V.K. Kapoor & Associates Pvt. Ltd., New Delhi V. ITO, Ward- 26(1), New Delhi

ITA 7794/DEL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4726 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 07-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: N C JAIN; N S BHATNAGAR
• Keywords: TDS; Set aside
• Section: 271(1)(c); 147; 154

Judgement Text

1 ITA NO. 7794/DEL/2018 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SH. R.K PANDA, ACCOUNTANT MEMBER ITA NO.7794/DEL/2018 ASSESSMENT YEAR: 2007-08 V. K. KAPOOR & ASSOCIATES PVT. LTD. 17, NETAJI SUBHASH MARG, DARYA GANJ, NEW DELHI, PIN: 110002 PAN: AABCV1222F VS ITO WARD-26(1) C.R. BUILDING, NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY SHRI N. S. BHATNAGAR, ADV & SH. N. C. JAIN, ADV RESPONDENT BY SH. S. L. ANURAGI, SR. DR DATE OF HEARING: 06/05/2019 DATE OF PRONOUNCEMENT: 2 0 /05/2019 ORDER PER R.K. PANDA, AM: 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 12 TH OCTOBER, 2018 OF THE CIT(A)-9, NEW DELHI FOR ASSESSMENT YEAR 2007-08. 2 ITA NO. 7794/DEL/2018 2. LEVY OF PENALTY OF RS. 2,70,000/- U/S 271(1)(C) OF THE INCOME TAX ACT BY THE A.O WHICH HAS BEEN UPHELD BY THE CIT(A) IS THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE GRO UNDS OF APPEAL. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SEE IS A PRIVATE LIMITED COMPANY AND FILED ITS RETURN OF INC OME ON 29 TH OCTOBER, 2007 DECLARING TOTAL INCOME OF RS.1,62,300 /- WHICH WAS PROCESSED U/S 143(1). SUBSEQUENTLY, THE CASE O F THE ASSESSEE WAS REOPENED BY ISSUE OF NOTICE U/S 147 AN D THE ASSESSMENT WAS COMPLETED U/S 147/143 (3) ON A TOTAL INCOME OF RS.15,76,510/-, AFTER MAKING ADDITION OF RS.10,75,5 39/- ON ACCOUNT OF DEDUCTIONS CLAIMED U/S 24(B) AND AMOUNT OF RS. 1,60,104/- FOR UNDISCLOSED AMOUNT OF INCOME FROM OT HER SOURCES. THE ASSESSEE PREFERRED APPEAL BEFORE THE LD.CIT(A) WHO SUSTAINED AN ADDITION OF RS.3,63,584/- OUT OF T HE ABOVE ADDITIONS. THEREAFTER, THE ASSESSEE FILED APPLICAT ION U/S 154 AND FINALLY THE INCOME WAS RECOMPUTED AT RS. 8,62,157/- . SUBSEQUENTLY, THE A.O INITIATED PENALTY PROCEEDINGS AND LEVIED PENALTY OF RS. 2,70,000/- U/S 271(1)(C) OF THE INCO ME TAX ACT, 1961. 4. IN APPEAL, THE LD.CIT (A) UPHELD THE ACTION OF THE A.O BY OBSERVING AS UNDER:- 3.2 I HAVE PERUSED THE GROUNDS OF APPEAL, THE SUBM ISSIONS OF THE APPELLANT AND THE ORDER OF THE AO. THE BRIEF FA CTS OF THE CASE ARE THAT THE AO, DURING THE ASSESSMENT PROCEEDINGS, HAD COMPLETED THE ASSESSMENT OF THE APPELLANT AT RS 15,86,400, AS AGA INST THE RETURNED INCOME OF RS 5,00,970, FILED BY THE APPELLANT, THER EBY MAKING AN 3 ITA NO. 7794/DEL/2018 ADDITION OF RS 10,79,820 IN THE HANDS OF THE APPELL ANT. AGAINST THE ORDER OF THE AO, THE ASSESSEE WENT TO THE APPELLATE AUTHORITY. THEREAFTER, THE CIT(A) 13, VIDE HIS ORDER DT 08.11. 2016 HAD RESTRICTED THE AMOUNT OF ADDITION AND HAD RECOMPUTED THE INCOM E OF THE APPELLANT AT RS 8,62,157/-. THE AO, ON SUCH ADDITIO NS, LEVIED A PENALTY OF RS 2,70,000, UNDER THE PROVISIONS OF SEC 271(1)(C) OF THE ACT. 3.4. THE AO U/S 271(1)(C) COMPUTED TAX PAYABLE ON THE TOTAL ASSESSED INCOME AND LEVIED PENALTY OF RS. 2,70,000/ - THEREUPON. HOWEVER, THE AO HAS LEVIED PENALTY ON ASSESSED INCO ME WITHOUT REDUCING THE AMOUNT OF RETURNED INCOME THERE FROM A ND THUS, THE PENALTY IS WRONGLY COMPUTED. AS EVIDENT FROM THE RE CTIFICATION ORDER DATED 28/07/2017 THE ADDITION OF RS. 3,63,384/- HAS BEEN SUSTAINED BY THE CIT(A)-13, DELHI ONLY ON WHICH PENALTY U/S 2 71(1)(C) OF THE ACT CAN BE LEVIED. THUS, THE AO IS DIRECTED TO RE-COMPU TE THE AMOUNT OF PENALTY @ 100% OF TAX SOUGHT TO BE EVADED ON THE ST ATED AMOUNT OF RS. 3,63,384/- AS AGAINST THE ASSESSED INCOME OF RS . 8,62,157/-. 3.5 BEFORE ME, THE APPELLANT HAS SUBMITTED THAT NO PENALTY CAN BE LEVIED ON THE ADDITION, SINCE THE ADDITION SUSTA INED BY THE CIT(A)- 13, DELHI IS ON ESTIMATE BASIS. THE APPELLANT CLAIM ED THAT THE AO HAS ERRED IN COMPUTING THE AMOUNT OF DISALLOWANCE IN TH E HANDS OF THE APPELLANT. 3.6 ON CONSIDERING THE SUBMISSIONS OF THE APPELLANT , I DO NOT FIND ANY MERIT IN IT. THE CIT(A), VIDE ORDER DT 08, 11,2016, HAD VERY WELL CONCLUDED THAT THE ALLOWABLE INTEREST, UNDER T HE PROVISIONS OF SEC 24(B) IS RS 217663 AS AGAINST THE CLAIM OF THE APPE LLANT AT RS 581047. THIS MEANS THAT THE APPELLANT HAD INTENTION ALLY JACKED UP THE DEDUCTION, TO LOWER ITS TAXES, THEREBY LEADING TO CONCEALMENT OF INCOME BY THE APPELLANT. THE CONCEALMENT OF INCOME IS VERY MUCH APPARENT FROM THE ASSESSMENT ORDER AND THE APPELLAT E ORDER. THUS THIS INTENTIONAL REDUCTION IN THE TAXABLE INCOME OF THE APPELLANT, WHICH HAS BEEN UPHELD BY THE APPELLATE AUTHORITY AS WELL, 4 ITA NO. 7794/DEL/2018 TANTAMOUNT TO CONCEALMENT OF INCOME AND THUS, MAKIN G IT ELIGIBLE FOR PENALTY U/S 271(1)(C). THUS, THE GROUNDS RAISED BY THE APPELLANT ARE DISMISSED AND THE PENALTY IS UPHELD. 5. AGGRIEVED OF SUCH ORDER OF THE CIT (A), T HE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LD. COUNSEL FOR THE ASSESSEE DRE W THE ATTENTION OF THE BENCH TO PAGES 26 TO 28 OF THE PAPER BOOK AND S UBMITTED THAT FULL DETAILS WERE GIVEN BY THE ASSESSEE AND NO THING WAS HIDDEN FROM THE DEPARTMENT. THE DETAILS OF INTERES T WAS DECLARED IN THE AUDIT REPORT. REFERRING TO THE DEC ISION OF THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS LTD. REPORTED IN 322 ITR 324, HE SUBMITTED THAT PEN ALTY IN THE INSTANT CASE IS NOT LEVAIBLE MERELY ON ACCOUNT OF C ERTAIN DISALLOWANCE. FURTHER, THE INTEREST EXPENSES WERE DISALLOWED ON ESTIMATE BASIS. SINCE, THERE IS NO FINDING IN THE INSTANT CASE THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN THE RE TURN OF INCOME IS INCORRECT OR FALSE, THEREFORE, NO PENALTY IS LEV IABLE. HE ACCORDINGLY SUBMITTED THAT PENALTY IN THE INSTANT C ASE WAS NOT SUSTAINABLE. 7. THE LD. DR RELIED UPON THE ORDER OF THE CIT(A) AND A.O. 8. I HAVE HEARD THE RIVAL ARGUMENTS MADE B Y BOTH THE SIDES AND CONSIDERED THE VARIOUS DECISIONS RELIED BY THE LD. COUNSEL FOR THE ASSESSEE. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT FULL PARTICULARS WERE GIVEN AND THERE WAS NO 5 ITA NO. 7794/DEL/2018 CONCEALMENT OF ANY PARTICULARS OF INCOME AND DISALL OWANCE OF INTEREST U/S 24(B) IS MAINLY ON ACCOUNT OF ESTIMATE D DISALLOWANCE. 9. I FIND SOME FORCE IN THE ARGUMENTS OF TH E LD. COUNSEL FOR THE ASSESSEE. AS PER THE RETURN OF INCOME AND AS P ER THE ASSESSMENT ORDER, THERE IS NO DIFFERENCE IN THE REN T RECEIPT AND THE MUNICIPALS TAX PAID BUT ONLY DIFFERENCE IS ON A CCOUNT OF INTEREST. THE EXPENSES U/S 24(A)/ 24(B) AS PER THE RETURN OF INCOME IS RS. 10,43,827/- WHEREAS AS PER THE ASSESS MENT ORDER SUCH AMOUNT IS RS. 6,80,443/-. EVEN THE INTEREST U /S 24(A) AS PER THE RETURN OF INCOME AND AS PER THE ASSESSMENT ORDER IS SAME. THE ONLY DIFFERENCE IS IN THE INTEREST CALCU LATED AS PER SECTION 24(B) WHICH AS PER THE RETURN OF INCOME IS RS.5,81,047/- WHERE AS PER THE ASSESSMENT ORDER THE SAME IS 2,46, 662/-.A PERUSAL OF THE DETAILS OF THE INTEREST REFLECTED IN THE AUDIT REPORT AT RS.5,81,047/- AS UNDER:- LIST OF INTEREST PAID INTEREST TDS PAID 1. SH. RAJESH KAPOOR 45577 4649 2. SH. DINESH KAPOOR 54717 5582 3. MS. PRABHA KAPOOR 88650 9043 4. MS. MUKTI KAPOOR 123690 12617 5. MR. VINOD KUMAR KHANNA 109953 11216 6. M/S SHIVA PETROLEUM INDIA LTD. 158460 3559 6 ITA NO. 7794/DEL/2018 TOTAL- 581047 46666 10. FROM THE ABOVE, IT IS CLEAR THAT ALL PAR TICULARS WERE GIVEN AND THERE IS NO CONCEALMENT AS SUCH WHICH IN MY OPINION WARRANTS LEVY OF PENALTY/S 271(1)(C). THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. L TD. REPORTED IN 322 ITR 158 HAS HELD THAT A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW CANNOT BY ITSELF WILL AMOUN T TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FU RNISHING INACCURATE PARTICULARS. FURTHER, WHEN THE ASSESSEE HAS DECLARED INCOME OF RS.5,00,971/- AND THE A.O COMPLETED THE A SSESSMENT ON A AT TOTAL INCOME AT RS. 8,62,157/-, I FAIL TO U NDERSTAND AS TO HOW AND WHY THE PENALTY HAS BEEN LEVIED BY THE A.O ON THE ASSESSED INCOME AT RS. 8,62,157/- INSTEAD OF THE DI FFERENCE OF RS.3,63,584/- BEING EXCESS INTEREST CLAIMED AS PER U/S 24(B) OF THE INCOME TAX ACT. THIS SHOWS THAT THE A.O HAS NO T APPLIED HIS MIND. ALTHOUGH, THE CIT(A) HAS CONSIDERED THE SAME AND SUSTAINED PENALTY ON RS. 36,33,584/-, HOWEVER, THE SAME IN MY OPINION IS NOT JUSTIFIED. 11. IN VIEW OF THE ABOVE DISCUSSION AND CONSIDERING THE FACT THAT FULL PARTICULARS WERE GIVEN AND NOTHING WAS H IDDEN FROM THE DEPARTMENT AND THE DISALLOWANCE OF INTEREST OF RS.3,63,584/- WAS ON ESTIMATED BASIS, THEREFORE, I AM OF THE CONSIDERED OPINION THAT IT IS NOT A FIT CAST FOR LE VY OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT. THEREFORE, I SET ASIDE THE ORDER 7 ITA NO. 7794/DEL/2018 OF THE CIT(A) AND DIRECT THE A.O TO CANCEL THE PENA LTY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLO WED. 12. IN RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT AT T HE TIME OF HEARING ITSELF I.E., ON 20.05.2019. SD/- (R.K PANDA) ACCOUNTANT MEMBER R.N* DATE:- 20.05.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 08.05.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 08.05.2019 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 20.05.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 20.05.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 21.0 5.2019 DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 8 ITA NO. 7794/DEL/2018