The ITO, Ward-10(4), Ahmedabad V. Shri Vikram Pramodray Pandya, Ahmedabad

ITSSA 57/AHD/2009

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 3093 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-09-2012
• Assessment Year: misc
• Appeal Filed On: 15-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SINGH
• Keywords: Depreciation; Business expenditure; Wrong claim; Difference of opinion
• Section: 143(3)

Judgement Text

, , , , C, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) )* + ) )* + ) )* + ) ' ' ' ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) IT(SS)A NO.57/AHD/2009 WITH CO NO.265/AHD/2009 [BLOCK PERIOD 1.4.1990 TO 18.7.2000] ITO, WARD-10(4) AHMEDABAD. /VS. VIKRAM PRAMODRAY PANDYA 14-A, DARSHAK SWASTIK SOCIETY NAVRANGPURA, AHMEDABAD. PAN : ABEPP 0484 E ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) + 1 2 )/ REVENUE BY : SHRI D.K. SINGH 4& 1 2 )/ ASSESSEE BY : SHRI ASEEM THAKKAR 5 1 &(*/ DATE OF HEARING : 20 TH SEPTEMBER, 2012 678 1 &(*/ DATE OF PRONOUNCEMENT : 05-10-2012 )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL BY THE REVENUE AND CO BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A)-XVI, AHMEDABAD DATED 2.7.2009. THESE ARE B EING DISPOSED OF WITH THIS CONSOLIDATED ORDER. IT(SS)A NO.57/AHD/2009 WITH CO NO.265/AHD/2009 -2- IT(SS)A.NO.57/AHD/2009 (REVENUES APPEAL) 2. THE GROUNDS OF THE APPEAL OF THE REVENUE ARE AS UNDER: 1. THE LD.CIT(A) HAS ERRED IN LAW AND FACTS IN RED UCING THE PENALTY LEVIED U/S.271(1)(C) R.W.S. 158BFA(2) AND C ANCELLING PENALTY LEVIED W.R.T. EDUCATIONAL EXPENSES OF RS.4, 25,000/- WITHOUT GOING TO THE FACTS AND DETAILED FINDING OF ITAT AND WITHOUT GIVING FINDINGS ON THE APPLICABILITY OF EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT. 2. THE LD.CIT(A) FAILED TO APPRECIATE THAT THE CLAI M OF DEDUCTION OF EXPENSE IS NOT BONA FIDE, AS THE RELEV ANT/NEXUS OF THE EXPENSES INCURRED WAS NEVER ESTABLISHED/PROVED BY THE ASSESSEE AND HENCE EXPLANATION 1 TO SECTION 271(1)(C) IS CLEARLY ATTRACTED. 3. THE LEARNED DR HAS RELIED ON THE ORDER OF THE AO . HE SUBMITTED THAT THE ASSESSEE HAS MADE A WRONG CLAIM OF EDUCATIONAL EXPENSES, WHICH WAS NOT BUSINESS EXPENDITURE OF THE ASSESSEE. HE SUBMITTED THAT THE ADDITION MADE WAS CONFIRMED BY T HE CIT(A) IN APPEAL. THE LEARNED DR SUBMITTED THAT EXPLANATION 1 TO SECTION 271(1)(C) IS CLEARLY ATTRACTED IN THE CASE OF THE A SSESSEE. HE SUBMITTED THAT THE EXPENSES WERE INCURRED FOR THE EDUCATION O F SON OF THE ASSESSEE, WHICH WAS CLEARLY PERSONAL EXPENSE AND CO NDUCT OF THE ASSESSEE WAS NOT BONA FIDE . HE REFERRED TO RELEVANT PORTIONS OF THE PENALTY ORDER IN SUPPORT OF THE CASE OF THE REVENUE . 4. THE LEARNED COUNSEL FOR THE ASSESSEE HAS OPPOSED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE . HE SUBMITTED THAT ALL MATERIAL FACTS WERE DISCLOSED AT THE TIME OF FI LING OF THE RETURN. MOREOVER, IN SUBSEQUENT YEARS ON THE SIMILAR FACTS, THE EDUCATIONAL EXPENSES OF THE SON OF THE ASSESSEE WERE DISALLOWED BY THE IT(SS)A NO.57/AHD/2009 WITH CO NO.265/AHD/2009 -3- DEPARTMENT, BUT NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS INITIATED, AND THERE WAS NO VALID REASON FOR TAKING A DIFFERENT STAND IN THE RELEVANT YEAR. HE HAS FILED COPIES OF THE ASSE SSMENT ORDER FRAMED IN SCRUTINY ASSESSMENT UNDER SECTION 143(3) OF THE ACT FOR THE ASSESSMENT YEARS 2001-2002 AND 2002-2003, WHEREIN T HE EDUCATION EXPENSES OF THE SON WERE DISALLOWED, BUT NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS INITIATED BY THE AO. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT ALL THE MATERIAL FACTS RELATING TO THE CLAIM OF THE EDUCATIONAL EXPENSES W ERE DISCLOSED BY THE ASSESSEE IN ITS RETURN OF INCOME ALONG WITH VARIOUS DOCUMENTS FILED BEFORE THE AO. WE FIND THAT THE DEPARTMENT HAS NOT TAKEN ANY GROUND REGARDING PENALTY DELETED BY THE CIT(A) ON THE ISSU ES OF CLAIM OF DEPRECIATION AND INTEREST ON CAR LOAN, AND HAS PREF ERRED GROUND ONLY ON THE ISSUE OF PENALTY ON THE EDUCATIONAL AND TRAV ELLING EXPENSES OF THE SON ON WHICH PENALTY UNDER SECTION 271(1)(C) IM POSED BY THE AO AND WAS DELETED BY THE CIT(A). WE FIND THAT PERUSA L OF THE SCRUTINY ASSESSMENT FRAMED UNDER SECTION 143(3) OF THE ACT F OR THE SUBSEQUENT PERIOD RELEVANT TO THE ASSESSMENT YEAR 2001-2002, A ND 2002-2003, COPY OF WHICH HAS BEEN FILED BEFORE THE TRIBUNAL, S HOWS THAT THE SIMILAR EXPENSES ON EDUCATIONAL AND TRAVELING EXPEN SES OF THE SON HAS BEEN DISALLOWED BY THE AO BY HOLDING THE SAME AS NO N-BUSINESS EXPENDITURE. THE AO HAS PREFERRED NOT TO INITIATE ANY PENALTY UNDER SECTION 271(1)(C) IN THESE TWO ASSESSMENT YEARS. WE FIND THAT THE ASSESSEE HAS FILED EXPLANATION AND THERE IS NO MATE RIAL BROUGHT ON RECORD TO SUGGEST THAT THE EXPLANATION OF THE ASSES SEE REGARDING THE CLAIM OF EDUCATIONAL EXPENSES WAS NOT BONA FIDE . IT IS A CASE OF DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE REVENUE REGARDING IT(SS)A NO.57/AHD/2009 WITH CO NO.265/AHD/2009 -4- ALLOWABILITY OF CERTAIN CLAIM OF EXPENSES CLAIMED B Y THE ASSESSEE, AS AN ALLOWABLE DEDUCTION OUT OF ITS TAXABLE INCOME. IN THESE FACTS OF THE CASE, WE HOLD THAT THE PENALTY LEVIED UNDER SECTION 271(1)(C) WAS RIGHTLY DELETED BY THE CIT(A) BY OBSERVING THAT THE EXPENSES WERE CLAIMED BY THE ASSESSEE UNDER A BONA FIDE BELIEF THAT SUCH EXPENSES WERE ALLOWABLE EXPENSES TO THE ASSESSEE. IN THIS V IEW OF THE MATTER, WE DISMISS THE GROUNDS OF THE APPEAL OF THE REVENUE . CO NO.265/AHD/2009 (ASSESSEES CO) 6. THE GROUNDS OF THE CO OF THE ASSESSEE ARE AS UND ER: 1. THE LEARNED COMMISSIONER OF INCOME FAX (APPEALS) HAS ERRED IN CONFIRMING THE LEVY OF MINIMUM PENALTY US/ .271(1)(C) RWS.158BF(2) OF THE ACT, ON THE AMOUNT OF RS.1,19,5 71/- BEING THE BALANCE AMOUNT OUT OF THE TOTAL EXPENSES/ADDITI ONS MADE OF RS.6,33,732/- FOR THE ALLEGED DIFFERENCE IN THE TWO P & L. ACCOUNTS ON THE PRESUMPTION THAT THE SAME IS CLAIME D IN EXCESS OF AMOUNT SHOWN IN REGULAR BOOKS OF ACCOUNTS. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE AMOUNT OF UNDISCLOSED INCOME WHICH IS SUBJECTED TO PENALTY IS RELATING TO EXPENSES DISALLOWED/CLAIMED IN THE REGULAR RETURN O F INCOME & THEREFORE, DO NOT FORM PART OF UNDISCLOSED INCOME. 7. THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT PRE SSED THESE GROUNDS OF CO OF THE ASSESSEE, WHICH ARE ACCORDINGL Y DISMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE AND THE CO OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT