Shri Shriraj Pankaj Shah, Ahmedabad V. The Asstt. Commissioner of Income Tax, Circle-5(2), Ahmedabad

ITA 961/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0978 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 20-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 271(1)(c); 2

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO. 961/AHD/2017 AND ITA NO.962/AHD/2017 / ASSESSMENT YEAR: 2008-09 SHRI SHRIRAJ PANKAJ SHAH 506, SEARDS TOWER GULBHAI TEKRA AHEMDABAD 380 006. PAN : ACJPS 9266 K VS ACIT, CIR.5(2) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI HEM CHHAJED REVENUE BY : SHRI SOMOGYAN PAL, SR.DR / DATE OF HEARING : 22/03/2019 /DATE OF PRONOUNCEMENT : 25/ 03/2019 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST OR DERS OF THE LD.CIT(A)-5, AHMEDABAD DATED 1.2.2017 AND 2.2.2017 PASSED IN THE ASSTT.YEAR 2008- 09. 2. ORDER DATED 1.2.2017 IMPUGNED IN ITA NO.961/AHD/ 2017 IS IN QUANTUM APPEAL OF THE ASSESSEE AGAINST ADDITION OF RS.7,24,159/- OUT OF DISALLOWANCE OF LABOUR EXPENSES, WHEREAS THE ORDER DATED 2.2.2017 IMPUGNED IN ITA NO.962/AHD/2017 IS WITH RESPECT TO PENALTY UNDER ITA NO.961 AND 962/AHD/2017 - 2 - SECTION 271(1)(C) OF THE ACT. FIRST WE TAKE QUANTU M APPEAL I.E. ITA NO.961/AHD/2017. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. HE WAS RUNNING TWO PROPRIETORSHIP CONCERNS VIZ. RAJ EN TERPRISE AND POWER PLAN ENGINEERING CO. HE HAS FILED HIS RETURN OF IN COME ON 27.9.2008 SHOWING TOTAL INCOME AT RS.32,63,340/-. ON SCRUTIN Y OF THE ACCOUNTS IT REVEALED TO THE AO THAT THE ASSESSEE HAS DEBITED LA BOUR EXPENSES OF RS.11,68,775/- TO THE PROFIT & LOSS ACCOUNT OF POWE R PLAN ENGG. CO. THESE EXPENDITURES WERE DEBITED UNDER THREE HEADS V IZ. SAGAR CHAUHAN, USHA CHAUHAN AND UTKARSH ENTERPRISE. AS FAR AS UTK ARSH ENTERPRISE IS CONCERNED, THE LD.AO HAS ALLOWED THOSE EXPENDITURE. HOWEVER, HE DISALLOWED LABOUR EXPENDITURE DEBITED QUA SHRI HARISH CHAUHAN AND USHA CHAUHAN. HE RECORDED THAT HARISH CHAUHAN IS T HE SON OF THE ASSESSEE. HE HAS BEEN HELPING IN THE BUSINESS OF H IS FATHER, BUT WAS NOT AWARE MUCH ABOUT BILLS RAISED QUA HIS NAME AND OTHER DETAILS. WITH REGARD TO USHA CHAUHAN HE OBSERVED THAT SHE IS HOUS E-WIFE AND HAS NO SOURCE OF INCOME AND SHE HAS NO KNOWLEDGE OF BILLS BEING ISSUED AS REFERRED ABOVE IN HER NAME. THIS INFERENCE HAS BEE N DRAWN ON THE BASIS OF THE STATEMENT OF THESE TWO PERSONS. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 4. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT THIS IS THE SECOND ROUND OF LITIGATION UPTO THE TRIBUNAL. IN THE FIRST ROUND, THE TRIBUNAL HAS REMITTED THIS ISSUE TO THE FILE OF THE LD.CIT(A) FOR FRESH A DJUDICATION. THE ASSESSEE HAS FILED FRESH MATERIAL BEFORE THE LD.CIT(A) WHICH HAVE BEEN CONSIDERED BY THE LD.CIT(A), BUT CONCURRED WITH THE AO. A PER USAL OF THE RECORD ITA NO.961 AND 962/AHD/2017 - 3 - WOULD INDICATE THAT PAYMENTS HAVE BEEN MADE THROUGH ACCOUNT PAYEE CHEQUES. IDENTITY OF BOTH THE PERSONS IS NOT IN DI SPUTE. THE AO WAS SATISFIED TO SOME EXTENT THAT SON WAS HELPING HIS F ATHER. BUT ON THE BASIS OF THEIR STATEMENT, HE HARBOURED A BELIEF THAT FATH ER OF THE FAMILY MEMBERS OF THE ASSESSEE MIGHT HAVE INFLATED THE EXP ENDITURE BY DEBITING THE SAME IN THEIR NAMES. AFTER CONSIDERIN G DETAILS, WE ARE OF THE VIEW THAT POSSIBILITY OF HELPING HER HUSBAND BY USHA CHAUHAN AND SHRI HARISH CHAUHAN HELPING HIS FATHER IN HIS BUSIN ESS CANNOT BE RULED OUT. THEY MAY NOT BE WELL AWARE ABOUT THE BILLS ISS UED IN THEIR NAMES, BUT THEY HAVE CONFIRMED THAT THEY ARE ATTENDING TO THE BUSINESS NEEDS AND HELPING THE ASSESSEE IN HIS PROPRIETORSHIP CONC ERNS. THE AO OUGHT TO HAVE APPRECIATED THIS ASPECT KEEPING IN MIND SMA LLNESS OF THE BUSINESS, WHICH IS NOT IN AN ORGANIZED SECTOR. IT IS NOT NEW THAT FAMILY MEMBERS HELPING EACH OTHER IN DOING BUSINESS IN THE IR PROPRIETOR-SHIP CONCERNS. IF SOME SALARY IS ATTRIBUTABLE TO THEM O N THEIR WORKING, THEN IT SHOULD NOT BE DOUBTED SIMPLY FOR THE REASON THAT TH OSE FAMILY MEMBERS ARE NOT AWARE ABOUT THE RAISING OF BILLS IN THEIR N AMES. TO OUR MIND, THE AO IS TOO THEORETICAL INSTEAD OF APPRECIATING THE R EALITY OF THE BUSINESS OF SUCH FAMILY PROPRIETORSHIP CONCERNS. W E ALLOW THE APPEAL OF THE ASSESSEE AND THE DELETE IMPUGNED ADDITION. 5. NOW WE TAKE PENALTY APPEAL. 6. AS FAR AS PENALTY IMPOSED UNDER SECTION 271(1)(C ) OF THE ACT IS CONCERNED, WE HAVE ALREADY DELETED THE QUANTUM ADDI TION FOR THE REASONS STATED HEREINABOVE. WE FIND THAT SUB-CLAUS E (III) OF SECTION 271(1)(C) PROVIDES MECHANISM FOR QUANTIFICATION OF PENALTY. IT CONTEMPLATES THAT THE ASSESSEE WOULD BE DIRECTED TO PAY A SUM IN ITA NO.961 AND 962/AHD/2017 - 4 - ADDITION TO TAXES, IF ANY, PAYABLE HIM, WHICH SHALL NOT BE LESS THAN BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TA X SOUGHT TO BE EVADED BY REASON OF CONCEALMENT OF INCOME OR FURNIS HING OF INACCURATE PARTICULARS OF INCOME. IN OTHER WORDS, THE QUANTIF ICATION OF THE PENALTY IS DEPENDED UPON THE ADDITION MADE TO THE INCOME OF THE ASSESSEE. SINCE WE HAVE ALREADY DELETED THE ADDITIONS, PENALT Y UNDER SECTION 271(1)(C) DOES NOT SURVIVE, AND THE SAME IS ACCORDI NGLY DELETED. 7. IN THE RESULT, BOTH QUANTUM AS WELL AS PENALTY A PPEALS OF THE ASSESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 25 TH MARCH, 2019. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER