Smt. Hetal Chandrajit Shah, Baroda v. The Dy.CIT,Circle-2(1),, Baroda

ITA 1434/AHD/2010 | 2004-2005
Pronouncement Date: 28-01-2011 | Result: Dismissed

Appeal Details

RSA Number 143420514 RSA 2010
Assessee PAN AGAPS7369A
Bench Ahmedabad
Appeal Number ITA 1434/AHD/2010
Duration Of Justice 8 month(s) 24 day(s)
Appellant Smt. Hetal Chandrajit Shah, Baroda
Respondent The Dy.CIT,Circle-2(1),, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 28-01-2011
Date Of Final Hearing 21-01-2011
Next Hearing Date 21-01-2011
Assessment Year 2004-2005
Appeal Filed On 04-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND A. N. PAHUJA) ITA NO. 1434/AHD/2010 A. Y.: 2004-05 SM. HETAL CHANDRAJIT SHAH PROP. M/S. EUROTECH POLYPLAST 4/B PANCHRATNA APARTMENT JETALPUR ROAD BARODA VS THE A. C. I. T. CIRCLE-2(1) BARODA PA NO. AGAPS 7369 A (APPELLANT) (RESPONDENT) APPELLANT BY SHRI BANDISH SOPARKAR AR RESPONDENT BY SHRI ANURAG SHARMA SR. DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-II BARODA DATED 25 TH FEBRUARY 2010 FOR ASSESSMENT YEAR 2004-05 CHALLE NGING THE LEVY OF PENALTY U/S 271 (1) ( C ) OF THE IT ACT. 2. THE ASSESSEE RUNS A PROPRIETARY BUSINESS IN THE NAME OF M/S. EUROTECH POLYPLAST AND MANUFACTURES FRP SHEETS AND OTHER RELATED PRODUCE. DURING THE CURRENT YEAR THE ASSESSEE CLAIM ED RS.1 77 637/- AS FOREIGN TOUR EXPENSES. ON VERIFICATION IT WAS N OTED BY THE AO THAT THE EXPENDITURE HAD BEEN INCURRED ON THE TRAVELING EXPENSES OF SHRI CHANDRAJIT SHAH HUSBAND OF THE ASSESSEE WHO IS NOT EMPLOYEE OF THE ASSESSEE. THE AO DISALLOWED THE CLAIM OF EXPENS ES AND INITIATED ITA NO.1434/AHD/2010 SM. HEAL CHANDRAJIT SHAH VS DCIT CIR-2(1) BARODA 2 PENALTY PROCEEDINGS. THE ASSESSEE ACCEPTED THE DISA LLOWANCE MADE BY THE AO. THE AO HELD THAT NO BENEFIT HAS BEEN DER IVED BY THE ASSESSEE FROM THE EXPENDITURE CLAIMED ON THE FOREIG N TRAVEL OF SHRI CHANDRAJIT SHAH AND ALSO NOTED THAT SUCH DETAILS WE RE UNEARTHED DURING THE ASSESSMENT PROCEEDINGS AFTER DUE DILIGEN CE. PENALTY WAS ACCORDINGLY LEVIED VIDE SEPARATE ORDER. 3. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT EXPENDITURE HAS BEEN INCURRED ON BEHALF OF THE ASSESSEE BY HER SPOU SE FOR ATTENDING JEC EXHIBITION BHUMA 2004 AT PARIS. THE PURPOSE W AS TO ACQUIRE INFORMATION ABOUT NEW TECHNOLOGY AND MANUFACTURING PROCESS WHICH CAN HELP THE EXISTING BUSINESS TO GROW WITH THE LAT EST TECHNOLOGY AVAILABLE IN THE FIELD OF FRP. IT WAS SUBMITTED THA T SINCE THE ASSESSEE HERSELF COULD NOT ATTEND SHE WANTED REPRESENTATION BY A PERSON WHO HAS EXPERTISE IN THIS FIELD. THE LEARNED CIT(A) HOW EVER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND CONFIRMED LEVY OF PENALTY. HIS FINDINGS IN PARA 2.3 AND 3 OF THE IMPUGNED ORDE R ARE REPRODUCED AS UNDER. 2.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE AND THE ORDER OF THE ASSE SSING OFFICER. EXPLANATION 1 TO SECTION 271(1) (C) IS ATT RACTED WHEN EITHER OF THE FOLLOWING THREE INGREDIENTS IS S ATISFIED VIZ : I. THE ASSESSEE FAILS TO OFFER AN EXPLANATION; OR II. HE OFFERS AN EXPLANATION WHICH IS FOUND BY THE AUTHORITIES TO BE FALSE; OR ITA NO.1434/AHD/2010 SM. HEAL CHANDRAJIT SHAH VS DCIT CIR-2(1) BARODA 3 III. THE PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONAFIDE AND THAT ALL THE FACTS RELA TING TO THE SAME HAVE BEEN DISCLOSED BY HIM. IN THE INSTANT CASE THE APPELLANT HAS CLAIMED EXPE NDITURE WHICH IS NOT IN THE COURSE OF HER BUSINESS. EXPENSE S INCURRED BY HER HUSBAND SHOULD HAVE BEEN CLAIMED IN HIS HANDS. DEBITING SUCH EXPENSES IN THE ACCOUNTS OF TH E APPELLANT WAS MERELY A MEANS OF REDUCING THE TAX LI ABILITY. NO EVIDENCE HAS BEEN BROUGHT REGARDING THE EXPLANAT ION OFFERED BY THE APPELLANT THAT THE TRIP OF HER HUSBA ND HAS IN ANY WAY BENEFITED HE BUSINESS OF THE APPELLANT. THE EXPENDITURE WAS NOT A BUSINESS EXPENSE. FURTHER TH IS FACT WAS UNEARTHED BY THE ASSESSING OFFICER LEADING TO THE CONCLUSION THAT THERE WAS A DELIBERATE ATTEMPT TO FILE INACCURATE PARTICULARS OF INCOME. HENCE I HOLD THAT THE ASSESSING OFFICER WAS JUSTIFIED IN LEVYING OF PENAL TY AND THE SAME IS CONFIRMED. 3. IN THE RESULT THE APPEAL IS DISMISSED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT THERE IS NO NEED WHETHER THE VISIT TO FOREIGN COUNT RY HAS RESULTED IN EARNING OF THE PROFIT OR NOT AND RELIED UPON CBDT C IRCULAR NO.4 DATED 19-06-1950 A IS REFERRED IN THE DECISION OF ITAT DE LHI BENCH IN THE CASE OF ACIT VS AMTEK AUTO LTD. 112 TTJ 455 (DELHI) AND ALSO RELIED UPON THE DECISION OF ITAT CHANDIGARH BENCH IN THE C ASE OF ACIT VS VIJAY KIRAN HOTELS (P) LTD. 174 TAXMAN 126. HE HAS ALSO RELIED UPON THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF ORIENTAL POWER CABLE LTD. 303 ITR 49 IN WHICH IT WA S HELD THAT NON INCLUSION OF PARTICULARS OF INCOME UNDER BONA FIDE BELIEF WOULD NOT ATTRACT PENALTY. HE HAS ALSO RELIED UPON THE DECISION OF PUNJAB ITA NO.1434/AHD/2010 SM. HEAL CHANDRAJIT SHAH VS DCIT CIR-2(1) BARODA 4 & HARYANA HIGH COURT IN THE CASE OF SHAHABAD CO-OPE RATIVE SUGAR MILLS 322 ITR 73 IN WHICH IT WAS HELD THAT NO PENALTY LEVIABLE ON WRONG CLAIM OF DEDUCTION. HE HAS ALSO RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE P ETROPRODUCTS PVT. LTD. 322 ITR 158 IN WHICH IT WAS HELD AS UNDER : A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE I N LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACC URATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. DECISION OF THE GUJARAT HIGH COURT AFFIRMED. 5. ON THE OTHER HAND THE LEARNED DR RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE HUSBAND OF THE ASSESSEE DID NOT RENDER ANY SERVICES FOR THE ASSESSEE AND THAT T HE ASSESSEE MADE A BOGUS CLAIM OF DEDUCTION WHICH WAS UNEARTHED BY T HE AO AT THE ASSESSMENT STAGE; THEREFORE PENALTY WAS RIGHTLY IM POSED IN THE MATTER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. EXPLANATION (1) TO SECTION 271 (1) (C) READS AS UNDER: [EXPLANATION 1.WHERE IN RESPECT OF ANY FACTS MATE RIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR O FFERS AN EXPLANATION WHICH IS FOUND BY THE [ASSESSING] OFFICER OR THE [C OMMISSIONER (APPEALS)][OR THE COMMISSIONER] TO BE FALSE OR ITA NO.1434/AHD/2010 SM. HEAL CHANDRAJIT SHAH VS DCIT CIR-2(1) BARODA 5 (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE [AND FAILS TO PROVE THAT SUCH EXPLANAT ION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MAT ERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM] THEN THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL FOR THE P URPOSES OF CLAUSE (C) OF THIS SUB-SECTION BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 7. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE W AS ASKED TO FURNISH THE DETAILS OF TRAVELING EXPENSES WHICH REV EALS THAT THE HUSBAND OF THE ASSESSEE VISITED PARIS AND AFTER EXA MINING THE CLAIM THE AO NOTED THAT THE HUSBAND OF THE ASSESSEE IS NO T AN EMPLOYEE OF THE ASSESSEE AND THAT FOREIGN TRAVEL WAS NOT UNDERT AKEN BY THE ASSESSEE OR BY ANY OF HER EMPLOYEES. THIS WAS THE S UFFICIENT REASON TO DISALLOW THE CLAIM OF THE ASSESSEE. IT WAS FURTH ER FOUND THAT THE HUSBAND OF THE ASSESSEE IS A PARTNER IN M/S. EVERES T FIBER GLASS INDUSTRIES AND THE ASSESSEE DID NOT GET ANY BENEFIT IN THE BUSINESS AS A RESULT OF FOREIGN VISIT OF HER HUSBAND. THE DEPAR TMENT HAS UNEARTHED THE REAL FACT OF CONCEALMENT OF INCOME. T HE ASSESSEE COULD NOT SUBSTANTIATE THE PLEA OF THE ASSESSEE AT THE ASSESSMENT STAGE AS WELL AS AT THE PENALTY STAGE. WHATEVER SUB MISSION WAS RAISED WAS NOT FOUND TO BE BONA FIDE. THE HUSBAND O F THE ASSESSEE DID NOT RENDER ANY SERVICES FOR THE BUSINESS OF THE ASSESSEE. THESE FACTS WOULD SHOW THAT THE ASSESSEE HAS MADE FALSE A ND BOGUS CLAIM OF THE EXPENDITURE FOR THE PURPOSE OF DEDUCTION. IT WAS NOT A ROUTINE DISALLOWANCE OF THE EXPENDITURE ON ESTIMATE BASIS. THE ASSESSEE HAS NOT OFFERED ANY EXPLANATION AND WHATEVER EXPLANATIO N WAS OFFERED WAS NOT SUBSTANTIATED THROUGH ANY MATERIAL OR EVIDE NCE ON RECORD. ITA NO.1434/AHD/2010 SM. HEAL CHANDRAJIT SHAH VS DCIT CIR-2(1) BARODA 6 THE HONBLE DELHI HIGH COURT ON IDENTICAL FACTS IN THE CASE OF CIT VS HARPARSHAD AND COMPANY LTD. 328 ITR 53 HELD AS UNDE R: HELD THAT THE REASONS GIVEN BY THE TRIBUNAL FOR QUASHING THE PENALTY PROCEEDINGS WERE IRRELEVANT N OT GERMANE TO THE ISSUE AND THE TRIBUNAL HAD LOST SIGH T OF ASPECTS WHICH HAD BEEN CONCLUSIVELY ESTABLISHED IN THE QUANTUM PROCEEDINGS. THE TRIBUNAL HAD FAILED TO TAKE NOTE OF THE FACT THAT PART OF THE CLAIM AS COMMISSION WAS ALLOWED TO THE ASSESSEE NOT BECAUSE R HAD RENDERED ANY SERVICES BUT BECAUSE J HAD RENDERED SERVICES FOR WHICH IT WAS PAID 1 PER CENT OF THE COMMISSION BY R OUT OF THE 3 PER CENT RECEIVED BY HER. AS FAR AS COMMISSION TO R WAS CONCERNED IT WAS ACCEPTED BY THE TRIBUNAL IN THE QUANTUM PROCEEDINGS THAT SHE DID NOT RENDER ANY SERVICES AT ALL. THE ASSESSEE HAD FAILED TO OFFER A NY EXPLANATION IN RESPECT OF THE ADDITION OF RS.1 83 0 78 AND IT COULD BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF BY VIRTUE OF THIS EXPLANATION. THE TRIBUNAL WAS NOT JUSTIFIED IN DELETING THE PENALTY IMPOSED BY THE INCOME-TAX OFFICER UNDER SECTION 271 (1) (C) OF THE ACT. THE FINDINGS GIVEN IN ASSESSMENT PROCEEDINGS ARE RELEVANT AND HAVE PROBATIVE VALUE. WHERE THE ASSESSEE PRODUCES NO FRESH EVIDENCE OR PRESENTS ANY ADDITIONAL OR FRESH CIRCUMSTANCES IN PENALTY PROCEEDINGS HE WOULD BE DEEMED TO HAVE FAILED TO DISCHARGE THE ONUS PLACED ON HIM AND THE LEVY OF PENALTY COULD BE JUSTIFIED. EVEN IF THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS BUT ON THE BA SIS THEREOF THE CLAIM WHICH IS MADE IS EX FACIE BOGUS IT MAY STILL ATTRACT PENALTY PROVISION. ITA NO.1434/AHD/2010 SM. HEAL CHANDRAJIT SHAH VS DCIT CIR-2(1) BARODA 7 THE EXPLANATION APPENDED TO SECTION 271 (1) (C) OF THE ACT ENTIRELY INDICATE THE ELEMENT OF STR ICT LIABILITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GI VING INACCURATE PARTICULARS WHILE FILING RETURN. THE OBJ ECT BEHIND ENACTMENT OF SECTION 271 (1) (C) READ WITH T HE EXPLANATIONS INDICATE THAT THE SECTION HAS BEEN ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE . THE PENALTY UNDER THAT PROVISION IS A CIVIL LIABILI TY. WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS IS THE CASE IN THE MA TER OF PROSECUTION UNDER SECTION 276C OF THE ACT. 8. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE VIEW THAT EXPLANATION (1) TO SECTION 271 (1) (C ) OF THE IT ACT IS CLEARLY ATTRACTED IN THE CASE OF THE ASSESSEE FOR T HE PURPOSE OF LEVY OF PENALTY. THE DECISIONS RELIED UPON BY THE LEARNED C OUNSEL FOR THE ASSESSEE WOULD NOT SUPPORT THE CASE OF THE ASSESSEE . WE THEREFORE DO NOT FIND ANY MERIT IN THE CASE OF THE ASSESSEE. THE SAME IS ACCORDINGLY DISMISSED. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED ON 28-01-2011 SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 28-01-2011 LAKSHMIKANT/- ITA NO.1434/AHD/2010 SM. HEAL CHANDRAJIT SHAH VS DCIT CIR-2(1) BARODA 8 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD