The ACIT, Circle-9,, Ahmedabad v. Shri Babubhai R.Patel, Ahmedabad

ITA 1718/AHD/2009 | 2004-2005
Pronouncement Date: 25-03-2011 | Result: Dismissed

Appeal Details

RSA Number 171820514 RSA 2009
Assessee PAN ABYPP8048A
Bench Ahmedabad
Appeal Number ITA 1718/AHD/2009
Duration Of Justice 1 year(s) 10 month(s)
Appellant The ACIT, Circle-9,, Ahmedabad
Respondent Shri Babubhai R.Patel, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 25-03-2011
Date Of Final Hearing 21-03-2011
Next Hearing Date 21-03-2011
Assessment Year 2004-2005
Appeal Filed On 25-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND D. C. AGRAWAL AM) ITA NO.1718/AHD/2009 A. Y.: 2004-05 THE A. C. I. T. CIRCLE-9 2 ND FLOOR A WING VASUPUJYA CHAMBERS ASHRAM ROAD AHMEDABAD VS SHRI BABUBHAI R. PATEL C/O. AJAY STRUCTURE ENGG. WORKS. DARSHAK 14 SWASTIK SOCIETY PUNJABI HALL GALI NAVRANGPURA AHMEDABAD PA NO. ABYPP 8048 A (APPELLANT) (RESPONDENT) APPELLANT BY SHRI S. K. JHA SR. DR RESPONDENT BY SHRI S. N. SOPARKAR WITH MS. URVASHI SHODHAN AR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-XV AHMEDABAD DATED 27-03-2009 FOR ASSESSMENT YEAR 2004-05 CHALL ENGING THE DELETION OF PENALTY U/S 271 (1) ( C ) OF THE IT ACT . 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. 3. THE LEARNED CIT(A) NOTED THAT PENALTY HAS BEEN LEVIED ON INTEREST ADDITION SUSTAINED BY THE LEARNED CIT(A) O F RS.12 02 042/- AND THAT NO FURTHER APPEAL IS PREFERRED BEFORE THE TRIBUNAL. THE ORDER OF THE LEARNED CIT(A) ON QUANTUM IS REPRODUCED IN T HE IMPUGNED ITA NO.1718/AHD/2009 ACIT CIRCLE-9 AHMEDABAD VS SHRI BABUBHAI R. PATEL 2 ORDER IN WHICH THE LEARNED CIT(A) ON QUANTUM NOTED THAT BALANCE DISALLOWANCE OF INTEREST OF RS.12 02 042/- RELATES EITHER TO THE SPECULATION BUSINESS CARRIED ON BY THE ASSESSEE OR TOWARDS THE INVESTMENT OF RS.4 78 50 000/- MADE TOWARDS PURCHAS E OF SHARES OF KANAK CASTOR OIL PVT. LTD. DISALLOWANCE TO THE EXTE NT OF ABOVE WAS CONFIRMED. IT WAS SUBMITTED BEFORE THE LEARNED CIT( A) THAT CONCEALMENT IMPLIES DELIBERATE ACT ON THE PART OF T HE ASSESSEE WITHHOLDING THE TRUE FACTS FROM THE AUTHORITIES. TH ERE WAS NO EVIDENCE TO SHOW THAT THE ASSESSEE HAS DELIBERATELY CONCEALE D THE FACTS. THE LEARNED CIT(A) FOLLOWING THE DECISION OF THE HONBL E DELHI HIGH COURT DELETED THE PENALTY. THE LEARNED COUNSEL FOR THE AS SESSEE SUBMITTED THAT THE LEARNED CIT(A) PASSED A RECTIFICATION ORDE R DATED 13-10-2010 AND NOTED THAT THE ASSESSEE HAS FOLLOWED THE ORDER OF THE HONBLE DELHI HIGH COURT IN THE CASE OF DELHI CLOTH AND GEN ERAL MILLS CO. LTD. 157 ITR 822 FOR DELETING THE ADDITION IN WHICH IT WAS HELD THAT MERE FACT THAT A CLAIM FOR EXPENDITURE STANDS DISALLOWED DOES NOT BY ITSELF LEAD TO THE INFERENCE THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS IN REGARD TO THAT ITEM. 4. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LE ARNED CIT(A) IN DELETING THE PENALTY. 5. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 (SC) HELD THAT A GLANCE AT THE PROVISIONS OF SECTION 271(1) (C ) OF THE INCOME-TAX ACT 1961 SUGGEST THAT IN ORDER TO BE COVERED BY IT THERE HA S TO BE ITA NO.1718/AHD/2009 ACIT CIRCLE-9 AHMEDABAD VS SHRI BABUBHAI R. PATEL 3 CONCEALMENT OF PARTICULARS OF THE INCOME OF THE ASS ESSEE. SECONDLY THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1) (C) WOULD EMBRACE THE DETAIL S OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS F OUND TO BE INCORRECT OR INACCURATE THE ASSESSEE CANNOT BE HEL D GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPO SE THE ASSESSEE TO PENALTY UNLESS THE CASE IS STRICTLY CO VERED BY THE PROVISION THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAI M TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE BECAUSE THAT IS THE ONLY DOCUMENT WHERE T HE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE THE LIABILI TY WOULD ARISE. TO ATTRACT PENALTY THE DETAILS SUPPLIED IN THE RET URN MUST NOT BE ACCURATE NOT EXACT OR CORRECT NOT ACCORDING TO TH E TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAI LS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORREC T OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENAL TY UNDER SECTION 271(1) ( C ). A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACC URATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INAC CURATE PARTICULARS. DECISION OF THE GUJARAT HIGH COURT AFF IRMED. ITA NO.1718/AHD/2009 ACIT CIRCLE-9 AHMEDABAD VS SHRI BABUBHAI R. PATEL 4 6. THE HONBLE SUPREME COURT IN THE CASE OF M/S. RA JASTHAN SPINNING & WEAVING MILLS 2009 PIOL 63 SC HELD THAT ON EVERY DEMAND PENALTY IS NOT AUTOMATIC. HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS SAHABAD CO -OP. SUGAR MILLS LTD. 322 ITR 73 (P&H) HELD THAT MAKING OF WRO NG CLAIM IS NOT AT PAR WITH CONCEALMENT OR GIVING OF INACCURATE INFORM ATION WHICH MAY CALL FOR LEVY OF PENALTY U/S 271 (1) ( C ) OF THE A CT. THE HONBLE PUNJAB & HARYANA HIGH COURT AGAIN IN THE CASE OF CIT VS SI DHARTHA ENTERPRISES 322 ITR 80 (P & H) HELD THAT LOSS SUFFE RED ON SALE OF MACHINERY WRONGLY TAKEN AGAINST PROFIT OF BUSINESS. ASSESSEE ON REALIZATION MISTAKE COMMITTED BY THE COUNSEL ACCEPT ED THE DECISION OF THE AO. NO DELIBERATE DEFAULT. APPELLATE AUTHORI TIES JUSTIFIED IN DELETING THE PENALTY U/S 271 (1) ( C ) OF THE IT AC T. 7. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO RELIED UPON THE ORDER OF ITAT AHMEDABAD BENCH IN THE CASE OF ACIT ( OSD) VS SCHUTZ DISMAN BIOTECH LTD. IN ITA NO.2783/AHD/2010 DATED 11-02-2011 IN WHICH THE TRIBUNAL FOLLOWING THE DECI SION IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) DISMISSED THE DEPARTMENTAL APPEAL. IT WAS ALSO NOTED THAT IN THAT CASE ALL REL EVANT FACTS WERE AVAILABLE ON RECORD AND THE ASSESSEE HAS NOT CONCEA LED THE FACTS OR FILED ANY INACCURATE PARTICULARS OF INCOME. 8. IN VIEW OF THE ABOVE FACTS IT IS CLEAR FROM THE PENALTY ORDER THAT ON THE ISSUE OF DISALLOWANCE OF INTEREST THE TOTAL ADDITION WAS MADE BY THE AO ON HIGHER AMOUNT WHICH WAS REDUCED BY THE LEARNED CIT(A) IN THE QUANTUM OF THE EXPENDITURE ABOVE. ALL THE PARTICULARS ITA NO.1718/AHD/2009 ACIT CIRCLE-9 AHMEDABAD VS SHRI BABUBHAI R. PATEL 5 WERE DISCLOSED BY THE ASSESSEE ON WHICH PART OF THE DISALLOWANCE IS SUSTAINED BY THE LEARNED CIT(A). THEREFORE IT IS A CASE OF ONE OPINION EXPLAINED BY THE ASSESSEE AND ANOTHER OPINION FORME D BY THE AO ON WHICH THE LEARNED CIT(A) AFTER CONSIDERING THE ISSU E IN DETAIL FURTHER REDUCED THE ADDITION. THEREFORE MERE DISALLOWANCE OF PART OF THE EXPENDITURE WOULD NOT BY ITSELF LEAD TO THE CONCLUS ION THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FIL ED INACCURATE PARTICULARS OF INCOME. NO FINDING HAS BEEN GIVEN IN THE ORDER OF THE LEARNED CIT(A) ON QUANTUM THAT THE EXPLANATION OF T HE ASSESSEE WAS FALSE OR THAT EXPLANATION OF THE ASSESSEE WAS NOT P ROBABLE. CONSIDERING THE FACTS OF THE CASE AS NOTED ABOVE I N THE LIGHT OF THE ABOVE DISCUSSIONS AND IN THE LIGHT OF THE FINDINGS OF THE LEARNED CIT(A) WE ARE OF THE VIEW THAT IT IS NOT A FIT CAS E FOR IMPOSITION OF PENALTY. THE LEARNED CIT(A) ON PROPER APPRECIATION OF THE FACTS AND MATERIAL ON RECORD CANCELLED THE PENALTY U/S 271 (1 ) ( C ) OF THE IT ACT. WE ACCORDINGLY CONFIRM HIS FINDINGS AND DISMISS TH E APPEAL OF THE REVENUE. 9. IN THE RESULT THE DEPARTMENTAL APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 25-03-2011 SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 25-03-2011 LAKSHMIKANT/- ITA NO.1718/AHD/2009 ACIT CIRCLE-9 AHMEDABAD VS SHRI BABUBHAI R. PATEL 6 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