Pearl Wears, Gurgaon V. Addl. DIT, New Delhi

ITA 815/DEL/2012

• Counselvise Citation: 81520114 RSA 2012
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 22-08-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 17-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHUMANA SEN
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI G.D. AGRAWAL, HONBLE VICE-PRESIDENT AND SHRI RAJPAL YADAV, HONBLE JUDICIAL MEMBER ITA NO. 815/DEL/2012 ASSESSMENT YEAR: 2006-07 PEARL WEARS, VS. ADDITIONAL CIT, PLOT NO. 446, UGYOD VIHAR, RANGE-27, PHASE-V, GURGAON-122 016 NEW DELHI. (PAN: AAHFP4373L) (APPELLANT) (RESPONDENT) REVENUE BY: SHRI PRADEEP DINOD IA, FCA ASSESSEE BY: MS. SHUMANA SE N, DR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LEARNED CIT DATED 09.12.2011 PASSED FOR ASSESSMENT YEAR 2006-07 . THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT LEARNED CIT(APPEA LS) HAS ERRED IN CONFIRMING THE PENALTY OF RS.88,593 IMPOSED UNDER S EC. 271(1)(C) OF THE INCOME-TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA S FILED ITS RETURN OF INCOME ON 30 TH OCTOBER, 2006 DECLARING AN INCOME OF RS.19,85,000. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSE SSMENT AND A NOTICE UNDER SEC. 143(2) OF THE ACT WAS ISSUED AND SERVED UPON T HE ASSESSEE. ON SCRUTINY OF THE CAPITAL ACCOUNT OF SHRI DEEPAK SETH, PARTNER , REVEALS AN ADDITION TO 2 CAPITAL OF RS.211,65,691 DURING THE YEAR. ASSESSIN G OFFICER HAS DIRECTED THE ASSESSEE TO EXPLAIN THIS ADDITION TO THE CAPITAL AC COUNT. THE ASSESSEE HAS SUBMITTED THE DETAILS. LEARNED ASSESSING OFFICER H AS ACCEPTED THE DETAILS EXCEPT THE FOLLOWING AMOUNTS: DATE SOURCE OF ADDITION AMOUNT 30/7/2005 SALE OF CAR NO. DDB5331 OF SH. DEEPAK JAIN 15,050/- 31/01/2006 RECD. FROM THE BLUES ON ACCOUNT OF SH. DEEPAK SETH. 44,787 3. ACCORDINGLY, HE MADE THE ADDITION. SIMILARLY, LE ARNED ASSESSING OFFICER HAS CONFRONTED THE ASSESSEE THAT IN THE AUD IT REPORT AT PARA 17F, THE AUDITOR HAD REPORTED THAT A SUM OF RS.40.406 PAID A S A REMUNERATION CHARGES TO THE AUDITORS AND A SUM OF RS.1,62,959 PAID AS FR EIGHT CHARGES ARE NOT ALLOWABLE AS DEDUCTION AS PER SECTION 40(A)(IA) OF THE ACT. ASSESSING OFFICER CONFRONTED THIS OBSERVATION TO THE ASSESSEE. THE AS SESSEE VIDE HIS LETTER DATED 10.2.2008 SUBMITTED AS UNDER: THESE PAYMENTS WERE INADVERTENTLY OMITTED TO BE AD DED TO THE INCOME. THESE MAY KINDLY BE ADDED IN THE ASSESSMENT ORDER. 4. LEARNED ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS QUA THESE THREE ADDITIONS. IN RESPONSE TO THE NOTICE RE CEIVED UNDER SEC. 271(1)(C) 3 READ WITH SECTION 274 OF THE ACT, IT WAS SUBMITTED THAT DUE TO A BONA FIDE MISTAKE, THE AMOUNTS OF RS.40,406 AND RS.1,62,959 W ERE NOT ADDED BACK WHILE FILING THE RETURN. LEARNED ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND IMPOSED A PENALTY O F RS.88,593 WHICH IS EQUIVALENT TO THE TAX SOUGHT TO BE EVADED ON THE AD DITIONS MADE TO THE INCOME OF THE ASSESSEE. 5. APPEAL TO THE LEARNED CIT(APPEALS) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 6. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVE, W E HAVE GONE THROUGH THE RECORD CAREFULLY. THE OPERATIVE FORCE OF THE RE ASONING ASSIGNED BY THE LEARNED REVENUE AUTHORITIES BELOW WHILE IMPOSING TH E PENALTY IS THAT ASSESSEE HAS NOT COMMITTED BONA FIDE MISTAKE, RATHE R IT IS A DELIBERATE ATTEMPT. LEARNED ASSESSING OFFICER WAS OF THE VIEW THAT ONCE AUDITORS HAVE QUALIFIED THAT DEDUCTION OF AUDITORS REMUNERATION A ND FREIGHT CHARGES WOULD NOT BE ADMISSIBLE TO THE ASSESSEE, THEN ASSESSEE SH OULD BE VIGILANT TO WRITE BACK THESE AMOUNTS WHILE PREPARING THE RETURN. IN O UR OPINION, THIS REASONING IS NOT SUSTAINABLE, BECAUSE IN THE CAPITAL ACCOUNT OF DEEPAK SETH, AN ADDITION OF RS.211,65,691 WAS MADE. OUT OF THIS TOTAL ADDITI ON, SOURCE OF A SUM OF 4 RS.59,837 REMAINED TO BE EXPLAINED BY THE ASSESSEE. THE ASSESSEE HAS GIVEN AN EXPLANATION THAT THIS AMOUNT REPRESENTS SALE OF CAR AND RECOVERED FROM THE BLUES ON ACCOUNT OF SHRI DEEPAK SETH. THE ADDITION WAS MADE BECAUSE SUPPORTING DOCUMENTS WERE NOT GIVEN BY THE ASSESSEE . ITS EXPLANATION WAS NOT FOUND TO BE FALSE. ONLY THING IS THAT ASSESSEE COULD NOT SUBSTANTIATE ITS EXPLANATION WITH THE SUPPORTING EVIDENCE. THUS, THI S AMOUNT, PRIMA FACIE, CANNOT BE CONSIDERED FOR THE PURPOSE OF THE PENALTY . WITH REGARD TO TWO OTHER ADDITIONS, WE FIND THAT THESE EXPENSES ARE OF REVENUE NATURE. WHEN ASSESSEE MADE THE PAYMENTS, IT FAILED TO DEDUCT THE TDS, THEREFORE, A DEDUCTION CANNOT BE CLAIMED AS PER SECTION 40(A)(AI ) OF THE ACT. LEARNED FIRST APPELLATE AUTHORITY WHILE CONFIRMING THE PENALTY RE FERRED TO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF ZOOM CO MMUNICATIONS REPORTED IN 327 ITR 510. THE ASSESSEE HAS RELIED UPON THE DE CISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS REPORTED IN 322 ITR 158. IN THE CASE OF ZOOM COMMUNICATIONS, AS SESSEE HAS CLAIMED THE DEDUCTION OF INCOME-TAX PAID WHICH IN ANY CASE NOT ADMISSIBLE. IN THAT BACKGROUND, PENALTY WAS IMPOSED. IN THE PRESENT CAS E, PRIMA FACIE, EXPENSES WERE OF REVENUE NATURE, BUT THEY WERE NOT ADMISSIBL E ON ACCOUNT OF NON- DEDUCTION OF TAX. IN THE ASSESSMENT PROCEEDINGS ITS ELF, ASSESSEE HAS SUBMITTED THAT DUE TO A BONA FIDE ERROR, THESE AMOU NTS COULD NOT BE ADDED 5 BACK. THE REVENUE AUTHORITIES HAVE NOT REFERRED ANY CIRCUMSTANCE OR PAST CONDUCT OF THE ASSESSEE WHICH SUGGESTS THAT SUCH TY PE OF MISTAKE EXPRESSED BY THE ASSESSEE AS BONA FIDE CANNOT HAPPEN IN ITS C ASE. THOUGH IT IS QUITE DIFFICULT TO PROVE OR DISPROVE SUCH TYPE OF CLAIM W ITH THE HELP OF DEMONSTRATIVE EVIDENCE BUT THE ASSESSING OFFICER WH O ASSESSED THE ASSESSEE ANNUALLY MAY REFER SOME CIRCUMSTANCE WHICH CAN HIGH LIGHT THE ANTECEDENTS OF THE ASSESSEE OR ITS CONDUCT IN EARLIER OR SUBSEQ UENT YEAR TO SUGGEST THAT IT WAS NOT A BONA FIDE MISTAKE RATHER IT WAS A DELIBER ATE ATTEMPT. NO SUCH MATERIAL IS AVAILABLE ON THE RECORD, THEREFORE, WE DO NOT HAVE ANY HESITATION TO CONCLUDE THAT SUCH TYPE OF MISTAKE CAN HAPPEN WH ILE FILING THE RETURN. THEREFORE, WE ALLOW THE APPEAL OF THE ASSESSEE AND DELETE THE PENALTY. DECISION PRONOUNCED IN THE OPEN COURT ON 12.10.20 12 SD/- SD/- ( G.D. AGRAWAL ) ( RAJPAL YADAV ) VICE-PRESIDENT JUDICIAL MEMBER DATED: 12/10/2012 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR