AND THAT THE P ROVISION OF EXPLANATION (1) TO SECTION 271(C) IS CLEARLY ATTRACTED. THUS, F URTHER AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT A PPEAL BEFORE US. 3. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) F OR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. A R OF THE ASSESSEE SUBMITS THAT THE ASSESSEE HAS NEITHER CONCEALED THE PARTICU LARS OF INCOME NOR FURNISHED INACCURATE PARTICULAR THEREOF. THE ASSESS EE HAS CLAIMED CERTAIN EXPENSES INCLUDING OF EXPENSES INCURRED ON HIS EDUC ATION. THE EXPENSES INCURRED BY THE ASSESSEE WERE NOT ALLOWED BY ASSESS ING OFFICER. MERE DISALLOWANCE OF CLAIM WHICH IS NOT ACCEPTABLE BY AS SESSING OFFICER WILL AUTOMATICALLY LEAD TO LEVY OF PENALTY. IN SUPPORT O F HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF RELIANC E PETROCHEMICALS PRODUCTS [322 ITR 158 (SC)]. 4. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE (DR) FOR THE REVENUE SUPPORTED THE ORDER OF LOWER AUTHORITIES. THE LD. D R FURTHER SUBMITS THAT THE ITA NO. 6622 MUM 2017-GAUTAM AHUJA 4 ADDITION/DISALLOWANCE MADE BY ASSESSING OFFICER WAS CONFIRMED BY LD. CIT(A). THE ASSESSEE HAS ACCEPTED THE ADDITION/DISA LLOWANCE AND NO FURTHER APPEAL IS FILED BEFORE THE TRIBUNAL. THE DISALLOWAN CE MADE BY ASSESSING OFFICER ATTAINS FINALITY. THEREFORE, THE PENALTY IS LEVIABLE ON THE DISALLOWANCE. THE ASSESSEE HAS NOT SHOWN ANY REASONABLE CAUSE WHI LE FILING REPLY TO THE SHOW-CAUSE ISSUED BY ASSESSING OFFICER. 5. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THERE IS N O DISPUTE THAT THE ASSESSEE DEBITED THE EXPENDITURE OF RS. 12,86,675/- INCURRED ON ACCOUNT OF EDUCATION. THE ASSESSING OFFICER DISALLOWED THE ENTIRE EXPENSE S. HOWEVER, ON APPEAL BEFORE THE LD. CIT(A), THE DISALLOWANCE WAS RESTRIC TED TO RS. 10,36,420/-. THE ASSESSING OFFICER WHILE MAKING DISALLOWANCE CON CLUDED THAT THE EXPENSES CLAIMED BY THE ASSESSEE ARE PERSONAL IN NATURE AND CANNOT BE LINKED TO THE INCOME EARNED. THERE IS NO FINDING OF THE ASSESSIN G OFFICER THAT THE PARTICULARS OF EXPENSES CLAIMED BY THE ASSESSEE ARE INACCURATE. THE LD. AR FOR THE ASSESSEE VEHEMENTLY ARGUED THAT MERE DISALLOWAN CE OF THE EXPENSES WOULD NOT AUTOMATICALLY LEAD TO LEVY OF PENALTY. 6. THE HONBLE SUPREME COURT IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS (P.) LTD. (SUPRA) HELD THAT A GLANCE AT THE SAID PROVISION WOULD SUGGEST THAT I N ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALM ENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE COURT OBS ERVED THAT IT HAD TO ONLY ITA NO. 6622 MUM 2017-GAUTAM AHUJA 5 SEE AS TO WHETHER IN THAT CASE, AS A MATTER OF FACT , THE ASSESSEE HAD GIVEN INACCURATE PARTICULARS. THE COURT NOTED THAT AS PER LAW LEXICON, THE MEANING OF THE WORD 'PARTICULAR' IS A DETAIL OR DETAILS (IN THE PLURAL SENSE); THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACCOUNT. TH EREFORE, THE WORD 'PARTICULAR' USED IN SECTION 271(1)( C ) WOULD EMBRACE THE MEANING OF THE DETAILS OF THE CLAIM MADE. THE COURT FURTHER OBSERV ED THAT IN WEBSTER'S DICTIONARY, THE WORD 'INACCURATE' HAS BEEN DEFINED AS: 'NOT ACC URATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS ; AS AN INACCURATE STATEMENT, COPY OR TRANSCRIPT.' THE COURT OBSERVED THAT READIN G THE WORDS 'INACCURATE' AND 'PARTICULARS' IN CONJUNCTION, THEY MUST MEAN TH E DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORREC T, NOT ACCORDING TO TRUTH OR ERRONEOUS. THE COURT NOTED THAT IT WAS AN ADMITTED POSITION THAT NO INFORMATION GIVEN IN THE RETURN WAS FOUND TO BE INC ORRECT OR INACCURATE. IT WAS NOT AS IF ANY STATEMENT MADE OR ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT AND ACCORDINGLY, HELD THAT, PRIMA FACIE , THE ASSESSEE COULD NOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. T HE COURT REPELLED THE CONTENTION RAISED BY THE COUNSEL FOR THE REVENUE TH AT 'SUBMITTING AN INCORRECT CLAIM IN LAW FOR THE EXPENDITURE ON INTEREST WOULD AMOUNT TO GIVING INACCURATE PARTICULARS OF SUCH INCOME'. THE COURT H ELD THAT IN ORDER TO EXPOSE THE ASSESSEE TO THE PENALTY UNLESS THE CASE IS STRI CTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY ANY STR ETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE ITA NO. 6622 MUM 2017-GAUTAM AHUJA 6 PARTICULARS. THEREFORE, IT IS OBVIOUS THAT IT MUST BE SHOWN THAT THE CONDITIONS UNDER SECTION 271(1)( C ) MUST EXIST BEFORE THE PENALTY IS IMPOSED. THE COU RT FURTHER OBSERVED THAT THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BECAUSE THAT IS THE ONLY DOCU MENT, WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF INCOME. 7. IN VIEW OF THE ABOVE FACTUAL AND LEGAL DISCUSSION, WE ARE OF THE VIEW THAT MERE DISALLOWANCE OF THE EXPENSES CLAIMED BY THE AS SESSEE WOULD NOT LEAD TO LEVY OF THE PENALTY. IN THE RESULT THE GROUNDS OF A PPEAL RAISED BY THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 /06/2019. SD/- SD/- M. BALAGANESH, PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 11 .06.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR G BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI