ACIT, Ludhiana V. Sh. Shiv Parshad Aggarwal, Ludhiana

ITA 820/CHANDI/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9820 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 29-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: SUBHASH AGGARWAL
• Keywords: Wrong claim; Difference of opinion
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 820/CHD/2014 (ASSESSMENT YEAR : 2009-10) THE A.C.I.T., VS. SH.SHIV PARSHAD AGGARWAL,, CIRCLE V, C/O M/S SALIGRAM SHIVPARSHAD, LUDHIANA. G.T. ROAD, MILLER GANJ, LUDHIANA. PAN: ABKPA7653E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH, DR RESPONDENT BY : SHRI SUBHASH AGGARWAL DATE OF HEARING : 01.07.2015 DATE OF PRONOUNCEMENT : 03.07.2015 O R D E R PER BHAVNESH SAINI, J.M. : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, LUDHIANA DATED 17.7.2014 FOR ASSESSME NT YEAR 2009-10, CHALLENGING THE CANCELLATION OF PENAL TY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2 2. BRIEFLY, THE FACTS ARE THAT THE ASSESSMENT IN T HIS CASE WAS COMPLETED AT TOTAL INCOME OF RS.3.55 CRORE S AGAINST THE RETURNED INCOME OF RS.3.15 CRORES. THE ONLY A DDITION MADE DURING THE COURSE OF ASSESSMENT WAS THE DISALL OWANCE OF RS.39,80,707/- UNDER SECTION 14A READ WITH RULE 8D. THE QUANTUM ADDITION WAS UPHELD BY THE LEARNED CIT (APP EALS). THE ASSESSING OFFICER VIDE SEPARATE ORDER LEVIED TH E PENALTY. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE TH E LEARNED CIT (APPEALS) AND IT WAS SUBMITTED THAT THE ASSESSI NG OFFICER MADE THE FOLLOWING DISALLOWANCES : I) SECTION 14A/RULE 8D(II) RS.33,08,071/- II) SECTION 14A/RULE 8D(III) RS. 6,72,635/- TOTAL : RS.39,80,706/- 3. THE DISALLOWANCE WAS MADE ON THE INTEREST PAYME NT OF RS.77,72,910/-. IT WAS SUBMITTED BEFORE THE L EARNED CIT (APPEALS) THAT THE BORROWED FUNDS ON WHICH INTEREST WAS PAID WERE GIVEN ON LOAN AND HIGHER AMOUNT OF INTEREST WA S EARNED ON THE SAME. ULTIMATELY, THE POSITION WAS THAT TH E ASSESSEE DECLARED INTEREST INCOME OF RS.1,18,29,523/- AND TH E INTEREST EXPENDITURE WAS RS.77,72,910/- AND AS SUCH, NO ADDI TION WAS CALLED FOR. THE LEARNED CIT (APPEALS), HOWEVER, D ID NOT ACCEPT THE CONTENTION OF THE ASSESSEE. THE ASSESS EE PREFERRED AN APPEAL BEFORE THE TRIBUNAL, WHO VIDE T HEIR ORDER DATED 27.3.2014 ACCEPTED THE CONTENTION OF THE ASSE SSEE REGARDING NETTING OF INTEREST AND HELD THAT IF AFTE R SETTING OFF NO INTEREST EXPENDITURE IS REMAINING TO BE SET OFF AGAINST THE INTEREST INCOME OFFERED UNDER THE HEAD INCOME FROM OTHER 3 SOURCES, THERE IS NO MERIT IN MAKING THE DISALLOWA NCE AND THUS DELETED THE ADDITION OF RS.33,08,071/-. HOWE VER, THE ADDITION OF RS.6,72,635/- WAS UPHELD. IT WAS, THE REFORE, SUBMITTED THAT THE ASSESSEE HAS DISCLOSED ALL THE F ACTS RELATING TO EARNING OF DIVIDEND INCOME AND EXPENDIT URE BEFORE THE AUTHORITIES BELOW. THE ASSESSEE RELIED UPON S EVERAL DECISIONS IN SUPPORT OF THE CONTENTION THAT THE PEN ALTY IS NOT LEVIABLE IN SUCH CIRCUMSTANCES INCLUDING THE DECISI ON OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIA NCE PETROPRODUCTS P. LTD., 322 ITR 158. THE LEARNED C IT (APPEALS) CONSIDERING THE SUBMISSION OF THE ASSESSE E CANCELLED THE PENALTY AND ALLOWED THE APPEAL OF THE ASSESSEE. HIS FINDINGS IN PARAS 3.3 TO 3.5 OF THE APPELLATE O RDER ARE REPRODUCED AS UNDER : 3.3 I HAVE CAREFULLY CONSIDERED THE APPELLANT'S S UBMISSIONS. IT IS A TRITE LAW THAT THE ASSESSMENT PROCEEDINGS AND P ENALTY PROCEEDINGS ARE SEPARATE PROCEEDINGS AND ARE DISTIN CT AND INDEPENDENT OF EACH OTHER. IN THE ASSESSMENT PROCEE DINGS, THE AO HAS TO SHOW THAT THE ADDITIONS MADE TO THE INCOME O F THE ASSESSEE ARE IN FACT THE INCOME OF THE ASSESSEE. HOWEVER, IN T HE PENALTY PROCEEDINGS, THE AO HAS TO BRING ON RECORD SOME FUR THER MATERIAL TO DEMONSTRATE THAT THE ASSESSEE HAD CONCEALED ITS INC OME OR FURNISHED INACCURATE PARTICULARS OF INCOME. WHETHER THERE IS ANY CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS W OULD DEPEND UPON THE RETURN FILED BECAUSE THAT IS THE ONLY DOCUM ENT, WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. THE PENALTY IN THIS CASE HAS BEEN IMPOSED ON THE DISALLOWANCES MADE U/S 14A OF THE IT ACT. THE EXPENSES WHICH HAVE BEEN DISALLOWED WERE DULY SHOWN IN THE RETURN OF INCOME. THIS IS THEREFORE NO T A CASE OF CONCEALMENT OF INCOME. FURTHER, IN THE PRESENT CASE, N O INFORMATION GIVEN IN THE RETURN WAS FOUND TO BE INCORRECT OR IN ACCURATE. IT IS NOT AS IF ANY STATEMENT MADE OR ANY DETAIL SUPPLIED WA S FOUND TO BE 4 FACTUALLY INCORRECT. THE EXPENSES CLAIMED BY THE APP ELLANT HAVE NOT BEEN FOUND BOGUS OR FALSE BY THE AO. THUS, THE GENU INENESS OF THE EXPENSES INCURRED BY THE APPELLANT HAS NOT BEEN DOUB TED BY THE AO. HENCE, THE APPELLANT CANNOT BE HELD GUILTY OF FURNIS HING INACCURATE PARTICULARS. THERE IS NO FINDING THAT ANY DETAILS SUP PLIED BY THE APPELLANT IN ITS RETURN WERE FOUND TO BE INCORRECT O R ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO Q UESTION OF INVITING THE PENALTY UNDER SECTION 271(L)(C) OF THE ACT. A ME RE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WI LL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE APPELLANT. SUCH CLAIM MADE IN THE RETURN CANNOT AMOU NT TO 'INACCURATE PARTICULARS'. THE QUESTION OF DISALLOWAN CE U/S 14A AND ITS QUANTIFICATION IS CONTENTIOUS, WHICH LEADS TO THE INFERENCE THAT THE DIFFERENCE OF OPINION BETWEEN THE APPELLANT AND THE A.O. IS BONA FIDE. THIS IS ALSO EVIDENT FROM THE FACT THAT THE HO N'BLE ITAT HAS DELETED THE DISALLOWANCE OF RS. 33,08,071/.- OUT OF THE TOTAL DISALLOWANCE OF RS. 39,80,706/-. THUS, IT CANNOT BE HELD THAT THE APPELLANT HAS FILED INACCURATE PARTICULARS OF INCOME OR HAD CONCEALED ITS INCOME AND, THEREFORE, THE PENALTY CANN OT BE LEVIED ON THE APPELLANT. THE RATIO OF JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF M/S RELIANCE PETRO CHEMICALS LTD. REPORTED IN (2010) 322 ITR 158 (SC), IS APPLICABLE TO THE 'WE ARE NOT CONCERNED IN THE PRESENT CASE WITH THE MENS REA. HOWE VER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A M ATTER OF FACT, THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS. IN WEBSTE R'S DICTIONARY, THE WORD 'INACCURATE' HAS BEEN DEFINED AS: 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING T O TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRANSCRI PT.' WE HAVE ALREADY SEEN THE MEANING OF THE WORD 'PARTI CULARS' IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TR UTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN W ERE FOUND TO 5 BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTIO N 271(L)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE P ARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE I N THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. IT WAS TRIED TO BE SUGGESTED THAT SECTION 14A OF THE ACT SPECIFICALLY EXCLUDED THE DEDUCTIONS IN RESPECT OF THE EXPENDITUR E INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. IT WAS FURTHER POINTED OUT THAT THE DIVIDENDS FROM THE SHARES DID NOT FORM THE PART OF THE TOTAL INCOME. IT WAS, THEREFORE, REITERATED BEFORE US THAT THE ASSESSING OFFICER HAD CORRECTLY REACHED THE CONCLUSION THAT SINCE THE ASS ESSEE HAD CLAIMED EXCESSIVE DEDUCTIONS KNOWING THAT THEY ARE INCORRECT; IT AMOUNTED TO CONCEALMENT OF INCOME. IT WAS TRIED TO B E ARGUED THAT THE FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FO RMS; (I) AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) AN IT EM OF EXPENDITURE MAY BE FALSELY (OR IN AN EXAGGERATED AMOU NT) CLAIMED, AND BOTH TYPES ATTEMPT TO REDUCE THE TAXABLE INCOME AND, THEREFORE, BOTH TYPES AMOUNT TO CONCEALMENT OF PART ICULARS OF ONE'S INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE DO NOT AGREE, AS THE ASSESSEE HAD FURNISHED ALL T HE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH D ETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COUL D BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT . MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, W HICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVEN UE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENAL TY TINDER SECTION 271(L)(C). IF WE ACCEPT THE CONTENTION OF THE REVEN UE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(L)(C). THAT IS CLEARLY NOT THE INTEND MENT OF THE LEGISLATURE. IN THIS BEHALF THE OBSERVATIONS OF THIS COURT MADE IN SREE KRISHNA ELECTRICALS V. STATE OF TAMIL NADU [2009] 23 VST 249 AS REGARDS 6 THE PENALTY ARE APPOSITE. IN THE AFOREMENTIONED DECIS ION WHICH PERTAINED TO THE PENALTY PROCEEDINGS UNDER THE TAMI L NADU GENERAL SALES TAX ACT, THE-COURT HAD FOUND THAT THE AUT HORITIES BELOW HAD FOUND THAT THERE WERE SOME INCORRECT STATE MENTS MADE IN THE RETURN. HOWEVER, THE SAID TRANSACTIONS WERE REF LECTED IN THE ACCOUNTS OF THE ASSESSEE. THIS COURT, THEREFORE, OBSERV ED: 'SO FAR AS THE QUESTION OF PENALTY IS CONCERNED THE ITEMS WHICH WERE NOT INCLUDED IN THE TURNOVER WERE FOUND INCORPORATED IN THE APPELLANT'S ACCOUNT BOOKS. WHERE CERTAIN ITEMS WHICH ARE NOT INCLUDED IN THE TURNOVE R ARE DISCLOSED IN THE DEALER'S OWN ACCOUNT BOOKS AND THE ASSESSING AUTHORITIES INCLUDES THESE ITEMS IN THE DEA LER'S TURNOVER DISALLOWING THE EXEMPTION, PENALTY CANNOT BE IMPOSED. THE PENALTY LEVIED STANDS SET ASIDE.' THE SITUATION IN THE PRESENT CASE IS STILL BETTER AS NO FAULT HAS BEEN FOUND WITH THE PARTICULARS SUBMITTED BY THE ASSE SSEE IN ITS RETURN. THE TRIBUNAL, AS WELL AS, THE COMMISSIONER OF INCOME- TAX (APPEALS) AND THE HIGH COURT HAVE CORRECTLY REACHED THIS CONCLUSION AND, THEREFORE, THE APPEAL FILED BY THE R EVENUE HAS NO MERITS AND IS DISMISSED. ' 3.4 SIMILARLY, THE HON'BLE PUNJAB AND HARYANA HIGH COURT IN CIT VS SHAHABAD CO-OP SUGAR MILLS LTD.[322 ITR 73(P & H)] HELD THAT MAKING OF WRONG CLAIM IS NOT AT PAR WITH CONCEALMENT OR GIVING OF INACCURATE INFORMATION , WHICH MAY CALL FOR LEVY OF PENALTY UNDER SECTION 271(L)(C) OF THE ACT. 3.5 IN VIEW OF THE ABOVE DISCUSSED POSITION, THE PENALTY LEVIED ON THIS DISALLOWANCE IS HEREBY CANCELLED. THESE GROUNDS OF APPEAL ARE ACCORDINGLY ALLOWED. 4. GROUND NO. 4:- THIS GROUND OF APPEAL IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC COMMENTS. 7 4. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES AND PERUSED THE FINDINGS OF THE AUTHORI TIES BELOW. IT IS NOT IN DISPUTE THAT THE SUBSTANTIAL ADDITION OF RS.33,08,071/- HAD ALREADY BEEN DELETED BY THE TRIB UNAL VIDE ORDER DATED 27.3.2014 WHILE ALLOWING THE APPEAL OF THE ASSESSEE PARTLY IN ITA NO.927/CHD/2012. THE COPY OF THE ORDER IS FILED ON RECORD. IT IS ALSO NOT IN DISPU TE THAT THE ASSESSEE DISCLOSED ALL THE FACTS RELATING TO THE EA RNING OF DIVIDEND INCOME AND INCURRING OF EXPENDITURE. IT WAS A CASE OF DIFFERENCE OF OPINION FOR MAKING ESTIMATED ADDIT ION AGAINST THE ASSESSEE UNDER SECTION 14A OF THE ACT, WHICH WA S ULTIMATELY REDUCED TO VERY NOMINAL ADDITION. THE LEARNED CIT (APPEALS) WAS, THEREFORE, JUSTIFIED IN HOLDING THAT ALL THE FACTS HAVE BEEN DISCLOSED IN THE RETURN OF INCOME. THER EFORE, IT IS NOT A CASE OF CONCEALMENT OF INCOME OR FILING OF IN ACCURATE PARTICULARS OF INCOME. THE INFORMATION SUPPLIED B Y THE ASSESSEE IN THE RETURN OF INCOME WAS NOT FOUND TO B E INCORRECT, INACCURATE OR FALSE. MERELY BECAUSE TH E ASSESSEE MADE A CLAIM OF DEDUCTION, WHICH WAS NOT SUSTAINED PARTLY IN LAW BY ITSELF, WILL NOT AMOUNT TO FILING OF INACCUR ATE PARTICULARS OF INCOME OR TO PROVE THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME. THE LEARNED CIT (APPEALS) CORRECTLY FOLLOWED THE DECISION OF THE HO N'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCT S P. LTD. (SUPRA) IN DELETING THE PENALTY. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES IN THE LIGHT OF THE FIN DINGS OF LEARNED CIT (APPEALS), WE DO NOT FIND ANY JUSTIFICA TION TO INTERFERE WITH THE ORDER OF THE LEARNED CIT (APPEAL S) IN 8 CANCELING THE PENALTY. WE CONFIRM THE FINDINGS OF THE LEARNED CIT (APPEALS) AND DISMISS THE DEPARTMENTAL APPEAL. 5. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF JULY, 2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 3 RD JULY, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH