SMT. ANITA BANSAL, BATHINDA V. INCOME TAX OFFICER, WARD 2(1), BATHINDA

ITA 712/ASR/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3323 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-08-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 23-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B K NOHRIA; RAJES H JINDAL
• Keywords: Set aside
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (SMC) BEFORE SH. B. R. BASKARAN, ACCOUNTANT MEMBER I.T.A. NO. 712/ASR/2017 A SSESSMENT YEAR: 2009-10 SMT ANITA BANSAL, 4299, KIKAR BAZAR, BATHINDA-151001 [PAN: ACRPB 8383L] VS. INCOME TAX OFFICER WARD2(1), BATHINDA-151001 (APPELLANT) (RESPONDENT) APPELLANT BY : SH. B. K. NOHRIA & RAJES H JINDAL (C.A.) RESPONDENT BY: SH. CHARAN DASS (D.R.) DATE OF HEARING: 27.08.2019 DATE OF PRONOUNCEMENT: 27.08.2019 ORDER PER B. R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 05-09-2017 PASSED BY LD CIT(A), BATHINDA FOR ASSESSMENT YEAR 2 009-10 CONFIRMING THE PENALTY OF RS.6,75,329/- LEVIED BY THE AO U/S 271(1 )(C) OF THE ACT. 2. DURING THE YEAR UNDER CONSIDERATION, THE ASS ESSEE HAD SOLD TWO SHOPS AND DECLARED NET SHORT TERM CAPITAL LOSS OF RS.19,000/- . ON EXAMINATION OF THE SAME, THE AO FOUND THAT THE ASSESSEE HAS CLAIMED COST OF IMPROVEMENT TO THE TUNE OF RS.31.15 LAKHS IN RESPECT OF BOTH THE SHOPS. THE A O EXAMINED THE EVIDENCES FURNISHED BY THE ASSESSEE AND FOUND THAT THE CONTRA CTORS WHO CARRIED OUT IMPROVEMENT WORKS DID NOT EXIST IN THE GIVEN ADDRES SES. THE ASSESSEE HAD CLAIMED THAT HE HAS WITHDRAWN FUNDS FROM BANKS TO MEET THE COST OF IMPROVEMENT. ITA NO. 712/ASR/2017 (AY 2009-10) ANITA BANSAL V. DY. ITO 2 HOWEVER, ON EXAMINATION OF BANK ACCOUNTS, THE AO NO TICED THAT THE FUNDS WITHDRAWN HAVE BEEN RE-DEPOSITED IN SUBSEQUENT DATE S. ON THESE FACTS, THE AO REJECTED THE CLAIM OF COST OF IMPROVEMENT AND ACCOR DINGLY COMPUTED THE NET SHORT TERM CAPITAL GAIN AT RS.30.96 LAKHS. THE AO INITIA TE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. 3. IN THE QUANTUM APPELLATE PROCEEDINGS, THE LD CIT(A) ALLOWED DEDUCTION TOWARDS COST OF IMPROVEMENT BY RESTRICTING THE SAME TO RS.5,74,000/-. THUS THE LD CIT(A) CONFIRMED ADDITION TO THE EXTENT OF RS.25,22 ,000/-. SUBSEQUENTLY, THE AO LEVIED A PENALTY OF RS.6,75,329/- U/S 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 4. IN THE PENALTY APPEAL FILED BEFORE LD CIT(A), THE ASSESSEE CONTENDED THAT THE ADDITION HAS BEEN MADE ON ESTIMATED BASIS AND HENCE PENALTY SHOULD NOT BE LEVIED. THE LD CIT(A), HOWEVER, DID NOT AGREE WITH THE CONT ENTIONS OF THE ASSESSEE BY OBSERVING THAT MERELY BECAUSE SOME RELIEF HAS BEEN GRANTED TO THE APPELLANT ON LUMP-SUM BASIS, THE SAME WOULD NOT MEAN THAT THE AD DITION WAS MADE ON ESTIMATED BASIS. ACCORDINGLY THE LD CIT(A) CONFIRMED THE PEN ALTY LEVIED BY THE AO. 5. I HEARD THE PARTIES AND PERUSED THE RECORD. THE UNDISPUTED FACTS REMAIN THAT THE ASSESSEE HAD CLAIMED THE COST OF IMPROVEMENT AT RS.31.15 LAKHS, BUT THE AO ADOPTED THE SAME AS NIL. THE LD CIT(A) HAS, HOWEVE R, ALLOWED THE DEDUCTION TOWARDS COST OF IMPROVEMENT AT RS.5,74,000/- BY ES TIMATING THE EXPENSES AT RS.1000/- PER SQ.FT. I HAVE NOTICED EARLIER THAT T HE ASSESSEE HAD DECLARED NET SHORT TERM CAPITAL LOSS OF RS.19,000/- AND THE AO HAD COM PUTED NET SHORT TERM CAPITAL GAIN AT RS.30.96 LAKHS, BY REJECTING THE CLAIM OF C OST OF IMPROVEMENT. SINCE THE LD CIT(A) GAVE RELIEF OF RS.5.74 LAKHS ON ACCOUNT OF C OST OF IMPROVEMENT, THE PENALTY WAS LEVIED ON THE BALANCE AMOUNT OF RS.25.22 LAKHS. HENCE THE ADDITION OF ITA NO. 712/ASR/2017 (AY 2009-10) ANITA BANSAL V. DY. ITO 3 RS.25.22 LAKHS ON WHICH PENALTY WAS LEVIED COMPRISE S OF DISALLOWANCE OF PART OF COST OF IMPROVEMENT ONLY. I NOTICED EARLIER THAT THERE IS DIFFERENCE BETWEEN THE ASSESSEE AND THE AO/CIT(A) WITH REGARD TO THE QUANT UM OF COST OF IMPROVEMENT. ULTIMATELY, THE COST OF IMPROVEMENT CAME TO BE ESTI MATED BY LD CIT(A) AND HENCE THE FACTUM OF INCURRING OF EXPENDITURE TOWARDS IMPR OVEMENT CANNOT BE DENIED. HENCE THERE IS MERIT IN THE CONTENTIONS OF THE ASSE SSEE THAT THE COST OF IMPROVEMENT HAS BEEN ALLOWED ON ESTIMATED BASIS, IN WHICH CASE THE DISALLOWANCE HAS RESULTED ON ACCOUNT OF SUCH ESTIMATION ONLY. EVEN OTHERWIS E, I NOTICE THAT THE AO HAS DRAWN INFERENCES ONLY IN ORDER TO REJECT THE CLAIM OF COST OF IMPROVEMENT, I.E., THE AO HAS NOT PROVED WITH CREDIBLE EVIDENCES THAT THE CLAIM OF COST OF IMPROVEMENT WAS FALSE. 6. SINCE THE AO HAS REJECTED THE CLAIM BY DRAWI NG ADVERSE INFERENCES AND SINCE THE DISALLOWANCE OF COST OF IMPROVEMENT HAS BEEN MA DE BY ESTIMATING THE EXPENSES, I AM OF THE VIEW THAT THE ASSESSEE CANNOT HELD TO BE LIABLE TO PAY PENALTY U/S 271(1)(C) OF THE ACT. IT IS WELL SETTLED PROPO SITION OF LAW THAT THE PENALTY CANNOT BE LEVIED ON INCOME ESTIMATED. THE DECISION RENDERED BY HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF HARIGOPAL SINGH V S. CIT (258 ITR 85) SUPPORTS THIS PROPOSITION. ACCORDINGLY, I AM OF THE VIEW TH AT THE LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE PENALTY. ACCORDINGLY I SET ASIDE THE ORDER PASSED BY LD CIT(A) AND DIRECT THE AO TO DELETE THE IMPUGNED PEN ALTY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN CO URT ON AUGUST 27, 2019 SD/- (B. R. BASKARAN) ACCOUNTANT MEMBER DATE: 27.08.2019 /GP/SR. PS. ITA NO. 712/ASR/2017 (AY 2009-10) ANITA BANSAL V. DY. ITO 4 COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: (2) THE RESPONDENT: (3) THE CIT(APPEALS) (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T TRUE COPY BY ORDER