The Merchants, C-7 Focal Point, Jalandhar V. The Asstt. Commissioner of Income-tax, Jalandhar

ITA 704/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0740 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 27-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S K VATTA
• Keywords: Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO.704(ASR)/2014 ASSESSMENT YEAR: 2006-07 THE MERCHANTS, C-7, FOCAL POINT, JALANDHAR. PAN:AAAFT8118C VS. ASST. CIT, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. S.K. VATTA (CA.) RESPONDENT BY: SH. UMESH TAKYAR (DR.) DATE OF HEARING: 16.05. 2016 DATE OF PRONO UNCEMENT: 24.05.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORD ER OF LEARNED CIT(A), JALANDHAR, DATED 25.09.2014 FOR ASST. YEAR: 2006-07. 2. THE ASSESSEE IS AGGRIEVED WITH THE ACTION OF LEA RNED CIT(A), BY WHICH HE HAD CONFIRMED THE PENALTY IMPOSED BY ASSES SING OFFICER U/S 271(1)(C) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE AS NOTED IN THE PENA LTY ORDER ARE THAT THE ASSESSEE CLAIMED FOREIGN TRAVEL EXPENSES OF RS. 13,04,894/- WHICH INCLUDED RS.6,45,753/- BY PARTNER OF THE FIRM, SMT. SABINA KAPOOR AND RS.6,59,141/- BY OTHERS. DURING THE ASSESSMENT PROC EEDINGS, THE ASSESSEE WAS ASKED TO FILE DETAILS REGARDING PURPOS E OF FOREIGN TOUR AND DETAILS OF PERSONS WHO HAD TRAVELED ABROAD. THE AS SESSEE FILED REPLY AND ITA NO.704 (ASR)/2014 ASST. YEAR : 2006-07 2 SUBMITTED THAT THE DETAILS, HOWEVER, THE ASSESSING OFFICER MADE AN ADDITION OF RS.6,45,753/- BY HOLDING THAT ASSESSEE HAD NOT MENTIONED THE PURPOSE OF FOREIGN TOUR, THE PLACE(S) VISITED A ND EVIDENCE OF STAY AND DETAILS OF ORDERS/PAYMENT RECEIVED FROM THEM. IN VI EW OF THIS ADDITION, THE ASSESSING OFFICER PASSED PENALTY ORDER U/S 271( 1)(C). THE ASSESSEE FILED APPEAL BEFORE LEARNED CIT(A) AND SUBMITTED VA RIOUS SUBMISSIONS, HOWEVER, LEARNED CIT(A) CONFIRMED THE PENALTY BY HO LDING AS UNDER: 5.2 I HAVE CONSIDERED THE OBSERVATIONS OF THE ASSE SSING OFFICER AS MADE BY HIM IN THE PENALTY ORDER AS WELL AS THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE VIDE LETTER DATED 26.08.2014/02.09.2014 ON THE ISSUE UNDER REFERENCE. I HAVE ALSO CONSIDERED VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE. ON CAREFUL CONSIDERATION OF T HE RIVAL CONTENTION OF THE RIVAL CONTENTIONS, IT HAS BEEN NOTICED THAT THE ASSESSEE DURING THE COURSE OF PENALTY PROCEEDINGS BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER SOME E-MAILS EXCHANGED BETWEEN SHRI SUNIL KHANNA AN D SOME PARTIES AT FRANCE AND SPAIN TO PROVE THAT THE FOREIGN TRIP OF MS. SABINA KAPOOR WAS IN CONNECTION WITH BUSINESS. IT IS INTERESTING TO N OTE THAT NOT ONLY THE E- MAILS WERE SENT BY SHRI SUNIL KHANNA BUT THE REPLIE S FROM THE FOREIGN PARTIES WERE ALSO RECEIVED BY HIM. IT HAS FURTHER B EEN NOTICED THAT NONE OF THE REPLY TO E-MAILS HAS BEEN GIVEN TO MS. SABINA K APOOR ALTHOUGH MS. SABINA KAPOOR WAS HAVING DIFFERENT E-MAIL ADDRESS W HICH HAS BEEN MENTIONED IN EACH E-MAIL. THE THANKS E- MAILS WERE ALSO SENT BY SHRI SUNIL KHANNA AND NOT BY MS. SABINA KAPOOR. IT APPEARS THA T SHRI SUNIL KHANNA HAS USED THE NAME OF MS. SABINA KAPOOR IN HIS E-MAI LS. SOME OF THE BILLS WHICH WERE PRODUCED DURING PENALTY PROCEEDINGS WERE ALSO ISSUED IN THE MONTH OF FEBRUARY, 2006 WHICH ITSELF PROVE THAT THE ORDERS REPRESENTS BY BILLS ISSUED ON 16.02.2006 WERE NOT RECEIVED AT THE INSTANCE OF MS. SABINA KAPOOR. MOREOVER, THE ASSESSEE HAS NOT GIVEN THE DE TAILS OF EXPENSES INCURRED DURING FOREIGN VISITS TO FRANCE AND SPAIN. IT HAS ALSO BEEN NOTICED THAT SHRI RAJAT BOSE AND SHRI KASHMIR SINGH THAKUR, THE EMPLOYEE OF THE ASSESSEE FIRM, HAVE ALSO UNDERTAKEN FOREIGN VISITS DURING THE PERIOD 12.10.2005 TO 18.10.2005, 14.11.2005 TO 01.12.2005 AND 03.03.2006 TO 01.04.2006 WHICH PERIOD ALSO COINCIDE WITH THE FORE IGN VISIT OF MS. SABINA KAPOOR. AS THE OTHER EMPLOYEES/PARTNERS OF THE ASSE SSEE FIRM HAVE ALSO VISITED FRANCE AND SPAIN DURING SAME PERIOD, IT CAN NOT BE SAID THAT THE ORDERS WERE PROCURED AT THE INSTANCE OF SMT. SABINA KAPOOR. 5.3 FROM THE ABOVE STATED FACTS, IT IS ABSOLUTELY CLEAR THAT THE FOREIGN TRIP OF MS. SABINA KAPOOR WAS A PLEASURE TRIP NOT I N ANY WAY CONNECTED WITH THE BUSINESS OF THE ASSESSEE FIRM. IN OTHER WO RDS, THE ASSESSEE HAS CERTAINLY MADE A FALSE CLAIM IN RESPECT OF EXPENSES INCURRED ON THE FOREIGN ITA NO.704 (ASR)/2014 ASST. YEAR : 2006-07 3 TRIP OF MS. SABINA KAPOOR AND CONSEQUENTLY FILED IN ACCURATE PARTICULAR OF INCOME TO THE EXTENT OF RS.6,45,753/-. MY VIEW IS A LSO SUPPORTED BY THE FACT THAT THE ASSESSEE HAS NOT CHALLENGED THE ADDIT ION WHICH HAS BEEN SUSTAINED BY THE CIT(A). IN VIEW OF THESE FACTS, I AM OF THE OPINION THAT THE ASSESSING OFFICER IS FULLY JUSTIFIED IN LEVYING THE PENALTY ON AN AMOUNT OF ADDITION SUSTAINED BY THE LD. CIT(A) OUT OF ADDITIO N MADE ON ACCOUNT OF DISALLOWANCE OF FOREIGN TOUR EXPENSES OF MS.SABINA KAPOOR. 4. AGGRIEVED WITH THE ORDER THE ASSESSEE IS IN APPE AL BEFORE US. 5. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT COM PLETE DETAILS WERE FILED DURING ASSESSMENT PROCEEDINGS SHOWING PERSON WISE DETAILS OF EXPENSES AND THE NAME OF COUNTRIES WHICH WERE VISIT ED AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO (PB PAGE 14 TO 89) WHERE THE COMPLETE BREAK UP OF EXPENSES ALONG WITH BILLS WAS PLACED. THE LEARNED AR SUBMITTED THAT THE DETAILS INCLUDED THE LETTERS FROM INDIA PROMOTION ORGANIZATION WHEREIN THEY HAD CONFIRMED THE PARTICI PATION IN THE TRADE FARE IN FOREIGN COUNTRY ORGANIZED BY THEM AND IN TH IS RESPECT LEARNED AR INVITED OUR ATTENTION TO (PB PAGE 20 TO 22) WHERE A COPY OF LETTER CONFIRMING THE PARTICIPATION OF ASSESSEE AND OTHER DETAILS WERE PLACED. THEREFORE, IN VIEW OF THE ABOVE, IT WAS ARGUED THAT ASSESSEE HAD SUBMITTED ALL THE DETAILS AND MERE DISALLOWANCE OUT OF EXPENSES CLAIMED CANNOT LEAD TO IMPOSITION OF PENALTY. 6. THE LEARNED AR, IN THIS RESPECT RELIED UPON THE FOLLOWING CASE LAWS. (I) M/S RELIANCE PETRO PRODUCTS (P) LIMITED 230 C TR 320 (SC) (II) CIT VS. AJAIB SINGH & CO. (2002) 253 ITR 630 ( PUNJAB & HARYANA) (III) SIDHARTH ENTERPRISE, AS REPORTED IN 322 ITR 80 (IV) TOSCANA LASTS LTD. VS. INCOME TAX OFFICER (20 14) 107 DTR (DEL)(TRIB)27. (V) MERIDIAN IMPEX VS. ACIT 107 DTR 89 ITA NO.704 (ASR)/2014 ASST. YEAR : 2006-07 4 (VI) JOINT COMMISSIONER OF INCOME TAX VS. VXL INDIA LIMITED ITAT, AMRITSAR BENCH 94 TTJ (ASR) 513 (VII) INCOME TAX OFFICER VS. KULDEEP SOOD ENTERPR ISES (ITAT) CHANDIGARH B BENCH 103 TTJ (CHD) 573 (VIII) ACIT VS. MODERN COAL COMPANY, ITAT, AMRITSAR SMC BENCH 103 TTJ(ASR)726 (XI) ITO VS. RAKESH GUPTA ITAT AMRITSAR SMC BENCH 1 07 TTJ (ASR). 909 (X) CIT VS. GARDEX, JALANDHAR APPEAL NO.243/12-134/ CIT(A) DECIDED ON 05.11.2015. 7. THE LEARNED DR, ON THE OTHER HAND, HEAVILY PLACE D HIS RELIANCE ON THE ORDER OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSEE H AD CLAIMED EXPENSES AS FOREIGN TRAVELING EXPENSES WHICH THE ASSESSEE CL AIMED TO HAVE BEEN INCURRED FOR THE PURPOSES OF BUSINESS. THE ASSESSEE HAD FURNISHED THE COMPLETE BREAK UP OF EXPENSES ALONG WITH PERSONS WH O HAD VISITED THE FOREIGN COUNTRIES. THE ASSESSING OFFICER, HOWEVER, DID NOT ALLOW CLAIM OF THE ASSESSEE AND DISALLOWED A PART OF FOREIGN TRAVE L EXPENSES BY HOLDING THAT ASSESSEE HAD NOT INCURRED SUCH EXPENDITURE FOR THE PURPOSES OF BUSINESS. HOWEVER, WE FIND THAT ASSESSEE HAD SUBMIT TED COMPLETE DETAILS OF EXPENSES AND HAD ALSO PAID FBT ON WHOLE OF THE S AID FOREIGN TOUR EXPENSES AS IS EVIDENT FROM THE ASSESSMENT ORDER IT SELF. THE ASSESSING OFFICER FROM THE DETAILS FILED BY ASSESSEE CAME TO KNOW ABOUT THE BREAK UP OF EXPENSE AND THEREFORE, IT CANNOT BE SAID THAT ASSESSEE HAD CONCEALED PARTICULARS OF INCOME. THE PENALTY WAS IM POSED ONLY BECAUSE ITA NO.704 (ASR)/2014 ASST. YEAR : 2006-07 5 OF THE FACT THAT ASSESSING OFFICER HAD DISBELIEVED SOME OF THE EXPENSES BEING INCURRED FOR THE PURPOSE OF BUSINESS. HOWEVER , THE FACT REMAINS THAT ASSESSEE HAD PASSED NECESSARY ENTRIES IN THE B OOKS OF ACCOUNTS RELATING TO SUCH EXPENDITURE AND HAD FILED DETAILS OF EXPENSES INCURRED BY ASSESSEE. THE FACT THAT ASSESSEE HAD NOT PREFERR ED APPEAL BEFORE THE HIGHER AUTHORITIES FOR ADDITION MADE BY ASSESSING O FFICER DOES NOT MEAN THAT ASSESSEE CAN BE IMPOSED PENALTY FOR THIS. THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE TWO DIFFERE NT PROCEEDINGS AND PENALTY PROCEEDINGS ARE NOT AUTOMATIC TO ASSESSMENT PROCEEDINGS AND EVERY DISALLOWANCE OF CLAIM OF SOME EXPENSES CANNOT LEAD TO IMPOSITION OF PENALTY. THE HONBLE SUPREME COURT IN THE CASE O F M/S RELIANCE PETRO PRODUCTS (P) LTD 230 CTR 320 HAS HELD AS UNDER. READING THE WORDS INACCURATE' AND 'PARTICULARS' I N CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE HOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEO US. IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSE E, IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH N OT BEING THE CAS, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER S. 271(1)(C). A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LA W, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOU NT TO THE INACCURATE PARTICULARS. THE ASSESSEE HAD FURNISHED ALL THE DET AILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN; WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE C ONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EX PENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY UNDER S. 271(1 )(C). IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETUR N WHERE THE CLAIM MADE IS NOT ACCEPTED BY AO FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER S. 271(1)(C). THAT IS CLEARLY NOT THE INTENDM ENT OF THE LEGISLATURE. THE TRIBUNAL, AS WELL AS, THE CIT(A) AND THE HIGH COURT HAVE CORRECTLY REACHED THIS CONCLUSION.SREE KRISHNA ELECTRICALS VS. STATE OF TAMIL NADU & APR. (2009) 23 VST 249 (SC) APPLIED; RELIANCE PETROPRODU CTS (P) LTD. (JUDGMENT ITA NO.704 (ASR)/2014 ASST. YEAR : 2006-07 6 DT. 23RD OCT.., 2007 OF THE GUJARAT HIGH COURT INFF AX APPEAL NO. 1149 OF 2007) AFFIRMED. (PARAS 9, 10 & 12) CONCLUSION : MERELY BECAUSE THE ASSESSEE CLAIMED DE DUCTION OF INTEREST EXPENDITURE WHICH HAS NOT BEEN ACCEPTED BY THE REVE NUE, PENALTY UNDER S. 271(1)(C) IS NOT ATTRACTED; MERE MAKING OF THE C LAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE ABOVE JUDGMENT OF HONBL E SUPREME COURT, WE DELETE THE PENALTY IMPOSED BY ASSESSING OFFICER. 9. IN VIEW OF THE ABOVE, THE APPEAL FILED BY ASSESS EE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH MAY, 2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:24.05.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER