Piyush Shelters India Pvt. Ltd., Faridabad V. DCIT, Faridabad

ITA 6820/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2886 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 28-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Keywords: Revenue expenditure; Capital expenditure

Judgement Text

1 | P A G E IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI B.P.JAIN, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 6820/DEL /2015 ASSTT. YEAR: 2009-10 PIYUSH SHELTERS INDIA PRIVATE LIMITED, PIYUSH GLOBAL 1, PLOT NO. 5, YMCA CHOWK, NH-2, MAIN MATHURA ROAD, FARIDABAD. VS DCIT, CIRCLE-II, FARIDABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI S.K. JAIN, SR. DR DATE OF HEARING : 09.11.2017 DATE OF PRONOUNCEMENT: 27.12.2017 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER DATED 11/09/2015 PASSED BY THE LD. CIT (APPEALS)-3, GURGAON WHEREIN VIDE THE IMPUGNED ORDER, THE LD. CIT (APPEA LS) HAS CONFIRMED THE IMPOSITION OF PENALTY OF RS. 19,800/- UNDER SECTION 271 (1) (C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CA LLED THE ACT) FOR ASSESSMENT YEAR 2009-10. ITA NO. 6820/DEL/2015 ASSESSMENT YEAR 2009-10 2 | P A G E 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 1,22 ,80,582/- AND AN ADDITION OF RS. 66,000/- WAS MADE IN THE ASSESSMENT ORDER PASSED SECTION 143 (3) OF THE ACT BY DISALLOWING THE EXPEN SES RELATING TO ISSUE OF SHARES FOR INCREASE IN THE AUTHORISED SHAR E CAPITAL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND THAT THE ASSESSEE HAD CLAIMED EXPENSES OF RS. 3,60,960/- UNDER THE HEAD MISCELLANEOUS EXPENSES AND ON VERIFICATION IT WAS FOUND THAT THE ASSESSEE HAD DEBITED TOTAL EXPENSES OF RS. 3,30,000/- ON ACCOUNT OF ISSUE OF SHARES OUT OF WHICH RS. 2,64,000/- HAD BEEN ADDED BACK IN THE COMPUTATION OF THE TOTAL INCOME AND THE BALANCE AMOUNT OF RS. 6 6,000/- WAS NOT ADDED BACK TO THE COMPUTATION WHICH RESULTED IN EXC ESS CLAIM OF EXPENSES OF RS. 66,000/-. SUBSEQUENTLY, PENALTY PRO CEEDINGS WERE ALSO INITIATED UNDER SECTION 271 (1) (C) OF THE ACT AND PENALTY OF RS. 19,800/- WAS IMPOSED WHICH WAS CONFIRMED BY THE LD. CIT (APPEALS). NOW, THE ASSESSEE HAS APPROACHED THE ITAT AND HAS R AISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE ORDER PASSED BY THE CIT (APPEAL) GURGAON ON DISMISS ING OF APPEAL AGAINST U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 IS BAD IN LAW . ITA NO. 6820/DEL/2015 ASSESSMENT YEAR 2009-10 3 | P A G E 2. THAT ON THE FACTS AND CIRCUMSTANCES, OF THE CA SE CIT (A) ORDER IS BAD IN LAW AS APPELLANT DISCLOSED FULL PAR TICULARS OF INCOME AND THE CASE OF APPELLANT IS COVERED BY EXPL ANATION I TO SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 . 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, CIT(A) FAILED TO NOTICE THAT EXPLANATION OR APPELLANT WAS BONA FIDE. 3. NONE WAS PRESENT ON BEHALF OF THE ASSESSEE AND N O ADJOURNMENT APPLICATION HAS ALSO BEEN RECEIVED ON BEHALF OF THE ASSESSEE. HOWEVER, LOOKING INTO THE FACTS OF THE CASE, WE PROCEED TO H EAR THE APPEAL EX PARTE QUA THE ASSESSEE. 4. THE LD. DEPARTMENTAL REPRESENTATIVE PLACED RELIA NCE ON THE ORDERS OF THE AUTHORITIES BELOW AND VEHEMENTLY ARGU ED THAT THE PENALTY HAD BEEN RIGHTLY IMPOSED AS THE EXPENSES ON ISSUE OF SHARES WAS CAPITAL EXPENDITURE AND THE ASSESSEES ACT OF C LAIMING THE SAME AS REVENUE EXPENDITURE WAS WITHOUT ANY BONA FIDE . IT WAS SUBMITTED THAT THE PENALTY IMPOSED BE CONFIRMED. 5. WE HAVE HEARD THE DEPARTMENTAL REPRESENTATIVE AN D HAVE ALSO PERUSED THE MATERIAL ON RECORD. THE FACTS OF THE CA SE ARE UNDISPUTED. THE PENALTY HAS BEEN IMPOSED FOR FURNISHING INACCUR ATE PARTICULARS OF INCOME. UNDOUBTEDLY, THERE HAS BEEN A FAILURE ON TH E PART OF THE ASSESSEE IN ADDING BACK THE AMOUNT OF RS. 66,000/- TO THE ITA NO. 6820/DEL/2015 ASSESSMENT YEAR 2009-10 4 | P A G E COMPUTATION OF HIS INCOME. HOWEVER, IT IS NOT THE C ASE OF THE DEPARTMENT THAT THE ASSESSEE HAD FURNISHED INACCURA TE PARTICULARS BECAUSE THE RELEVANT DETAILS WERE VERY MUCH ON RECO RD AND FORMED PART OF THE RETURN OF INCOME OF THE ASSESSEE. AT THIS JUNCTURE IT MAY BE APPOSITE TO REFER TO THE DECISION OF THE HONBLE SU PREME COURT IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS (P.) LTD . REPORTED IN [2010] 322 ITR 158/189 TAXMAN 322, WHEREIN THE HONBLE COURT, WHILE INTERPRETING THE PROVISIONS OF SECTION 271(1)( C ) OF THE ACT, HAS HELD THAT A GLANCE AT THE SAID PROVISION WOULD SUGGEST THAT IN ORDER TO B E COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF T HE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHE D INACCURATE OF HIS INCOME. IN THE FACTS OF THAT CASE, THE COURT FOUND THAT IT WAS NOT A CASE OF CONCEALMENT OF THE PARTICULARS OF THE INCOME, NO R WAS IT THE CASE OF THE REVENUE EITHER. HOWEVER, THE COUNSEL FOR THE RE VENUE SUGGESTED THAT BY MAKING AN INCORRECT CLAIM FOR THE EXPENDITU RE ON INTEREST, THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF IN COME. THE COURT OBSERVED THAT IT HAD TO ONLY SEE AS TO WHETHER IN T HAT CASE, AS A MATTER OF FACT, THE ASSESSEE HAD GIVEN INACCURATE PARTICUL ARS. THE COURT NOTED THAT AS PER LAW LEXICON, THE MEANING OF THE WORD 'P ARTICULAR' IS A ITA NO. 6820/DEL/2015 ASSESSMENT YEAR 2009-10 5 | P A G E DETAIL OR DETAILS (IN THE PLURAL SENSE); THE DETAIL S OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACCOUNT. THEREFORE, THE WORD ' PARTICULAR' USED IN SECTION 271(1)( C ) WOULD EMBRACE THE MEANING OF THE DETAILS OF THE CLAIM MADE. THE COURT FURTHER OBSERVED THAT IN WEBSTER'S DICTIONARY, THE WORD 'INACCURATE' HAS BEEN DEFINED AS: 'NOT ACCURAT E, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN I NACCURATE STATEMENT, COPY OR TRANSCRIPT.' THE COURT OBSERVED THAT READIN G THE WORDS 'INACCURATE' AND 'PARTICULARS' IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCUR ATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. THE C OURT NOTED THAT IT WAS AN ADMITTED POSITION THAT NO INFORMATION GIVEN IN THE RETURN WAS FOUND TO BE INCORRECT OR INACCURATE. IT WAS NOT AS IF ANY STATEMENT MADE OR ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUAL LY INCORRECT AND ACCORDINGLY, HELD THAT, PRIMA FACIE , THE ASSESSEE COULD NOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. THE COURT REP ELLED THE CONTENTION RAISED BY THE COUNSEL FOR THE REVENUE THAT 'SUBMITT ING AN INCORRECT CLAIM IN LAW FOR THE EXPENDITURE ON INTEREST WOULD AMOUNT TO GIVING INACCURATE PARTICULARS OF SUCH INCOME'. THE HONBLE APEX COURT HELD THAT IN ORDER TO EXPOSE THE ASSESSEE TO THE PENALTY UNLESS ITA NO. 6820/DEL/2015 ASSESSMENT YEAR 2009-10 6 | P A G E THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, M AKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISH ING INACCURATE 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. 5.1 REVERTING TO THE FACTS OF THE PRESENT CASE, THE ASSESSING OFFICER, IN THE PENALTY ORDER, HAS OBSERVED THAT THE ASSESSEEE HAS FURNISHED INACCURATE PARTICULARS. THE AO HAS HELD THAT THE AC T OF NOT ADDING BACK THE IMPUGNED AMOUNT TO THE COMPUTATION OF INCO ME WAS AN ACT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LD. CIT (A) HAS ALSO CONFIRMED THE IMPOSITION OF PENALTY. HOWEVER, W ITH REGARD TO THE PROVISIONS OF SECTION 271(1)(C ) OF THE ACT PER TAINING TO PENALTY, THE HONBLE APEX COURT HAS AUTHORITATIVELY LAID DOW N THAT MAKING OF A CLAIM BY THE ASSESSEE WHICH IS NOT SUSTAINABLE WI LL NOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. IN CIT VS. RE LIANCE PETROPRODUCTS PVT. LTD. (SUPRA), THE HONBLE APEX C OURT HAS HELD AS FOLLOWS: ITA NO. 6820/DEL/2015 ASSESSMENT YEAR 2009-10 7 | P A G E A GLANCE AT THIS PROVISION WOULD SUGGEST THAT IN O RDER TO BE COVERED, THERE HAS TO BE CONCEALMENT OF PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICU LARS OF HIS INCOME. THE PRESENT IS NOT A CASE OF CONCEALMENT OF INCOME. THA T IS NOT THE CASE OF THE REVENUE EITHER. HOWEVER, THE LD. COUNSEL FOR THE RE VENUE SUGGESTED THAT BY MAKING INCORRECT CLAIM FOR THE EXPENDITURE ON INTER EST, THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. AS PER LAW LEXICON, THE MEANING OF THE WORD 'PARTICULAR' IS A DETAIL OR DET AILS (IN PLURAL SENSE); THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACC OUNT. THEREFORE, THE WORD 'PARTICULARS' USED IN THE SECTION 271 (1) (C) WOULD EMBRACE THE MEANING OF THE DETAILS OF THE CLAIM MADE. IT IS AN ADMITTED POSITI ON IN THE PRESENT CASE THAT NO INFORMATION GIVEN IN THE RETURN WAS FOUND TO BE INCORRECT OR INACCURATE. IT IS NOT AS IF ANY STATEMENT MADE OR ANY DETAIL SUPPL IED WAS FOUND TO BE FACTUALLY INCORRECT. HENCE, AT LEAST, PRIMA FACIE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. THE LE ARNED COUNSEL ARGUED THAT 'SUBMITTING AN INCORRECT CLAIM IN LAW FOR THE EXPEN DITURE ON INTEREST WOULD AMOUNT TO GIVING INACCURATE PARTICULARS OF SUCH INC OME.' WE DO NOT THINK THAT SUCH CAN BE THE INTERPRETATION OF THE CONCERNE D WORDS. THE WORDS ARE PLAIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESSEE T O THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY P ROVISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. ITA NO. 6820/DEL/2015 ASSESSMENT YEAR 2009-10 8 | P A G E 5.2 ALTHOUGH, BOTH THE LOWER AUTHORITIES HAVE HELD THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME, ON AN OVERALL CONSIDERATION ON THE FACTS, SUCH A VIEW IS NOT TENA BLE IS THE PRESENT APPEAL THEREFORE, RESPECTFULLY FOLLOWING THE JUDGME NT OF THE HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS PV T. LTD. (SUPRA) WE DEEM IT FIT TO SET ASIDE THE ORDER OF THE LD. CI T (APPEALS) AND DIRECT THE AO TO DELETE THE PENALTY. 6. IN THE FINAL RESULT, APPEAL OF THE ASSESSEE STAN DS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 27 TH DECEMBER, 2017. SD/- SD/- (B.P. JAIN ) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH DECEMBER, 2017 DRAGON COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGI STRAR