M/s. Rohit Farms (P) Ltd., New Delhi V. ACIT, New Delhi

ITA 762/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3649 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 30-06-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 19-02-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BANITA DEVI NAROEM
• Keywords: Wrong claim
• Section: 143(3); 68

Judgement Text

I.T.A. NO.762 /DEL/2010 1/6 IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH F BEFORE SHRI C. L. SETHI, JUDICIAL MEMBER AND SHRI A K GARODIA, ACCOUTANT MEMBER ITA NO. 762 /DEL/2010 (ASSESSMENT YEAR 2004-05) M/S. ROHIT FARMS (P) LTD., VS. ACIT, CIRCLE 15(1) , 25, RAJINDRA BHAWAN, PUSA ROAD, NEW DELHI. NARELA, NEW DELHI-110 018. (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AACCR-2510F APPELLANT BY: SHRI RAJESH JAIN, CA RESPONDENT BY: SMT. BANITA DEVI NAROEM, SR. DR ORDER PER A. K. GARODIA, AM: 1. THIS IS ASSESSEES APPEAL, DIRECTED AGAINST THE ORD ER OF LD. CIT(A) XVIII, NEW DELHI DATED 20.01.2010 FOR THE AS SESSMENT YEAR 2004-05. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER: 1. THAT THE LD. CIT(A) ERRED IN UPHOLDING THE ORDE R OF ACIT LEVYING PENALTY U/S 271(1)(C) AMOUNTING TO RS.3,75, 164/- ON THE FACTS OF THE CASE & AS PER RELEVANT LAW BY THE APPE LLANT. WITHOUT PREJUDICE TO GROUND NO.1, 2. THE LD. CIT(A) ERRED IN UPHOLDING THE LEVY OF EN TIRE PENALTY OF RS.3,75,164/-, WITHOUT APPRECIATING THAT THE SAI D PENALTY CAN BE LEVIED ONLY WITH REFERENCE TO AMOUNT OF INCOME F INALLY ASSESSED AFTER THE ORDER OF CIT(A) AND INCOME RETUR NED BY THE APPELLANT. I.T.A. NO.762 /DEL/2010 2/6 3. THAT THE ORDERS OF THE A.O. & CIT(A) ARE NOT BAS ED ON THE FACTS OF THE CASE & AS PER LAW AND HENCE ADDITIONS SUSTAI NED BY THE CIT(A) ARE TOTALLY ILLEGAL AND NOT BASED ON BINDING JUDICIAL PRECEDENTS. 2. THE BRIEF FACTS AS NOTED BY THE A.O. IN THE PENALTY ORDER ARE THAT THE ASSESSEE FILED RETURN OF INCOME DECLARING A LOS S OF RS.20,473/- AND THE ASSESSMENT U/S 143(3) WAS COMPL ETED AT AN INCOME OF RS.1.26 LACS. IN THE ASSESSMENT ORDER, I T HAS BEEN NOTED BY THE A.O. THAT DURING THIS YEAR, THE ASSESS EE HAS SHOWN RECEIPT OF RS.50,000/- ON ACCOUNT OF HIRE CHARGES A ND AGAINST SUCH RECEIPT, THE ASSESSEE HAS CLAIMED EXPENSES OF RS.30,000/- ON ACCOUNT OF SECURITY CHARGES, RS.15,000/- ON ACCO UNT OF PRELIMINARY EXPENSES AND RS.16,470/- ON ACCOUNT OF ELECTRICITY EXPENSES IN ADDITION TO OTHER EXPENSE WHICH ARE NOT DISTURBED BY THE A.O. THE A.O. HAS DISALLOWED THESE 3 EXPENS ES CLAIMED BY THE ASSESSEE UNDER THE HEAD SECURITY CHARGES, EL ECTRICITY EXPENSES AND PRELIMINARY EXPENSES TOTALING RS.61,47 0/-. REGARDING THE RECEIPT OF RS.50,000/-, IT WAS HELD B Y THE A.O. THAT THE SAME IS RECEIPT FROM THE UNDISCLOSED SOURC ES AND HE MADE ADDITION OF THE SAME U/S 68. IT IS FURTHER HE LD BY THE A.O. THAT AGAINST THE RECEIPT OF RS.50,000/- ON ACCOUNT OF HIRE CHARGES, THE SAME IS ASSESSABLE UNDER THE HEAD INC OME FROM HOUSE PROPERTY AND NOT UNDER THE HEAD INCOME FROM BUSINESS AND ACCORDINGLY, AFTER ALLOWING STATUTORY DEDUCTION U/S 24 OF 30% I.E. RS.15,000/-, HE ASSESSED THE INCOME FROM H OUSE PROPERTY AT RS.35,000/-. IN THIS MANNER, HE HAS AS SESSED THE INCOME OF THE ASSESSEE AT RS.1,25,997/- AS AGAINST LOSS OF RS..20,473/- DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME. I.T.A. NO.762 /DEL/2010 3/6 THERE IS ONE MORE ASPECT IN THIS CASE AS IN THE COM PUTATION OF INCOME, IT WAS ALSO A CLAIM OF THE ASSESSEE THAT TH ERE IS BROUGHT FORWARD LOSS OF RS.9,10,285/- AND SUBSEQUENTLY, IT WAS ADMITTED BY THE ASSESSEE BEFORE THE A.O. AS PER LETTER DATED 08.06.2006 THAT THERE IS NO BROUGHT FORWARD LOSS AND CLAIM OF CARRY FORWARD OF SUCH BROUGHT FORWARD LOSS WAS CLAIMED BY THE ASS ESSEE IN THE COMPUTATION OF INCOME BY MISTAKE. IN ADDITION TO D IFFERENCE IN THE ASSESSEES INCOME AT RS.1.26 LACS AS AGAINST TH E DECLARED LOSS BY THE ASSESSEE IN THE RETURN OF INCOME OF RS. 20,473/-, THIS CLAIM OF THE ASSESSEE REGARDING BROUGHT FORWARD LOS S OF RS.9,10,285/- WAS ALSO CONSIDERED BY THE A.O. AS TH E CONCEALED INCOME AND WHILE LEVYING THE PENALTY, THE A.O. CONS IDERED THIS CLAIM ALSO AND LEVIED PENALTY U/S 271(1) (C) ON A T OTAL AMOUNT OF RS.10,56,755/-. BEING AGGRIEVED, THE ASSESSEE CARR IED THE MATTER IN APPEAL BEFORE CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. IT IS SUBMITTED BY THE LD. A.R. THAT IN QUANTUM APP EAL, LD. CIT(A) HAS PASSED HIS ORDER ON 14.08.2007 AND THE C OPY OF THIS ORDER OF LD. CIT(A) IS AVAILABLE ON PAGE 5-9 OF THE PAPER BOOK. IT IS ALSO SUBMITTED BY HIM THAT NO APPEAL HAS BEEN FILED BY THE REVENUE BEFORE THE TRIBUNAL AGAINST THIS ORDER OF L D. CIT(A) IN QUANTUM PROCEEDINGS. OUR ATTENTION WAS DRAWN TO PA GE 4 OF THIS ORDER OF CIT(A) WHICH IS AVAILABLE ON PAGE 8 O F THE PAPER BOOK AND IT IS POINTED OUT THAT WITH REGARD TO THE ADDITION OF RS.50,000/- MADE BY THE A.O. U/S 68 OF THE I. T. AC T, THE MATTER WAS RESTORED BACK BY THE CIT(A) TO THE FILE OF THE A.O. FOR A FRESH DECISION AFTER VERIFYING AS TO WHETHER THERE IS A DOUBLE ADDITION OF THE SAME AMOUNT WHILE COMPUTING THE INC OME OF THE I.T.A. NO.762 /DEL/2010 4/6 ASSESSEE. IT IS SUBMITTED BY THE LD. A.R. THAT THE APPEAL EFFECT ORDER HAS NOT YET BEEN PASSED BY THE A.O. AND HENCE FOR THIS ADDITION OF RS.50,000/-, PENALTY CANNOT BE LEVIED. 4. REGARDING THE PENALTY LEVIED BY THE A.O. IN CONNECT ION WITH THE WRONG CLAIM OF BROUGHT FORWARD LOSSES BY THE ASSESS EE TO THE EXTENT OF RS.9,10,285/-, IT WAS SUBMITTED THAT THIS HAS NOT BEEN CLAIMED IN THE RETURN OF INCOME AND SUCH LOSS WAS C LAIMED ONLY IN THE COMPUTATION OF INCOME FILED ALONG WITH THE R ETURN OF INCOME AND NO SUCH CLAIM WAS MADE IN THE RETURN OF INCOME. IT IS SUBMITTED THAT THE RETURN OF INCOME FILED BY THE ASSESSEE IS AVAILABLE ON PAGE 2 OF THE PAPER BOOK AND HENCE, NO PENALTY IS IMPOSABLE WITH REGARD TO THIS AMOUNT OF RS.9,10,285 /- ALSO. 5. WITH REGARD TO PENALTY IMPOSED BY THE A.O. ON ACCOU NT OF OTHER ADDITIONS, NO ARGUMENT WAS ADVANCED BY THE LD. A.R. FOR THE ASSESSEE. LD. D.R. SUPPORTED THE ORDERS OF AUTHORI TIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSED TH E MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHO RITIES BELOW. WE FIND THAT COPY OF THE RETURN FILED BY TH E ASSESSEE FOR THE PRESENT YEAR IS AVAILABLE ON PAGE 2 OF THE PAPE R BOOK AND IN THE SAME, THE ASSESSEE HAS MERELY SHOWN LOSS OF RS. 20,473/- AND THERE IS NO CLAIM REGARDING ANY BROUGHT FORWARD LOS S OF RS.9,10,285/- AND AFTER INCLUDING THE LOSS OF THE C URRENT YEAR OF RS.20,473/-, IT HAS BEEN SHOWN IN THE COMPUTATION O F INCOME THAT NET LOSS TO BE CARRIED FORWARD IS RS.9,30,758/ -. ON PAGE 1 OF THE ORDER OF LD. CIT(A) ALSO IN QUANTUM PROCEEDI NGS, WHICH IS AVAILABLE ON PAGE 5 OF THE PAPER BOOK, IT IS NOT ED BY THE LD. CIT(A) ALSO THAT BUSINESS LOSS WAS ALLEGED TO BE AT RS.9,30,758/- ON THE BASIS OF COMPUTATION OF INCOM E AS AGAINST I.T.A. NO.762 /DEL/2010 5/6 THE LOSS SHOWN AT RS.20473/- BY THE ASSESSEE IN THE RETURN OF INCOME. IN THE LIGHT OF THESE FACTS, WE ARE IN AGR EEMENT WITH THE LD. A.R. FOR THE ASSESSEE THAT FOR THE PURPOSE OF I MPOSING THE PENALTY U/S 271(1)(C), THE CLAIM OF THE ASSESSEE IN THE RETURN OF INCOME HAS TO BE CONSIDERED AND SINCE THERE WAS NO CLAIM BY THE ASSESSEE IN THE RETURN OF INCOME WITH REGARD TO THIS BROUGHT FORWARD LOSS OF RS.9,10,285/-, NO PENALTY CAN BE IM POSED ON THIS AMOUNT OF RS.9,10,285/-. 7. WITH REGARD TO ADDITION MADE BY THE A.O. U/S 68 OF RS.50,000/-, WE FIND THAT THIS ASPECT HAS BEEN RESTORED BACK BY LD. CIT(A) TO THE FILE OF THE A.O. IN QUANTUM PROCEEDINGS AND HE HAS DIRECTED THE A.O. TO VERIFY AS TO WHETHER THERE IS DOUBLE AD DITION OF THE SAME AMOUNT. IT WAS THE SUBMISSION OF THE LD. A.R. THAT NO APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THIS O RDER OF CIT(A) AND HENCE THIS ASPECT HAS BECOME FINAL. THE A.O. HAS TO GIVE EFFECT TO THE ORDER OF LD. CIT(A) AND IF IN THE APPEAL EFFECT ORDER IT IS ACCEPTED THAT THERE IS DOUBLE AD DITION OF RS.50,000/- THEN NO PENALTY CAN BE IMPOSED ON THIS ADDITION ALSO OF RS.50,000/-. THE A.O. SHALL PASS APPEAL EF FECTS ORDER FIRST AS PER THE DIRECTION OF LD. CIT(A) IN HIS ORD ER DATED 14.08.2007 IN QUANTUM PROCEEDINGS AND THEREAFTER, H E SHOULD FINALLY DETERMINE THE AMOUNT OF PENALTY. 8. WITH REGARD TO 3 DISALLOWANCES OF EXPENSES OF RS.30 ,000/- ON ACCOUNT OF SECURITY CHARGES, RS.16,470/- ON ACCOUNT OF ELECTRICITY EXPENSES AND RS.15,000/- ON ACCOUNT OF PRELIMINARY EXPENSES, NO ARGUMENT HAS BEEN ADVANCED BY THE LD. A.R. FOR THE ASSESSEE AS TO WHY PENALTY SHOULD NOT BE IMPOSE D ON THESE DISALLOWANCES AND HENCE WE DO NOT FIND ANY REASON T O INTERFERE I.T.A. NO.762 /DEL/2010 6/6 IN THE ORDER OF LD. CIT(A) WITH REGARD TO IMPOSITIO N OF PENALTY FOR THESE DISALLOWANCES. WE, THEREFORE, DIRECT THE A.O. TO FIRST GIVE EFFECT TO THE ORDER OF LD. CIT(A) REGARDING TH E CLAIM OF THE ASSESSEE THAT THERE IS DOUBLE ADDITION OF RS.50,000 /- AND THE PENALTY SHOULD BE QUANTIFIED ON THE BASIS OF DIFFER ENCE IN INCOME FINALLY DETERMINED AS PER SUCH APPEAL EFFECT ORDER COMPARED WITH LOSS DECLARED BY THE ASSESSEE IN ITS RETURN OF INCOME OF RS.20,473/-. WITH THESE OBSERVATIONS, WE CONFIRM THE ORDER OF LD.CIT(A). 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PA RTLY ALLOWED AS INDICATED ABOVE. 10. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON T HE DATE OF HEARING I.E. ON 30.06.2010. SD./- SD./- (C. L. SETHI) (A K GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:30 TH JUNE, 2010 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI