Vijay Sahebrao Ingawale, Pune V. Assistant Commissioner of Income-tax,

ITA 982/PUN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2447 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 13-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR DHEERAJ K JAIN
• Keywords: Wrong claim
• Section: 43B; 131

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , !, # $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.982/PN/2014 ASSESSMENT YEAR : 2008-09 VIJAY SAHEBRAO INGAWALE, S/O SAHEBRAO INGAWALE, PLOT NO.36, SHANIKRUPA NIVAS, MORE VASTI, SANE CHOWK, CHIKHALI, PUNE 412 114. PAN : AAGPI7957N . APPELLANT VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE. . RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : SHRI (DR.) DHEERAJ K. JAIN / DATE OF HEARING : 10.03.2016 / DATE OF PRONOUNCEMENT: 31.03.2016 % / ORDER PER PRADIP KUMAR KEDIA, AM : THE PRESENT APPEAL PREFERRED BY THE ASSESSEE IS AGA INST THE ORDER OF CIT(A)-V, PUNE DATED 13.02.2014 RELATING TO ASSESSM ENT YEAR 2008-09 PASSED UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL :- 1. HONORABLE AUTHORITY HAS ERRED IN IMPOSING PENAL TY U/S 271(1)(C) OF INCOME TAX ACT, 1961, ON BONUS PAYMENT AND LAND DEVELOPMEN T EXPENSES. 2. THE APPELLANT CREACES RIGHT TO ADD, ALTER, DELET E, MODIFY OR AMEND ANY CHANGE OR ALL THE ABOVE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING. 3. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE INSPITE OF SERVICE OF NOTICE. THE LD. DEPARTMENTAL REPRESE NTATIVE, SHRI (DR.) DHEERAJ 2 ITA NO.982/PN/2014 KUMAR JAIN APPEARED ON BEHALF OF THE RESPONDENT/REV ENUE. INITIALLY, THE HEARING WAS FIXED ON 07.12.2015. ON 07.12.2015, NO NE APPEARED ON BEHALF OF THE ASSESSEE AND NO ANY ADJOURNMENT WAS SOUGHT BY T HE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE. THE APPEAL WAS RE -FIXED FOR HEARING ON TODAY I.E. 10.03.2016. HOWEVER, ON 10.03.2016 NEITHER AP PEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT WAS SOUGHT BY THE ASSE SSEE. IT APPEARS THAT ASSESSEE IS NOT INTERESTED IN PURSUING THE APPEAL. IN THE ABSENCE OF ANY APPEARANCE BY THE ASSESSEE IN PERSON OR THROUGH AUT HORIZED REPRESENTATIVE INSPITE OF SERVICE OF NOTICE, WE PROCEED TO DISPOSE OF THE APPEAL EX-PARTE QUA THE ASSESSEE AFTER HEARING THE RESPONDENT/REVENUE O N MERITS IN TERMS OF RULE 24 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 19 63. 4. IN THE CAPTIONED APPEAL, THE ASSESSEE HAS CHALLE NGED THE ORDER OF THE CIT(A) IN SUSTAINING THE PENALTY IMPOSED AS A SEQUE L TO THE DISALLOWANCE OF BONUS EXPENSES OF RS.18,39,338/- IN THE HANDS OF TH E ASSESSEE IN QUANTUM ASSESSMENT. 5. BRIEFLY STATED, THE RELEVANT FACTS CONCERNING TH E CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF LABOUR CONTRACTOR, LA WNS AND LAND DEVELOPERS AND STONE CRUSHING. THE RETURN OF INCOME WAS FILED ON 15.10.2008 DECLARING A LOSS OF RS.13,26,461/-. THE ASSESSEE INTER-ALIA CLAIMED BONUS PAYMENT OF RS.18,39,338/-. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, THE ASSESSING OFFICER RECORDED STATEMENT OF ACCOUNTANT OF THE ASS ESSEE SHRI DNYANESHWAR ASHOK CHOTE WHO DEPOSED THAT THE BONUS PAYMENT FOR FINANCIAL YEAR 2007-08 RELEVANT TO ASSESSMENT YEAR 2008-09 WAS BETWEEN 5-7 LAKHS APPROXIMATELY WITH MAXIMUM POSSIBLE VARIATION OF 10%. SUBSEQUENT LY, ON THE BASIS OF STATEMENT RECORDED UNDER SECTION 131 OF THE ACT, TH E ASSESSEE WAS CONFRONTED ON THE ISSUE. THE ASSESSEE ACCEPTED THE ACTUAL BON US PAYMENT DURING THE YEAR WAS RS.8,55,129/- ONLY WHICH ALSO PERTAIN TO EARLIE R ASSESSMENT YEAR 2007-08. THE ASSESSING OFFICER NOTED THAT THIS AMOUNT WAS NO T DISALLOWED IN ASSESSMENT YEAR 2007-08. THEREFORE, THE CLAIM AMOUNTS TO DOUB LE DEDUCTION. IN THE QUANTUM PROCEEDINGS, THE ASSESSEE AND HIS AR AGREED FOR ADDITION VIDE ORDER- 3 ITA NO.982/PN/2014 SHEET ENTRY DATED 28.11.2010. IN THE COURSE OF APP ELLATE PROCEEDINGS BEFORE THE CIT(A), THE ASSESSEE SUBMITTED, AS RECORDED IN PARA 5 OF THE CIT(A) ORDER THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE HAS STATED AND ACCEPTED THAT BONUS PAYMENT OF RS.8,55,129/- WAS RE LATING TO THE CURRENT ASSESSMENT YEAR 2008-09 RELEVANT TO FINANCIAL YEAR 2007-08. THIS CONTENTION IS NOT DISPUTED BY THE ASSESSING OFFICER. THE ASSESSE E FURTHER SUBMITTED BEFORE THE CIT(A) THAT :- (I) NO PROVISION OF BONUS PAYMENT WAS MADE FOR THE YEAR 2006-07 IN THE RESPECTIVE BALANCE SHEET. (COPY OF BALANCE S HEET ENCLOSED HEREWITH). (II) SINCE NO PROVISION HAS BEEN MADE THERE WAS NO DISALLOWANCE IN COMPUTATION OF INCOME. (III) BONUS WAS PAID DURING THE FINANCIAL YEAR 2007 -08 AND DEDUCTION THERETO WAS TAKEN ON PAYMENT BASIS. (IV) WHEN THERE IS NO PROVISION MADE IN THE BOOKS O F ACCOUNT OF THE FY 2006-07 HEREWITH THERE WILL BE DISALLOWANCE? HE NCE BONUS PAYMENT OF RS.8,55,129/- HAS TO BE ALLOWED IN THE F Y 2007-08 ON PAYMENT BASIS UNDER SECTION 43B. (V) ASSESSING OFFICER HAS NOT ANYWHERE IN THE ASSES SMENT PROCEEDINGS OR IN PENALTY ORDER STATED THAT BALANCE PAYMENT OF BONUS WAS BOGUS OR IRRELEVANT. (VI) ASSESSING OFFICER HAS NOT DISPUTED THAT BONUS PAYMENT OF RS.9,84,209/- WAS NOT MADE FOR THE FINANCIAL YEAR 2 007-08. (VII) DUE TO UNAWARE OF THE CONSEQUENCES ASSESSEE H AS ACCEPTED DISALLOWANCE FOR THE SAKE OF PEACE. 6. THE CIT(A) REJECTED THE AFORESAID CONTENTIONS OF THE ASSESSEE AND OBSERVED THAT THE ASSESSEE HAS MADE A BOGUS CLAIM O F EXPENDITURE TO THE EXTENT OF RS.9,84,209/-. AS REGARDS THE BALANCE CLAIM OF RS.8,55,129/-, THE CIT(A) OBSERVED THAT SINCE THE SAME PERTAINS TO ASSESSMENT YEAR 2007-08, THE SAME SHOULD HAVE BEEN DISALLOWED IN TERMS OF SECTION 43B OF THE ACT IN THE EARLIER YEAR WHICH WAS NOT DONE BY THE ASSESSEE. BY CLAIMI NG THE AMOUNT IN 4 ITA NO.982/PN/2014 IMPUGNED ASSESSMENT YEAR 2008-09 ON PAYMENT BASIS, THE ASSESSEE HAS CLAIMED DOUBLE DEDUCTION WHICH WAS PREVENTED BY THE ASSESSI NG OFFICER DUE TO IN DEPTH SCRUTINY AND ANALYSIS OF FACTS. HE ACCORDING LY DISMISSED THE APPEAL OF THE ASSESSEE AND CONFIRMED THE PENALTY. 7. WE FIND THAT IN SO FAR AS THE CLAIM OF RS.8,55,1 29/- OUT OF BONUS EXPENDITURE IS CONCERNED, THE CASE OF THE ASSESSEE THAT THE SAME WAS NOT CLAIMED IN THE EARLIER YEAR AS EXPENDITURE ON PROVI SION BASIS BUT HAS BEEN CLAIMED ON PAYMENT BASIS ONLY DURING THIS YEAR HAS NOT BEEN DISCREDITED BY REVENUE. THE EXPENDITURE IS ALLOWABLE UNDER SECTIO N 43B ON PAYMENT BASIS ONLY. THUS, IN SO FAR AS CLAIM OF RS.8,55,129/- IS CONCERNED, WE FIND THAT THE REVENUE HAS NOT BROUGHT ON RECORD ANY MATERIAL TO R EBUT THE CONTENTION OF ASSESSEE THAT THIS AMOUNT WAS NOT CLAIMED IN THE EA RLIER YEAR AND NO PROVISION WAS MADE IN THIS REGARD. THEREFORE, NO DOUBLE DEDU CTION WAS RESULTED. 8. AS REGARDS THE BALANCE OF OTHER AMOUNT OF RS.9,8 4,209/- IS CONCERNED, THE EXPENDITURE HAS BEEN CLAIMED ON THE BASIS OF BO OK ENTRIES WITHOUT ANY ACTUAL PAYMENT. THUS, THE ASSESSEE HAS FAILED TO C OMPLY WITH THE PROVISIONS OF SECTION 43B OF THE ACT FOR THIS SUM. WE ALSO NOTIC E THAT ASSESSEE HAS READILY ACCEPTED THE ERROR WHEN CONFRONTED WITHOUT INDULGIN G IN ANY KIND OF LITIGATION. THEREFORE, THE CONDUCT APPEARS BONA-FIDE. WE ALSO NOTICE THAT THE PARTICULARS OF BONUS EXPENSES PER SE WERE NOT SUPPRESSED FROM THE DEPARTMENT AT ANY STAGE. IN VIEW OF THESE FACTS, MERELY BECAUSE SOME EXPENSES HAVE BEEN DISALLOWED DUE TO OPERATION OF LEGAL FICTION OF SEC TION 43B OF THE ACT, SUCH DISALLOWANCE IPSO FACTO WILL NOT LEAD TO IMPOSITION OF PENALTY. IT IS NOT THE CASE OF THE REVENUE THAT LIABILITIES FOR BONUS AS PROVID ED DO NOT EXIST AT ALL. WE FIND THAT WHILE THE ASSESSEE HAS MADE WRONG CLAIM I N SO FAR AS PROVISION FOR BONUS WITHOUT ITS ACTUAL PAYMENT OF RS.9,84,209/-, NO FALSITY IN THE EXPLANATION OF THE ASSESSEE HAS BEEN BROUGHT ON RECORD. DISALL OWANCE DUE TO DEEMING FICTION UNDER SECTION 43B CANNOT BE EQUATED WITH FU RNISHING INACCURATE PARTICULARS OF INCOME. THE STATEMENT OF THE ACCOUN TANT OF THE ASSESSEE DOES NOT INCRIMINATE THE ASSESSEE WITH ANY KIND OF FALSITY PER SE. 5 ITA NO.982/PN/2014 9. IN THE TOTALITY OF FACTS AND CIRCUMSTANCES OF TH E CASE, WE FIND THAT MERE DISALLOWANCE OF THE CLAIM OF EXPENDITURE BY ITSELF WOULD NOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME PER SE. ACCORDINGLY, WE ARE OF THE CONSIDERED VIEW THAT THE FACTS AND CIRCUMSTANCES EX ISTING IN THE PRESENT CASE DO NOT WARRANT IMPOSITION OF PENALTY. THUS, ASSESSEE SUCCEEDS ON THIS ISSUE. 10. WE ALSO FIND FROM THE GROUNDS OF APPEAL THAT TH E ASSESSEE HAS QUESTIONED THE IMPOSITION OF PENALTY ON ACCOUNT OF DISALLOWANCE TOWARDS LAND DEVELOPMENT EXPENSES. HOWEVER, WE FIND FROM THE OR DER OF THE CIT(A) THAT RELIEF ON THE ISSUE HAS ALREADY BEEN GRANTED BY THE CIT(A) AGAINST WHICH THE REVENUE IS NOT IN APPEAL AND THEREFORE THIS ISSUE D OES NOT CALL FOR ANY ADJUDICATION BY THE TRIBUNAL. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON THIS 31 ST DAY OF MARCH, 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER # / ACCOUNTANT MEMBER PUNE ; DATED : 31 ST MARCH, 2016. % & '() *)' / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-V, PUNE; 4) THE CIT-V, PUNE; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. %+ / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE