Shri S.Martin, CHENNAI v. DCIT, Coimbatore

ITA 1617/CHNY/2012 | 2008-2009
Pronouncement Date: 24-10-2013 | Result: Allowed

Appeal Details

RSA Number 161721714 RSA 2012
Assessee PAN AEWPM3703Q
Bench Chennai
Appeal Number ITA 1617/CHNY/2012
Duration Of Justice 1 year(s) 2 month(s) 3 day(s)
Appellant Shri S.Martin, CHENNAI
Respondent DCIT, Coimbatore
Appeal Type Income Tax Appeal
Pronouncement Date 24-10-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 24-10-2013
Date Of Final Hearing 09-10-2013
Next Hearing Date 09-10-2013
Assessment Year 2008-2009
Appeal Filed On 21-08-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI [BEFORE DR. O.K. NARAYANAN VICE-PRESIDENT AND SHRI S. S. GODARA JUDICIAL MEMBER] I.T.A.NO.1617/MDS/2012 ASSESSMENT YEAR : 2008-09 SHRI S. MARTIN 335-339 DAISY PLAZA 6 TH STREET GANDHIPURAM COIMBATORE 641 012 VS THE DY. CIT COMPANY CIRCLE I(3) COIMBATORE [PAN AEWPM 3703 Q] (APPELLANT) (RESPONDENT) I.T.A.NO.1684/MDS/2012 ASSESSMENT YEAR : 2008-09 THE DY. CIT COMPANY CIRCLE I(3) COIMBATORE VS SHRI S. MARTIN 335-339 DAISY PLAZA 6 TH STREET GANDHIPURAM COIMBATORE 641 012 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R. VIJAYARAGHAVAN ADVOCATE DEPARTMENT BY : MS. ALKA RAJVANSHI JAIN CIT DATE OF HEARING : 09-10-2013 DATE OF PRONOUNCEMENT : 24-10-2013 O R D E R PER S.S.GODARA JUDICIAL MEMBER THESE CROSS APPEALS FILED BY ASSESSEE AND THE RE VENUE FOR ASSESSMENT YEAR 2008-09 ARE DIRECTED AGAINST THE O RDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I COIMBATORE DATED 12.6.2012 I.T.A.NO.1617 & 1684/12 :- 2 -: PASSED IN APPEAL NO. 48/11-12 PARTLY CONFIRMING PEN ALTY IN PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME- TAX ACT 1961 (IN SHORT THE ACT). 2. IN THE COURSE OF HEARING THE ASSESSEE VEHEMENTLY ARGUES IN I.T.A.NO.1617/MDS/2012 THAT THE CIT(A) HAS WRONGLY CONFIRMED PENALTY U/S 271(1)(C) OF THE ACT QUA ADDITION MAD E IN THE COURSE OF REGULAR ASSESSMENT U/S 94(7) OF THE ACT MERELY FOR THE REASON THAT THE DISALLOWANCE/ADDITION HAD BEEN MADE BY THE ASSE SSING OFFICER. AS PER ASSESSEE THE IMPUGNED PENALTY IS NOT SUSTA INABLE IN VIEW OF CASE LAW (2012) 32 CCH 126 CHETAN V. MEHROTRA VS. ITO (2010) 41 SOT 254 HINDALCO INDUSTRIES LTD. VS. ACIT 2012-TIO L-437 JANUS INVESTMENT FUND VS. DCIT AND (2011) 44 SOT 26 WALT ER SALDHANA VS. DCIT ( ALL BY MUMBAI BENCH OF THE TRIBUNAL). 3. IN REPLY THE REVENUE STRONGLY SUPPORTS THE CIT(A) S ORDER CONFIRMING PENALTY AND PRAYS FOR MAINTAINING THE SA ME. AT THE SAME TIME IN I.T.A.NO.1684/MDS/2012 IT IS THE CASE OF THE REVENUE THAT THE CIT(A) HAS WRONGLY DELETED PENALTIES LEVIED BY THE ASSESSING OFFICER QUA DISALLOWANCES U/S 14A R.W.R 8D FOREIG N TRAVEL EXPENSES AND THE ADDITION U/S 28(IV) OF THE ACT. IN SUPPOR T IT QUOTES CASE LAW OF DELHI HIGH COURT 30 TAXMANN.COM 6 CIT VS. MORGA N FINVEST PVT. LTD I.T.A.NO.1617 & 1684/12 :- 3 -: AS WELL AS [2013] 352 ITR 1 CIT VS. MAK DATA LTD. A ND PRAYS FOR ACCEPTANCE OF ITS APPEAL. 4. IN REVENUES APPEAL THE ASSESSEE JUSTIFIES THE OR DER OF THE CIT(A) DELETING PENALTIES IN QUESTION IN VIEW OF CA SE LAW [2012] 348 ITR 306(SC) PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT & ANOTHER [2007] 288 ITR 196(GUJ) BTX CHEMICAL P. LTD VS. CIT AND [2010] 322 ITR 158 (SC) CIT VS. RELIANCE PETROPRODUCTS PVT. LT D. WE HAVE HEARD BOTH PARTIES AND GONE THROUGH THE CA SE FILE AS WELL AS THE JUDICIAL PRECEDENTS CITED HEREINABOV E. 5. THE ASSESSEE IS AN INDIVIDUAL. IN THE IMPUGNED ASSESSMENT YEAR HE HAD INCOMES FROM SALARY HOUSE PROPERTY B USINESS CAPITAL GAINS AS WELL AS INTEREST EARNED FROM BANK DEPOSI TS. THE ASSESSING OFFICER HAD FRAMED REGULAR ASSESSMENT IN HIS CASE VIDE ORDER DATED 31.12.2010 MAKING FOUR DISALLOWANCES/ADDITIONS. TH E FIRST ONE PERTAINED TO ASSESSEES EXEMPT INCOME FROM MUTUAL FUNDS AND SHARES TOTALLING ` 1 21 14 883/- IN THE BOOKS OF BEST & CO. AND ` 92 92 743/- IN HIS PERSONAL BOOKS BY INVOKING SECTION 14A R.W. R 8D(2)(III) @ 0.5% TOTALLING ` 18 70 000/-. THE SECOND DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 94(7) OF THE ACT PERTAINED T O ASSESSEES CLAIM OF I.T.A.NO.1617 & 1684/12 :- 4 -: SHORT TERM LOSS OF ` 5 10 14 333/- REGARDING DIVIDENDS DERIVED FROM SALE OF MUTUAL FUNDS OF ` 1 92 33 364/- AFTER OBSERVING THAT THE PURCHASE AND SALE THEREOF HAD TAKEN PLACE WITHIN A TIME SPAN OF THREE MONTHS WHICH ATTRACTED AFORESAID STATUTORY PROVISIO N. THE THIRD DISALLOWANCE/ADDITION MADE BY THE ASSESSING OFFICER WAS REGARDING ASSESSEES CLAIM OF FOREIGN TRAVEL EXPENSES AMOUNTI NG TO ` 15 75 745/- WHICH WAS MADE AFTER OBSERVING THAT THE ASSESSEE H AD FAILED TO PROVE ANY EXPORT BUSINESS AND THE SAME WAS ALSO PERSONAL IN NATURE. SIMILARLY THE ASSESSING OFFICER ALSO NOTICED FROM THE DETAILS FILED BY THE ASSESSEE THAT HIS BUSINESS BY THE NAME OF SM ARTWIN HAD BEEN CLOSED TWO YEARS AGO AND HE HAD TAKEN ADVANCES FROM VARIOUS PARTIES AMOUNTING TO ` 2 76 12 775/- FOR SUPPLY OF LOTTERY TICKETS WHICH WAS LIABLE TO BE TREATED AS BUSINESS INCOME U/S 28(IV) OF THE ACT. IN THIS MANNER THE ASSESSEES TOTAL INCOME WAS ASSESSED A S ` 93 54 73 704/-. ALONGWITH FRAMING OF THE ASSESSME NT THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS AGAINST THE ASSESSEE U/S 271(1)(C) OF THE ACT FOR HAVING FURNISHED INACCURAT E PARTICULARS OF INCOME. THERE IS HARDLY NO ISSUE BETWEEN THE PARTI ES THAT THE ASSESSEE PAID THE TAXES AND DID NOT PREFER ANY AP PEAL AGAINST THE IMPUGNED DISALLOWANCES/ADDITIONS STATED HEREINABOVE . IN THIS MANNER THE ASSESSMENT ATTAINED FINALITY. I.T.A.NO.1617 & 1684/12 :- 5 -: 6. COMING TO PENALTY PROCEEDINGS THE ASSESSEE STRONGL Y CONTESTED BEFORE THE ASSESSING OFFICER TO HAVE EITH ER CONCEALED INCOME FROM BEING ASSESSED OR FURNISHING OF INACCU RATE PARTICULARS OF INCOME. HOWEVER THE PLEADINGS OF THE ASSESSEE CO ULD NOT IMPRESS UPON THE ASSESSING OFFICER WHO VIDE ORDER DATED 28.6.2011 IMPOSED PENALTY OF ` 1 64 58 599/- @ 100% OF THE TAX SOUGHT TO BE AVOID ED. 7. AGGRIEVED THE ASSESSEE PREFERRED APPEAL. VIDE OR DER UNDER CHALLENGE THE CIT(A) HAS CONFIRMED ONLY THE PENALT Y PERTAINING TO DISALLOWANCE/ADDITION LEVIED BY THE ASSESSING OFFIC ER U/S 94(7) OF THE ACT. ON THE SAID ISSUE THE FINDING OF THE CIT(A) READ THAT THE ASSESSEE HAD FILED INACCURATE PARTICULARS AND DETAI LS IN THE RETURN CLAIMING EXCESS LOSS WITHOUT TAKING INTO CONSIDERAT ION SHORT TERM LOSS LIABLE TO BE REDUCED TO THE EXTENT OF DIVIDEND RECE IVED U/S 94(7) OF THE ACT. REGARDING THE PENALTIES QUA DISALLOWANCES /ADDITIONS U/S 14A R.W.R 8D FOREIGN TRAVEL EXPENSES AND INCOME U/S 2 8(IV) OF THE ACT THE CIT(A) IS OF THE OPINION THAT THOUGH THE ADDITIONS HAD BEEN MADE IN ASSESSEES INCOME STILL HE COULD NOT BE HELD GUILT Y OF EITHER HAVING FURNISHED INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. ACCORDINGLY THE ASSESSEES APPEAL HAS BEEN ALLOWE D IN PART BY THE CIT(A). I.T.A.NO.1617 & 1684/12 :- 6 -: IN THIS MANNER BOTH PARTIES ARE AGGRIEVED. THE S TAND OF THE ASSESSEE IN I.T.A.NO.1617/MDS/2012 IS THAT THE PENA LTY REGARDING ADDITION U/S 94(7) AFORESAID HAS BEEN WRONGLY AFFI RMED WHEREAS THE STAND OF THE REVENUE IS THAT THE CIT(A) OUGHT TO HA VE UPHELD IN OTHER PENALTIES AS WELL. FIRST WE COME TO ASSESSEES APPEAL. 8. AS STATED HEREINABOVE THE ASSESSEE HAD SOLD MUTUA L FUND UNITS ETC. AND CLAIMED LOSS FROM PURCHASE AND SALE TRANSACTIONS WITHIN THREE MONTHS TIME GAP. FROM COMPILATION OF THE DO CUMENTS FILED BY THE ASSESSEE IT IS EVIDENT TO US THAT THE ASSESS EES AUDITOR HIMSELF IN LETTER DATED 16.12.2010 ADDRESSED TO THE ASSESSING OFFICER HAD FILED ALL NECESSARY DETAILS PERTAINING TO INVESTMENTS IN MUTUAL FUNDS PURCHASES AND SALES THEREOF. THE SAME IS ALSO SUBS TANTIATED FROM THE AFFIDAVIT DATED 31.8.2013 DULY ATTESTED BY ASSESSEE S AUDITOR CONCERNED. EVEN IF WE DO NOT TREAT THE AFFIDAVIT A S PART OF THE RECORD THE FACT REMAINS THAT WELL BEFORE THE ASSESSMENT OR DER DATED 31.12.2010 THE ASSESSEE HAD DULY FURNISHED ALL RE LEVANT DETAILS ON THE BASIS OF WHICH THE DISALLOWANCE U/S 94(7) HAD BEEN MADE BY THE ASSESSING AUTHORITY. THAT BEING THE CASE WE FAIL TO UNDERSTAND AS TO HOW HE CAN BE HELD GUILTY OF HAVING EITHER CONCEAL ED OR HAVING FURNISHED INACCURATE PARTICULARS OF INCOME. WE REI TERATE THE SETTLED I.T.A.NO.1617 & 1684/12 :- 7 -: PRINCIPLE OF LAW IN PRICE WATERHOUSE COOPERS PVT. L TD AND RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) THAT EVERY DISALLO WANCE/ADDITION DOES NOT LEAD TO PENALTY AUTOMATICALLY. SIMILARLY IN T HE CASE LAW DECIDED BY THE TRIBUNAL (SUPRA) AS WELL IT HAS BEEN HELD BY T HE CO-ORDINATE BENCHES THAT MERE FACT OF DISALLOWANCE/ADDITION U/ S 94(7) OF THE ACT IS NOT A SUFFICIENT GROUND TO IMPOSE PENALTY U/S 271 (1)(C) OF THE ACT. IN THESE CIRCUMSTANCES WE SEE NO REASON TO CONCUR WIT H THE PENALTY IN QUESTION IMPOSED BY THE ASSESSING OFFICER AND CONFI RMED BY THE CIT(A). HENCE THE PENALTY IN QUESTION IN ASSESSE ES APPEAL STANDS DELETED. I.T.A.NO.1617/MDS/2012 STANDS ACCEPTED. 9. NOW WE COME TO REVENUES APPEAL. SUFFICELY STATED HEREINABOVE THIS APPEAL PERTAINS TO THE LEVY OF PE NALTY REGARDING DISALLOWANCE U/S 14A R.W.R 8D FOREIGN TRAVEL EXPE NSES AND ADDITION U/S 28(IV) OF THE ACT (SUPRA). IN NONE OF THE ADDI TIONS HEREINABOVE AS RIGHTLY POINTED OUT BY THE CIT(A) IT IS THE CASE OF THE REVENUE THAT THE ASSESSEE HAD EVER MADE ANY FALSE CLAIM OR FURN ISHED INACCURATE PARTICULARS OF INCOME. THE MERE FACT THAT THE ASS ESSING OFFICER HAD DISALLOWED 0.5% OF THE EXEMPT INCOME BY INVOKING RU LE 8D FOREIGN TRAVEL EXPENSES BY HOLDING THAT THE ASSESSEES BUS INESS IS NOT OUTSIDE INDIA AND ADDITION U/S 28(IV) OF THE ACT REGARDING ADVANCES PERTAINING I.T.A.NO.1617 & 1684/12 :- 8 -: TO CLOSED BUSINESS IN OUR VIEW WOULD NOT IPSO FAC TO PROVE THE CASE AGAINST THE ASSESSEE OF HAVING FILED INACCURATE PAR TICULARS OR CONCEALMENT OF ANY INCOME FROM BEING ASSESSED AT TH E HANDS OF ASSESSING AUTHORITY. SO FAR AS THE CASE LAW QUOTED BY THE REVENUE (SUPRA) IS CONCERNED WE FIND THAT IN MAK DATA LTD. S CASE THE ASSESSEE THEREIN HAD NOT OFFERED ANY EXPLANATION MU CH LESS A PLAUSIBLE ONE AND IN MORGAN FINVEST PVT. LTDS CASE IT WAS A CASE OF FURNISHING OF INCORRECT PARTICULARS WHICH IS NOT SIMILAR TO TH E ONE IN HAND. THEREFORE WE SEE NO REASON TO INTERFERE IN THE ORD ER OF THE CIT(A) DELETING PENALTIES IN QUESTION. SO THE REVENUES APPEAL IS REJECTED. 10. CONSEQUENTLY ASSESSEES APPEAL IN I.T.A.NO.1617/M DS/2012 IS ALLOWED AND THAT FILED BY THE REVENUE IN I.T.A.N O. 1684/MDS/2012 IS DISMISSED. ORDER PRONOUNCED ON THURSDAY THE 24 TH OF OCTOBER 2013 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (S. S. GODARA) JUDICIAL MEMBER DATED: 24 TH OCTOBER 2013 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR