Chase Buildcone Projects Pvt. Ltd., Ahmedabad V. The Income Tax Officer, Ward-1(3), Ahmedabad

ITA 69/AHD/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7168 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 04-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Assessee Lawyers: P D SHAH
• Keywords: Set aside
• Section: 271(1)(c)

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER . / I.T.A. NO. 69/AHD/2018 ( ASSESSMENT YEAR : 2011-12) CHASE BUILDCON PROJECTS PRIVATE LIMITED MEHTA LODHA & CO. CHARTERED ACCOUNTANTS, 105, SAKAR-1, NEAR GANDHIGRAM RAILWAY STATION, OFF. ASHRAM ROAD, AHMEDABAD - 380009 / VS. THE INCOME TAX OFFICER WARD 1(1)(3), AHMEDABAD ./ ./ PAN/GIR NO. : AABC1832B ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI P. D. SHAH, A.R. / RESPONDENT BY : SHRI S. K. DEV, SR.D.R. DATE OF HEARING 29/07/2019 !'# / DATE OF PRONOUNCEMENT 29/07/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS)-1, AHMEDABAD (CIT(A) IN SHORT), DATED 2 3.11.2017 ARISING ITA NO. 69/AHD/18 [CHASE BUILDCON PROJECTS PVT. LTD. VS. ITO] AY 2011-12 - 2 - IN THE PENALTY ORDER DATED 29.11.2016 PASSED BY THE ASSESSING OFFICER (AO) UNDER S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING AY 2011-12. 2. AS PER THE GROUNDS OF APPEAL, THE ASSESSEE HAS C HALLENGED THE IMPOSITION OF PENALTY OF RS.2,16,300/- UNDER S. 271 (1)(C) OF THE ACT. 3. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEAR NED AR FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE IS IN THE BU SINESS OF DEVELOPMENT OF PROPERTY AND IN CARRYING OUT THE SAI D BUSINESS, AN AMOUNT OF RS.7 LAKHS WAS DEPOSITED WITH DEBT RECOVE RY TRIBUNAL (DRT) AS MARGIN MONEY IN AN AUCTION TO BE CONDUCTED BY DRT FOR ACQUISITION OF PROPERTY AS CO-PARTICIPANT ALONG WIT H ONE SHRI SHAILESH PATEL. THE BID OF THE ASSESSEE WAS NOT ACCEPTED AN D CONSEQUENTLY, THE AFORESAID AMOUNT WAS REFUNDED BY THE DRT. THE TOTA L AMOUNT OF RS.22.50 LAKHS WAS DEPOSITED ORIGINALLY WHICH INCLU DED DEPOSIT OF RS.7 LAKHS MADE DIRECTLY BY THE ASSESSEE TO THE DRT AND THE REMAINING AMOUNT WAS DEPOSITED BY THE CO-PARTICIPAN T SHRI SHAILESH PATEL. HOWEVER, THE TOTAL AMOUNT OF RS.22.50 LAKHS WAS REFUNDED TO SHRI SHAILESH PATEL ON FAILURE OF AUCTION BID. THE ASSESSEE COULD NOT RECOVER THE AFORESAID AMOUNT OF RS.7 LAKHS FROM THE CO-PARTICIPANT AND CONSEQUENTLY BOOKED THE SAID AMOUNT AS LOSS ARI SING FROM BUSINESS OWING TO FAILURE OF SUCH RECOVERY. IN THE CIRCUMST ANCES, THE LEARNED AR SUBMITTED THAT THE CLAIM OF THE ASSESSEE TOWARDS REVENUE LOSS, WHILE MAY BE WRONG, BUT HOWEVER IS NOT ACTUATED BY ANY DISHONEST CONDUCT AND IS NOT MALAFIDE. IT WAS THUS CONTENDED THAT THE CASE OF THE ASSESSEE IS THUS GOVERNED BY THE DECISION OF HONBL E SUPREME COURT IN CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LIMITED (322 I TR 158) (SC); PRICE WATERHOUSE COOPERS VS. CIT (348 ITR 306 ) (SC) & BTX CHEMICALS PRIVATE LIMITED (288 ITR 196) (GUJ). ITA NO. 69/AHD/18 [CHASE BUILDCON PROJECTS PVT. LTD. VS. ITO] AY 2011-12 - 3 - 4. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THA T THE ASSESSEE HAS CLAIMED LOSS ON FORFEITURE OF RS.7 LAKHS WHICH IS MISLEADING. THE LEARNED DR FURTHER POINTED OUT THAT THE ASSESSEE HA S NOT MADE ANY ATTEMPT TO RECOVER THE MONEY AND THE FACT OF NON-RE COVERY FROM SHRI SHAILESH PATEL OR DRT REMAINS UNPROVED. THE LEARNE D DR FURTHER POINTED OUT THAT THE CO-ORDINATE BENCH OF ITAT IN Q UANTUM PROCEEDINGS HAS ALREADY OBSERVED THAT THE CLAIM OF THE ASSESSEE LACKS MERIT. CONSEQUENTLY, THE REVENUE WAS JUSTIFIED IN IMPOSING PENALTY. THE LEARNED DR THUS RELIED UPON THE ORDER OF THE AO AND THE CIT(A) FOR CONFIRMING THE PENALTY. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE IMPOSITION OF PENALTY UNDER S. 271(1)(C) OF THE ACT ON DISALLOWANCE OF EXPENDITURE OF RS.7 LAKHS CLAIMED BY THE ASSESSEE A S LOSS ON FORFEITURE FOR THE YEAR UNDER CONSIDERATION IS SUBJ ECT MATTER OF CONTROVERSY. IT IS THE CASE OF THE ASSESSEE THAT IT HAD GIVEN A PART OF BUSINESS ADVANCE AMOUNTING TO RS.7 LAKHS TO DRT FOR ACQUIRING PROPERTY FOR DEVELOPMENT AS A JOINT PARTICIPANT WIT H OTHER PARTICIPANT NAMELY SHRI SHAILESH PATEL. THE MONEY WAS REFUNDED BY THE DRT TO THE OTHER CO-PARTICIPANT WHICH COULD NOT BE RECOVER ED BY THE ASSESSEE. IN THE CIRCUMSTANCES, WHERE THE PAYMENT OF MARGIN M ONEY TO DRT IS NOT IN DISPUTE, THE CLAIM OF EXPENDITURE FOR SUCH L OSS ON ACCOUNT OF NON-RECOVERY, WHILE DISALLOWED IN QUANTUM PROCEEDIN GS, IS NOT SUFFICIENT PER SE TO IMPOSE PENALTY UNDER S. 271(1)(C) OF THE ACT. NEEDLESS TO SAY, THE IMPOSITION OF PENALTY IS NOT A UTOMATIC CONSEQUENCE. THE ASSESSEE HAS OFFERED EXPLANATION FOR CLAIM OF EXPENDITURE WHICH IS PLAUSIBLE WHEN TESTED FOR THE PURPOSES OF LIABILITY IN THE FORM OF PENALTY. UNDER THE CIRCUM STANCES, MERELY BECAUSE THE CLAIM OF EXPENDITURE WAS FOUND TO BE WR ONG AND NOT IN ACCORDANCE WITH LAW BY ITSELF WILL NOT JUSTIFY PENA LTY IN THE ABSENCE OF ANY FALSITY IN THE EXPLANATION OFFERED. WE THUS FI ND MERIT IN THE PLEA ITA NO. 69/AHD/18 [CHASE BUILDCON PROJECTS PVT. LTD. VS. ITO] AY 2011-12 - 4 - OF THE ASSESSEE FOR NON-LEVY OF PENALTY IN THE MITI GATING CIRCUMSTANCES EXISTING IN THE CASE. WE THEREFORE SET ASIDE THE O RDER OF THE CIT(A) AND DIRECT THE AO TO CANCEL THE PENALTY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. SD/- SD/- (RAJPAL YADAV) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 29/07/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 29/07/201 9