FIRDAUS E. KHATRI, MUMBAI V. ASST CIT CIR 9, MUMBAI

ITA 6935/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4532 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 28-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R C JAIN
• Keywords: Business income; Depreciation
• Section: 143(3); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI B.R.BASKARAN (AM) AND SHRI RAM LAL NEGI (JM) ITA NO.6935/MUM/2013 ASSESSMENT YEAR: 2009-10 FIRDAUS E. KHATRI. 638, GORI HOUSE, TPS III, 8 TH ROAD, KHAR (W), MUMBAI- 400052. PAN : AHDPK9168K VS. THE ASSTT. CIT CENTRAL CIRCLE - 9, 6 TH FLOOR, C.G.O. ANNEXE, M.K.ROAD, MUMBAI- 400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. R.C.JAIN RESPONDENT BY : SHRI. CHANDIP SINGH DATE OF HEARING: 12/10/2015 DATE OF PRONOUNCEMENT: 12/01/2016 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN PREFERRED AGAINST ORDER D T. 02/09/2013 PASSED BY LD. CIT(APPEALS)-37 MUMBAI U/S 271(1)(C) OF THE INCOME TAX ACT, 1961, ( IN SHORT THE ACT) PERTAINING TO THE ASST. YEAR 2009-10. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE B EING A PARTNER IN M/S BASERA CONSTRUCTION AND M/S RAWASSA CONSTRUCTIO N FILED ITS RETURN FOR THE A.Y. 2009-10 DECLARING THE TOTAL IN COME OF RS. 79,800/-. THE RETURN WAS PROCESSED AND AFTER THE SCRUTINY AND ASSESSMENT ORDER DT. 11/08/2011 WAS PASSED U/S 143(3) OF THE I NCOME TAX, 1961. 2.1 DURING THE ASSESSMENT PROCEEDING AO NOTICED TH AT THE ASSESSEE HAD CLAIMED DEPRECIATION OF RS. 4,98,563/- ON MOTOR CAR AGAINST 2 ITA NO.6935/MUM/2013 ASSESSMENT YEAR: 2009-10 INTEREST INCOME RECEIVED FROM FIRMS ON HIS CAPITAL BALANCE CHARGEABLE AS BUSINESS INCOME UNDER THE PROVISIONS OF SUBSECT ION (V) OF SECTION 28 OF THE ACT AND HIS SHARE IN THE TOTAL INCOME OF THE FIRM WHICH IS OTHERWISE EXEMPT U/S 2A OF SECTION10 OF THE INCOME TAX ACT, 1961. 2.2 THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY DEP RECIATION CLAIMED ON CAR PUT TO PERSONAL USE SHOULD NOT BE DISALLOWED , FOR THE REASON THAT THE ASSESSEE WAS NOT ACTIVELY ENGAGED IN BUSIN ESS/PROFESSIONAL ACTIVITY. LATER ON THE ASSESSEE FILED REVISED COMPU TATION OF TOTAL INCOME EXCLUDING THE DEPRECIATION OF MOTOR CAR CLAIM STATI NG THAT THE DEPRECIATION WAS CLAIM DUE TO LACK OF KNOWLEDGE. T HE ASSESSEE HAD ALSO CLAIMED DEDUCTION OF RS. 2,500/-ON ACCOUNT OF PROFESSION TAX PAID BUT THE AO DID NOT ALLOW THE SAME ON THE GROUND THA T THE ASSESSEE COULD NOT PRODUCE ANY DOCUMENTARY PROOF OF PAYMENT OF PROFESSIONAL TAX. 2.3 CONSEQUENTLY, THE AO INITIATED PROCEEDS U/S 271 (1)(C) FOR PROVIDING INACCURATE PARTICULARS OF INCOME AND THE PENALTY ORDER U/S 271(1)(C) OF THE ACT WAS PASSED AFTER OBTAINING AP PROVAL FROM THE ADDL.CIT, CENTRAL RANGE-2, MUMBAI, IMPOSING PENALTY OF RS. 1,38,571/- THE ASSESSEE CHALLENGED THE ASSESSMENT O RDER BEFORE THE LD. CIT(A). THE CIT(A) AFTER HEARING THE APPELLANT UPHELD THE IMPUGNED ORDER AND DISMISSED THE APPEAL. 3. THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL AGAINST THE IMPUGNED ORDER PASSED BY THE CIT(A). THE ASSESSEE HAS CHALLE NGED THE IMPUGNED ORDER MAINLY ON THE GROUND THAT THE LD. CIT(A) HAS ERROR IN CONFIRMING THE ORDER PASSED BY THE AO DECLARING HIM THE ASSES SEE IN DEFAULT U/S 3 ITA NO.6935/MUM/2013 ASSESSMENT YEAR: 2009-10 271(1)(C) OF THE ACT AND CONFIRMING THE PENALTY OF RS. 1,38,571,/- IMPOSED BY THE AO. 4. BEFORE US THE LD. AR REITERATED ITS SUBMISSIO N MADE BEFORE THE AUTHORITIES BELOW AND RELYING UPON THE RATIO LAID D OWN BY THE HONBLE SUPREME COURT IN CIT VS. RELIANCE PETRO PRODUCTS PV T. LTD.(2010) 322 ITR 0158 SUBMITTED THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE APPELLANTS CASE IS COVERED BY AFORESAID JUDGM ENT. ON THE OTHER HAND OF LD. DR RELYING ON CONCURRENT FINDING OF A O AND LD. CIT(A) SUBMITTED THAT THE ORDER PASSED BY THE LD. CIT(A) IS IN ACCORDANCE WITH THE LAW LAID DOWN BY HONBLE SUPREME COURT IN UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS, 2008, 306 ITR 277. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE DOCUMENTS ON RECORD IN THE LIGHT OF RIVAL SUBMISSIONS. SECTION 2 71(1)(C) OF THE ACT CONTEMPLATES THAT IF THE AO OR THE COMMISSIONER (AP PEALS) OR THE PRINCIPLE COMMISSIONER OR COMMISSIONER AS THE CASE MAY BE, IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT, IS SATISF IED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF THE INCOME OR FURN ISHED INACCURATE PARTICULARS OF SUCH INCOME, HE MAY DIRECT THAT SUCH ASSESSEE SHALL PAY BY WAY OF PENALTY. 6. IN CIT VS. RELIANCE PETROPRODUCTS P. LTD. (SUPRA ) THE ASSESSEE HAD CLAIMED DEDUCTION OF INTEREST OF LOANS TAKEN FOR PU RCHASE OF SHARES WHICH WAS DISALLOWED BY THE AO. THE HONBLE SUPREM E COURT HAS HELD THAT MERELY BECAUSE THE ASSESSEE CLAIMED DED UCTION WHICH WAS NOT SUSTAINABLE IN LAW, PENALTY UNDER SECTION 271(1 )(C) IS NOT ATTRACTED AND IF THE CONTENTION OF THE REVENUE IS ACCEPTED, T HE ASSESSEE WOULD 4 ITA NO.6935/MUM/2013 ASSESSMENT YEAR: 2009-10 BE LIABLE FOR PENALTY UNDER SECTION 271(1)(C) IN EV ERY CASE WHERE THE CLAIM MADE BY THE ASSESSEE IS NOT ACCEPTED BY THE AO FOR ANY REASON. 7. AS PER THE LAW LAID DOWN IN CIT VS. RELIANCE PET ROPRODUCTS PVT. LTD.(SUPRA), MAKING A CLAIM WHICH IS NOT SUSTAINAB LE IN LAW DOES NOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. THE HONBL E JURISDICTIONAL HIGH COURT FOLLOWING THE VERDICT OF HONBLE SUPREME COUR T HAS DECIDED THE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE IN CIT VS. NALIN P. SHAH (HUF) ITA (LOD) NO 51 OF 2013. 8. IN THE PRESENT CASE, THE ASSESSEE HAS CLAIMED DEPRECIATION/DEDUCTION IN QUESTION AND THE SAME BEC AME UNSUSTAINABLE IN LAW. IN VIEW OF THE JUDGMENT OF TH E HONBLE SUPREME COURT AFORESAID THE ACT OF THE ASSESSEE DOES NOT AT TRACT SECTION 271(1)(C) OF THE ACT. THE ASSESSEE HAS MADE THE CLA IMS UNDER THE BONA FIDE BELIEF THAT HE IS ENTITLED FOR THE SAME AS HE HAD ALSO CLAIMED THE SAME IN THE EARLIER ASSESSMENT YEAR. SECONDLY, MERE FACT THAT THE ASSESSEE HAS NOT CHALLENGED THE ADDITIONS MADE BY T HE AO CANNOT BE THE REASON FOR ARRIVING AT THE CONCLUSION THAT THE ASSESSEE HAS INTENTIONALLY FURNISHED INCORRECT OR INACCURATE INF ORMATION AND THEREBY MADE HIMSELF LIABLE UNDER SECTION 271(1)(C) OF THE ACT. 9. THE HONBLE SUPREME COURT HAS DISCUSSED THE CAS E DHARMENDRA TEXTILE PROCESSORS (SUPRA) IN RELIANCE PETROPRODUCT S P. LTD. (SUPRA), THEREFORE THERE IS NO SUBSTANCE IN THE CONTENTION O F THE REVENUE THAT THE LD. CIT(A) HAS PASSED THE IMPUGNED ORDER IN ACC ORDANCE WITH THE LAW LAID DOWN BY THE APEX COURT. 5 ITA NO.6935/MUM/2013 ASSESSMENT YEAR: 2009-10 10. IN VIEW OF THE FACTS OF THE CASE, EVIDENCE ON RECORD AND IN THE LIGHT OF THE JUDGMENTS DISCUSSED IN THE FOREGOING PARAS, WE ARE OF THE CONSIDERED OPINION THAT THE CASE OF THE APPELLANT/A SSESSEE IS SQUARELY COVERED BY THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN RELIANCE PETROPRODUCTS PVT. LTD, DISCUSSED ABOVE. WE, THEREF ORE DECIDE THE ISSUE IN QUESTION IN FAVOUR OF THE APPELLANT/ASSESSEE. AC CORDINGLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) A ND DIRECT THE AO TO DELETE THE PENALTY. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JANUARY, 2016 SD/- SD/- ( B.R.BASKARAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 12/01/2016 6 ITA NO.6935/MUM/2013 ASSESSMENT YEAR: 2009-10 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. '#$ % , %' , / DR, ITAT, MUMBAI 6. $() * / GUARD FILE. + + + + / BY ORDER, + //TRUE COPY// , ,, ,/ // /+- . +- . +- . +- . (DY./ASSTT. REGISTRAR) %' %' %' %', , , , / ITAT, MUMBAI PRAMILA