M/s. Bentex Control & Switchgear Co., Delhi V. ACIT, New Delhi

ITA 681/DEL/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2797 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 06-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K K JAISWAL
• Keywords: Principle of natural justice; Onus to prove
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI R. S. SYAL, ACCOUNTANT MEMBER AND SMT SUCHITRA KAMBLE , JUDICIAL MEMBER I.T.A .NO.- 681/DEL/2014 (ASSESSMENT YEA R-2009-10) M/S. BENTEX CONTROL & SWITCHGEAR CO. C/O M/S. BHATIA BEHL & ASSOCIATES, 26/8, OLD RAJINDER NAGAR, DELHI 110 060 AAAFB6531D (APPELLANT) VS ACIT CIRCLE 27(1), D- BLOCK, ROOM NO. 218, VIKAS BHAWAN, I. P. ESTATE, NEW DELHI (RESPONDENT) APPELLANT BY SH. K. K. JAISWAL, DR RESPONDENT BY SHRI R. S. SINGHVI , CA ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED AGAINST THE ORDER DATED 21/11/ 2013 PASSED BY CIT (A)-XXIV, NEW DELHI. THIS APPEAL IS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10. 2. THE GROUNDS OF APPEAL ARE AS FOLLOWS:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE ORDER OF THE LD. CIT(A) IS BAD IN LAW AS WELL AS ON THE F ACTS OF THE CASE. DATE OF HEARING 07.01.2016 DATE OF PRONOUNCEMENT 07.01.2016 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) GROSSLY ERRED IN SUSTAINING THE PENALTY OF R S. 5,28,365/- U/S. 271(1)(C) OF THE INCOME TAX ACT IMP OSED BY THE LD AO. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) GROSSLY ERRED IN NOT PROVIDING ANY MEANINGFU L AND EFFECTIVE OPPORTUNITY TO THE ASSESSEE AND PASSING T HE ORDER AGAINST THE PRINCIPAL OF NATURAL JUSTICE 4. THAT THE APPELLANT CRAVE LEAVE TO TAKE ADDITIONA L GROUND OR GROUNDS OF APPEAL OR TO ALTER OR VARY ANY OR ALL TH E GROUNDS OF APPEAL BEFORE OR AT THE TIME OF BEARING OF THE A PPEAL. 3. THE ASSESSEE IS A PARTNERSHIP FIRM CARRYING ON T HE BUSINESS OF MANUFACTURING, SALE AND PURCHASE OF ELECTRICAL GOOD S SUCH AS ELECTRICAL MOTORS, STARTERS, ELECTRICAL METER, MCB AND OTHER ELECTRICAL GOODS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR 2009-10 ON 29.09.2009 DECL ARING INCOME OF RS. 46,49,170/-. THE CASE OF THE ASSESSEE WAS SE LECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT THE ASSES SING OFFICER NOTED THAT THE ASSESSEE HAD MADE THE INVESTMENT OF RS. 5.50 CRORES IN THE SHARES, THE INCOME FROM WHICH IF RECEIVED IN THE SHAPE OF DIVIDEND IS EXEMPT. ACCORDINGLY, THE ASSESSEE WAS A SKED TO EXPLAIN AS TO WHY THE INTEREST SHOULD NOT BE DISALLOWED BY INVOKING THE PROVISIONS OF SECTION 14A READ WITH RULE 8D OF THE INCOME TAX RULES. IN REPLY THE ASSESSEE SUBMITTED BEFORE THE A SSESSING OFFICER THAT THE INTEREST AND OTHER EXPENSES DISALLOWABLE U NDER RULE 8D COMES TO RS. 17,09,920/- AND OFFERED THE SAME FOR A DDITION IN THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERA TION. THE SCRUTINY ASSESSMENT OF THE ASSESSEE FIRM WAS COMPLE TED U/S. 143(3) OF THE ACT ON 27.12.2011 WHEREIN THE ASSESSING OFFI CER ASSESSED THE INCOME OF THE ASSESSEE AT RS. 65,01,950/- AFTER MAK ING THE ADDITIONS OF RS. 17,09,920/- ON ACCOUNT OF DISALLOW ANCE OF INTEREST AND RS. 1,42,860/- OUT OF DISCOUNT AND REBATE. THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS U/S. 271 (1)(C) OF THE INCOME TAX ACT, 1961 ON THE GROUND THAT THE ASSESSE E HAS FURNISHED INACCURATE PARTICULARS OF INCOME BY THE C LAIM OF EXCESS EXPENSES ON ACCOUNT OF INTEREST IN ITS P & L ACCOUN T WITHOUT MAKING DEDUCTIONS OF RS. 17,09,920/- U/S 14A READ W ITH RULE 8D OF THE INCOME TAX RULES. DURING THE COURSE OF PENAL TY PROCEEDINGS, THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT IT HAD VOLUNTARILY OFFERED THE AMOUNT OF RS.17,09,920/- FO R DISALLOWANCE UNDER RULE 8D READ WITH SECTION 14A OUT OF THE EXPE NSES ACTUALLY INCURRED BY THE ASSESSEE. HENCE THE ASSESSEE HAS NE ITHER CONCEALED THE PARTICULARS OF SUCH INCOME. THE ASSESSEE HAS MA INTAINED PROPER BOOKS OF ACCOUNTS IN THE NORMAL COURSE OF BUSINESS. THESE BOOKS OF ACCOUNTS WERE SUBJECT TO TAX AUDIT BY AN INDEPENDEN T CHARTERED ACCOUNTANT. THE AUDITED BALANCE SHEET, P & L ACCOUN T, AUDIT REPORT AND FORM 3CD WERE DULY FILED DURING THE ASSESSMENT PROCEEDINGS. NO DEFECT OR DEFICIENCY WAS FOUND OR POINTED OUT BY THE ASSESSING OFFICER IN THE BOOKS OF ACCOUNT OR IN OTHER DOCUMEN TS, DETAILS OR RECORD FILED BY THE ASSESSEE. THE ASSESSEE HAS NEIT HER SUPPRESSED ANY INCOME NOR CLAIMED ANY BOGUS OR FALSE EXPENDITU RE. ALL THE EXPENDITURE DEBITED TO THE P & L ACCOUNT WERE GENUI NE EXPENSES INCURRED FOR THE PURPOSE OF BUSINESS DURING THE NOR MAL COURSE OF BUSINESS. THEREFORE, THE ASSESSEE SUBMITTED THAT TH E ASSESSEE DISCHARGED INITIAL BURDEN OF PROOF ON HIS SHOULDERS . HOWEVER, THE ASSESSING OFFICER REJECTED THE AFORESAID EXPLANATIO N AND WAS OF THE VIEW THAT THE OFFER OF DISALLOWANCE OF RS. 17,09,92 0/- WAS NOT VOLUNTARY BY THE ASSESSEE. THE ASSESSEE OFFERED THE DISALLOWANCE ONLY WHEN POINTED OUT DURING THE COURSE OF ASSESSME NT ABOUT THE APPLICATION OF RULE 8D READ WITH SECTION 14A. ACCOR DINGLY, THE ASSESSING OFFICER IMPOSED THE PENALTY OF RS. 5,28,3 60/- U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961. 4. BEING AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE HOL DING THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME AND WAS LIABLE FOR PENALTY UNDER CLAUSE A OF EXPLANATION 1 TO SEC TION 271(1)(C) OF THE INCOME TAX ACT, 1961. 5. THE AR SUBMITTED THAT THE ASSESSEE MAINTAINED PR OPER BOOKS OF ACCOUNTS AND THE SAME WERE SUBJECT TO TAX AUDIT. THE ASSESSEE SUBMITTED AUDITED BALANCE SHEET, P & L ACCOUNT, AUD IT REPORT AND FORM 3CD WERE DULY FILED DURING THE ASSESSMENT PROC EEDINGS. NO DEFECT OR DEFICIENCY WAS FOUND OR POINTED OUT BY TH E ASSESSING OFFICER IN THE BOOKS OF ACCOUNT OR IN OTHER DOCUMEN TS, DETAILS OR RECORD FILED BY THE ASSESSEE. DURING THE COURSE OF PENALTY PROCEEDINGS, THE ASSESSEE VOLUNTARILY OFFERED THE A MOUNT OF RS.17,09,920/- FOR DISALLOWANCE UNDER RULE 8D READ WITH SECTION 14A OF THE ACT OUT OF THE EXPENSES ACTUALLY INCURRE D BY THE ASSESSEE. HENCE THE ASSESSEE NEVER CONCEALED THE PA RTICULARS OF SUCH INCOME AND NOT CLAIMED ANY BOGUS OR FALSE EXPE NDITURE. 6. THE DR RELIED UPON THE PENALTY ORDER AS WELL AS THE CIT(A)S ORDER. 7. WE HAVE PERUSED ALL THE RECORDS AND HEARD BOTH T HE PARTIES. IT IS PERTINENT TO NOTE THAT THE ASSESSEE SUBMITTED AU DITED BALANCE SHEET, P & L ACCOUNT, AUDIT REPORT AND FORM 3CD WER E DULY FILED DURING THE ASSESSMENT PROCEEDINGS. THERE WAS NO DEF ECT OR DEFICIENCY WAS FOUND OR POINTED OUT BY THE ASSESSIN G OFFICER IN THE BOOKS OF ACCOUNT OR IN OTHER DOCUMENTS, DETAILS OR RECORD FILED BY THE ASSESSEE. DURING THE COURSE OF PENALTY PROCEEDI NGS, THE ASSESSEE VOLUNTARILY OFFERED THE AMOUNT OF RS.17,09 ,920/- FOR DISALLOWANCE UNDER RULE 8D READ WITH SECTION 14A OF THE ACT OUT OF THE EXPENSES ACTUALLY INCURRED BY THE ASSESSEE. THU S, THE ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTICULARS OR CLA IMED ANY BOGUS EXPENDITURE. THE ASSESSING OFFICER AS WELL AS THE C IT(A) WAS INCORRECT IN HOLDING THAT THERE WAS INACCURATE PART ICULARS FURNISHED BY THE ASSESSEE. 8. IN RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 7TH OF JANUARY 2016. SD/- SD/- (R.S. SYAL) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 07/01/2016 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT R EGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 07.01.2016 PS 2. DRAFT PLACED BEFORE AUTHOR 07.01.2016 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2016 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 07.01.2016 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 07.01.2016 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.