The ACIT, 1(1), Indore V. M/S. ANAND SAGAR REAL ESTATES PVT. LTD., Indore

ITA 747/IND/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0391 (ITAT-INDORE)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-06-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 27-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V I MEHTA
• Assessee Lawyers: ARPIT GAUR CAS
• Keywords: Onus to prove
• Section: 40A(3); 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T.A.NO.747/IND/2014 A.Y. : 2010-11 ACIT, 1(1), INDORE. M/S.ANAND SAGAR REAL ESTATES PVT.LTD., VS. 101, KHANDWA ROAD, GRAM LIMBODI, INDORE. APPELLANT RESPONDENT PAN NO. AAGCA4078F APPELLANT BY : SHRI V.I.MEHTA, DR RESPONDENT BY : SHRI ANIL KAMAL GARG AND SHRI ARPIT GAUR, CAS DATE OF HEARING : 17 . 0 6 .201 5 DATE OF PRONOUNCEMENT : 30 . 0 7 .201 5 -: 2: - 2 O R D E R PER GARASIA, J.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-II, INDORE, DATED 28.08.2014 FOR T HE ASSESSMENT YEAR 2010-11. 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT. THE ASS ESSEE IS REGULARLY ASSESSED TO INCOME TAX SINCE ITS INCEPTIO N. THE ASSESSEE FURNISHED ITS RETURN OF INCOME FOR THE ASS ESSMENT YEAR UNDER CONSIDERATION. THE ASSESSMENT WAS COMPLE TED U/1 143(3) AND THE AO HAS MADE THE FOLLOWING ADDITI ONS :- S.NO. DESCRIPTION AMOUNT (RS.) 1. ADDITION ON ACCOUNT OF DISALLOWANCE U/S 40(A)(IA) OF THE ACT 1,91,000 2. DISALLOWANCE U/S 14A OF THE ACT 8,09,007 3. DISALLOWANCE OF EXPENSES U/S 40A(3) OF THE ACT 12,38,520 -: 3: - 3 4. DISALLOWANCE OF PRIOR PERIOD EXPENSES 2,32,191 TOTAL ADDITIONS 24,70,718 3. WHILE PASSING THE ASSESSMENT ORDER, THE AO HAS INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME- TAX ACT, 1961, AND THE AO HAS LEVIED THE PENALTY OF RS. 10 LACS U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. 4. THE MATTER CARRIED TO LD. CIT(A) AND THE LD. CIT(A) HAS ALLOWED THE CLAIM BY OBSERVING AS UNDER :- 3.1 I HAVE GONE THROUGH THE REASONS BROUGHT BY THE AO IN THE PENALTY ORDER AND OBSERVED THAT THE AO HAS MAINLY TAKEN THE SAME GROUNDS FOR LEVYING THE PENALTY U/S271(L)(C) AS HAS BEEN DISCUSSED BY AO IN THE ASSESSMENT ORDER. I HAVE ALSO GONE THROUGH THE WRITTEN SUBMISSION FILED BY THE APPELLANT WHICH ARE REPRODUCED ABOVE. THE DISALLOWANCE MADE U/S 40(A)(IA), SECTION 14A AND 40A(3) OF INCOME TAX ACT , 1961 ARE OF SUCH NATURE WHICH DO NOT ATTRACT PENALT Y U/S 271(L)(C) OF INCOME TAX ACT, 1961. THESE -: 4: - 4 PROVISIONS OF THE ACT HAVE INHERENT ELEMENT OF PENA LTY IN THE FORM OF DISALLOWANCES OF THE EXPENDITURE DESPITE GENUINENESS. THE QUESTION OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULAR OF INCOME WILL ARISE ONLY IN THE CASE WHERE THE APPELLANT HAS NOT DONE SOMETHING OR HAS DONE SOMETHING CONTRARY TO THE MANDATE GIVEN BY THE LAW. THESE PROVISIONS DO NOT MANDATE THE APPELLANT TO DISALLOW THESE KINDS OF EXPENDITURE UNDER QUESTION AND ADD THE SAME IN THE TAXABLE INCOME. THE TAXPAYER FILES CLAIMS IN THE RETURN OF INCOME ON TH E BASIS OF VARIETY OF NOTIONS, BELIEFS AND INTERPRETA TION OF LAW WHICH MAY NOT FIND FAVOUR FROM THE AUTHORITI ES MAKING ASSESSMENT. BUT SO LONG AS THE TAXPAYER HAS NOT FURNISHED INACCURATE PARTICULARS OF INCOME OR H AS CONCEALED THE PARTICULARS OF INCOME, THE SAME CANNO T BE BROUGHT UNDER THE AMBIT OF PENAL PROVISIONS U/S 271(L)(C). IN THE CASE UNDER CONSIDERATION, WHILE F ILING THE RETURN OF INCOME AND MAKING CLAIMS UNDER THE RELEVANT PROVISIONS OF THE LAW, IT CANNOT BE CONSTR UED -: 5: - 5 THAT THE APPELLANT HAD FILED INACCURATE PARTICULARS OF INCOME RESULTING INTO CONCEALMENT OF INCOME. THESE WERE THE CLAIM MADE BY THE APPELLANT WHICH WERE FOUND NOT IN CONSISTENT WITH THE RELEVANT PROVISION S OF LAW ACCORDINGLY THE AO RESORTED TO DISALLOWANCES. THE APPELLANT HAS RELIED UPON THE FINDINGS OF HONB LE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS ( P) LTD. (2010) 36 DTR (SC) 449. I HAVE GONE THROUGH TH E RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE ABOVE MENTIONED CASE AND OBSERVED THAT THE SAME IS SQUARELY APPLICABLE IN THE CASE OF APPELLANT. THE RELEVANT PART OF DECISION IS DULY REPRODUCED IN THE PRE-PAGES OF THIS ORDER. 3.2 THE ABOVE CASE LAW, THOUGH FOUND RELEVANT TO TH E ADDITION U/S 14A OF INCOME TAX ACT ONLY, YET THE RA TIO IS VERY WELL APPLICABLE TO THE FACTS RELEVANT TO AN Y EXPENDITURE CLAIMED BY THE APPELLANT, NOT SUSTAINABLE IN LAW WILL NOT AMOUNT' TO FURNISHING O F INACCURATE PARTICULARS. THEREFORE, THE DISALLOWANCE S MADE U/S 40(A)(IA), 40A(3)AND THE PRIOR PERIOD -: 6: - 6 EXPENDITURE ARE SQUARELY COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE ABOVE MENTIONED CASE AS FAR AS FURNISHING OF INACCURATE PARTICULARS OF INCOME AND LEVY OF PENALTY U/S 271(L)(C) IS CONCERN ED. FURTHER THE APPELLANT HAS CONTENDED THAT EXPLANATIO N 1 TO SECTION 271(1)(C) IS NOT APPLICABLE FOR THE RE ASONS THAT THE PRIMARY BURDEN TO PROVE THAT THE PARTICULA RS OF INCOME HAVE BEEN FURNISHED INACCURATELY AND THE INCOME HAS BEEN CONCEALED, IS ON THE REVENUE. THE FOLLOWING CASE LAWS HAS BEEN RELIED UPON BY THE APPELLANT (I) DILIP N. SHROFF VS. JCIT & ANR. (2007 ) 291 ITR 519 (SC) (II) D.M. MANASVI VS. CIT(1972) CT R (SC) 437 (III) T.ASHOK PAI VS. CIT(2007) 292 ITR 11 (SC) (IV) MAULIK JASUBHAI TRUST VS. ITO (1998) 60 I TJ (MUMBAI) 467. THE CONTENTION RAISED AND THE DECISIONS RELIED UPON BY THE APPELLANT HAVE BEEN FOUND TENABLE. THE INGREDIENT OF THE CONCEALMENT AN D FURNISHING OF INACCURATE PARTICULARS OF INCOME ARE REQUIRED TO BE DRAWN FIRST TO PENALIZE THE PERSON. IN THE INSTANT CASE, IN VIEW OF THE ABOVE DISCUSSION A ND -: 7: - 7 FROM CAREFUL PERUSAL OF PENALTY ORDER, I DO NOT FIN D ANY FACTS BROUGHT ON RECORD BY THE AO TO BRING THE APPELLANT WITHIN THE SCOPE OF SECTION 271(L)(C) OF INCOME TAX ACT, 1961. THEREFORE, THE AO WAS NOT FOUND JUSTIFIED IN LEVYING THE PENALTY IN THIS CASE . ALL THE GROUNDS OF APPEAL ARE ALLOWED. 5. THE LD. SENIOR D.R. RELIED ON THE ORDER OF THE AO. 6. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDE R OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS. RELIA NCE PETRO PRODUCTS (P) LIMITED, (2010) 36 DTR (S.C.) 449, IN WHICH IT WAS HELD THAT MERELY BECAUSE THE ASSESSEE CLAIMED DEDUC TION WHICH HAS NOT BEEN ACCEPTED BY THE REVENUE, PENALTY UNDER SECTION 271(1)(C) IS NOT ATTRACTED. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE HAVE GONE THROUGH THE ORDERS OF THE A UTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE DECISION OF H ON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCT S (P) LIMITED (SUPRA). WE FIND THAT THE ABOVE DECISION IS SQUARELY APPLICABLE TO THE CASE OF THE ASSESSEE AND THE LD. CIT(A) HAS -: 8: - 8 RIGHTLY CANCELLED THE PENALTY. OUR INTERFERENCE TO THE ORDER OF THE LD. CIT(A) IS NOT CALLED FOR. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 30 TH JULY, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 30 TH JULY, 2015. CPU* 3.17.7