Sh. Vivek Lal, New Delhi v. DCIT, New Delhi

ITA 3983/DEL/2009 | 2002-2003
Pronouncement Date: 09-04-2010 | Result: Allowed

Appeal Details

RSA Number 398320114 RSA 2009
Bench Delhi
Appeal Number ITA 3983/DEL/2009
Duration Of Justice 6 month(s) 10 day(s)
Appellant Sh. Vivek Lal, New Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 09-04-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted H
Tribunal Order Date 09-04-2010
Date Of Final Hearing 31-03-2010
Next Hearing Date 31-03-2010
Assessment Year 2002-2003
Appeal Filed On 29-09-2009
Judgment Text
I.T.A. NO.3893 /DEL/09 1/7 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H NEW DELHI) BEFORE SHRI A.D. JAIN JUDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER I.T.A. NO.3983 /DEL/2009 ASSESSMENT YEAR : 2002-03 SHRI VIVEK LAL DCIT PROP. RAMNATH INTERNATIONAL CIRCLE-24 (1) A-7 GREEN PARK NEW DELHI. NEW DELHI. V. (APPELLANT) (RESPONDENT) PAN /GIR/NO.AAAPL-0814-H APPELLANT BY : SHRI S.K. AGARWAL ADVOCATE. RESPONDENT BY : SHRI NK CHAND SR. DR. ORDER PER A.K. GARODIA AM: THIS IS AN ASSESSEE'S APPEAL DIRECTED AGAINST THE O RDER OF LD CIT(A)-XXIII NEW DELHI DATED 24.8.2009 FOR ASSESSMENT YEAR 2002- 03. ALTHOUGH THE ASSESSEE HAS RAISED AS MANY AS 12 GROUNDS OF APPEAL S BUT THE ONLY GRIEVANCE OF THE ASSESSEE REGARDING IMPOSITION OF A PENALTY OF R S.35 39 999/- U/S 271(1)( C ) OF THE INCOME TAX ACT 1961 ON THE VALUE OF STOCK O F RS.1 15 68 626/- DISCLOSED DURING SURVEY CONDUCTED ON 5.3.2002. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PROPRIETOR OF M/S RAMNATH INTERNATIONAL WHICH IS ENGAGED IN THE BUSIN ESS OF TRADING OF LEATHER GARMENTS AND FINISHED LEATHER AS A MERCHANT EXPORT ER. THE ASSESSEE IS ALSO CO- PARCENER IN M/S R.D. RAMNATH COMPANY (HUF) ENGAGED IN THE BUSINESS OF EXPORT. THE ASSESSEE IS ALSO HAVING SALARY INCOME A S A JOINT MANAGING DIRECTOR . I.T.A. NO.310308/DEL/ 2/7 IN M/S RAMNATH EXPORTS LTD. IN THE PRESENT YEAR A SURVEY WAS CARRIED OUT IN THE PREMISES OF THE ASSESSEE U/S 133A ON 5.3.2002. IN THE COURSE OF SURVEY A SUM OF RS.1 15 68 626/- WAS SURRENDERED BY THE ASSESSEE . THE ASSESSEE FILED RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.1 55 85 67 0/-. IN THE RETURN OF INCOME THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.47 98 411/ - U/S 80HHC OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSIN G OFFICER ASKED THE ASSESSEE THAT THERE IS A NET LOSS OF RS.24 90 842/- FROM THE EXPORT OF GOODS AND HENCE WHY THE CLAIM OF THE ASSESSEE REGARDING DEDUC TION U/S 80HHC SHOULD NOT BE DISALLOWED IN VIEW OF JUDGMENT OF HON'BLE APEX C OURT RENDERED IN THE CASE OF IPCA LABORATORIES LTD.. IT IS NOTED BY THE ASSESSIN G OFFICER IN PARA NO.4.1 OF ASSESSMENT ORDER THAT IN RESPONSE TO THIS SPECIFIC QUERY THE ASSESSEE VIDE LETTER DATED 21.2.2005 SUBMITTED THAT THE JUDGMENT OF HON' BLE APEX COURT RENDERED IN THE CASE OF IPCA LABORATORIES LTD. (SUPRA) IS NOT A PPLICABLE IN THIS CASE. THE ASSESSEE FURTHER SUBMITTED THAT THE DEDUCTION U/S 8 0HHC WORKS OUT TO RS.1 29 10 449/- IN CASE THE SUM OF RS.1 15 68 626/ - IS INCLUDED IN THE PROFIT OF THE ASSESSEE WHICH WAS DECLARED BY THE ASSESSEE BY WAY OF ADDITIONAL CLOSING STOCK AS DIRECTED BY THE SURVEY TEAM U/S 133A OF TH E INCOME TAX ACT 1961 ON 5.3.2002. IT WAS ALSO SUBMITTED THAT THE SAME WAS NOT INCLUDED IN THE PROFIT FOR CLAIMING DEDUCTION U/S 80HHC IN THE RETURN OF INCOM E FILED BY THE ASSESSEE. IT IS FURTHER NOTED BY THE ASSESSING OFFICER THAT THE ASS ESSEE HAS SUBMITTED A REVISED COMPUTATION ACCORDING TO WHICH DEDUCTION U/S 80HHC HAS BEEN CLAIMED AT RS.1 29 10 449/-. THE ASSESSING OFFICER REJECTED T HE CONTENTION OF THE ASSESSEE AND HE DID NOT ALLOW ANY DEDUCTION U/S 80HHC. SUBSE QUENTLY LD CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE ON ACCOUNT OF DEDUCT ION ALLOWABLE TO THE ASSESSEE U/S 80HHC AND AS PER THE APPEAL EFFECT ORDER PASSED BY THE ASSESSING OFFICER HE HAS ALLOWED DEDUCTION U/S 80 HHC TO THE EXTENT O F RS.47 68 996/- AS AGAINST DEDUCTION OF RS.47 98 411/- CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)( C) OF THE ACT. IN THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER IT IS STATED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS DELIBERATELY CONCEALE D ITS INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF R S.1 15 68 626/-. THE BASIS . I.T.A. NO.310308/DEL/ 3/7 ADOPTED BY THE ASSESSING OFFICER IS THAT HAD THERE BEEN NO SURVEY U/S 133A THE INVESTMENT IN STOCK TO THIS EXTENT COULD NOT HAVE C OME TO THE KNOWLEDGE OF THE DEPARTMENT AND THEREFORE THE ASSESSEE IS NOT IN A POSITION TO CLAIM DEDUCTION U/S 80HHC IN RESPECT OF THE SAME ALSO. HE IMPOSED A PENALTY OF RS.35 39 999/- TO THE EXTENT OF 100% OF TAX SOUGHT TO BE EVADED ON THIS AMOUNT OF ALLEGED CONCEALED INCOME OF RS.1 15 68 626/-. BEING AGGRIE VED THE ASSESEE CARRIED THE MATTER IN APPEAL BEFORE LD CIT(A) BUT WITHOUT SUCCE SS AND NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. IT IS SUBMITTED BY LD AR OF THE ASSESSEE THAT IN THE PRESENT CASE ASSESSED INCOME AFTER APPEAL EFFECT IS SAME AS WAS DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME AND HENCE IT IS NOT A CASE OF CONCEALMENT AND HENCE THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/S 271(1) ( C) OF THE ACT IS NOT JUSTIFIED. RELIANCE WAS PLACED BY HIM ON THE FOLLOWING TRIBUNA L DECISIONS:- A) TRIBUNAL DECISION OF A BENCH OF DELHI TRIBUNAL R ENDERED IN THE CASE OF SHRI ANIL KUMAR JAIN V. ITO IN I.T.A. NO. 4192/DEL/2009 DATED 12.2.2001. B) AMIR CHAND V. ITO 49 ITD 606 (DEL.). C) JCIT V. SIGNATURE (2004) 85 TTJ 117 (DEL.). D) APPLIANCES INDIA V. ITO 27 SOT 1 (DEL. . 4. AS AGAINST THIS IT WAS SUBMITTED BY THE LD DR O F THE REVENUE THAT THESE TRIBUNAL DECISIONS ARE DISTINGUISHABLE ON FACTS AND HENCE ARE NOT APPLICABLE IN THE PRESENT CASE. IT IS ALSO SUBMITTED THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS REVISED ITS CLAIM FOR DEDUCTION U/S 80HHC FROM RS.47.98 LAKHS TO RS.129.10 LAKHS WHICH IS NOT ALLO WED BY THE ASSESSING OFFICER AND BY LD CIT(A) AND THE ASSESSEE HAS NOT FILED ANY SECOND QUANTUM APPEAL BEFORE THE TRIBUNAL AND HENCE TO THIS EXTENT OF EXT RA CLAIM OF DEDUCTION U/S 80HHC CONCEALMENT IS ESTABLISHED AND HENCE PENALTY SHOULD BE IMPOSED TO THIS EXTENT AT LEAST. SECOND CONTENTION WAS RAISED BY HI M THAT INCOME OF RS.115.68 LAKHS WAS DECLARED BY THE ASSESSEE AS BUSINESS INCO ME BUT THE SAME WAS . I.T.A. NO.310308/DEL/ 4/7 FINALLY ASSESSED AS INCOME FROM OTHER SOURCES AND T HIS IS ALSO FURNISHING OF INACCURATE PARTICULARS OF INCOME AND HENCE FOR THIS REASON ALSO THE PENALTY IMPOSED BY THE ASSESSING OFFICER AND CONFIRMED BY T HE LD CIT(A) IS JUSTIFIED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GON E THROUGH THE MATERIAL AVAILABLE ON RECORD AND THE JUDGMENTS CITED BY LD A R OF THE ASSESSEE. WE FIND THAT AS PER THE APPEAL EFFECT ORDER PASSED BY THE A SSESSING OFFICER THE INCOME OF RS.115.68 LAKHS WAS ASSESSED AS INCOME FROM OTHE R SOURCES AND STILL BUSINESS INCOME ASSESSED BY THE ASSESSING OFFICER I S OF RS.82.64 LAKHS WHEREAS THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 8 0HHC IN THE RETURN OF INCOME FILED BY THE ASSESSEE WAS ONLY OF RS.47.98 L AKHS AND HENCE IT CANNOT BE SAID THAT ANY DEDUCTION WAS CLAIMED BY THE ASSESSEE ON ACCOUNT OF EXTRA INCOME DECLARED BY THE ASSESSEE IN THE COURSE OF SURVEY AT RS.115.68 LAKHS ON ACCOUNT OF EXTRA STOCK FOUND IN THE COURSE OF SURVEY. WE AL SO FIND THAT THE ASSESSEE IS A TRADING EXPORTER AND AS PER FORM NO.10 CCAC FURNISH ED BY THE ASSESSEE THE DEDUCTION U/S 80HHC IS COMPUTED ON THE BASIS OF EXP ORT TURNOVER IN RESPECT OF TRADING OF GOODS AND REDUCING THERE FROM THE DIRECT COST AND INDIRECT COST AND AS PER THE SAME THE PROFIT FROM EXPORT AFTER ADDING B ACK 90% OF EXPORT INCENTIVE HAS BEEN WORKED OUT AT RS.68 64 873/- AND DEDUCTION U/S 80HHC WAS CLAIMED TO THE EXTENT OF 70% OF IT AT RS.47 98 411/-. HENCE DEDUCTION U/S 80HHC WAS NOT CLAIMED BY THE ASSESSEE ON THE BASIS OF BOOK PROFIT OR BUSINESS INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME AND EVEN AF TER EXCLUDING THE EXTRA INCOME DECLARED IN THE COURSE OF SURVEY ON ACCOUNT OF EXTRA STOCK OF RS.115.68 LAKHS FROM BUSINESS PROFIT THE REMAINING BUSINESS PROFIT OF RS.82.64 LAKHS IS SUFFICIENT TO ABSORB THE DEDUCTION CLAIMED BY THE A SSESSEE U/S 80 HHC TO THE EXTENT OF RS.47.98 LAKHS. HENCE IT IS NOT THE CAS E THAT ANY EXTRA DEDUCTION WAS CLAIMED BY THE ASSESSEE U/S 80HHC BY INCLUDING NON BUSINESS INCOME IN BUSINESS INCOME. REGARDING THIS SUBMISSION OF LD DR OF THE REVENUE THAT THERE WAS A REVISED CLAIM FILED BY THE ASSESSEE IN THE CO URSE OF ASSESSMENT PROCEEDINGS AS PER WHICH THE ASSESSEE HAS CLAIMED D EDUCTION U/S 80HHC TO THE EXTENT OF RS.129.10 LAKHS AS AGAINST RS.47.98 LAKHS CLAIMED IN THE RETURN OF . I.T.A. NO.310308/DEL/ 5/7 INCOME WE FIND THAT SUCH CLAIM WAS REJECTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER ITSELF AND IN THE PENALTY ORDER N O PENALTY IS LEVIED BY THE ASSESSING OFFICER ON ACCOUNT OF THIS EXTRA CLAIM RA ISED BY THE ASSESSEE BEFORE HIM FOR DEDUCTION U/S 80HHC. IN FACT THE ASSESSING OFFICER HAS NOT EVEN REFERRED TO THIS EXTRA CLAIM MADE BY THE ASSESSEE FOR DEDUCT ION U/S 80HHC AND SINCE THE ASSESSING OFFICER HAS NOT LEVIED ANY PENALTY ON THI S EXTRA CLAIM MADE BY THE ASSESSEE U/S 80HHC. WE ARE OF THE CONSIDERED OPINIO N THAT EVEN NO ADJUDICATION IS CALLED FOR ON THIS ASPECT OF THE MA TTER AS TO WHETHER PENALTY TO THIS EXTENT IS JUSTIFIED OR NOT. THE ASSESSING OFFICER HAS HIMSELF NOT LEVIED ANY PENALTY ON ACCOUNT OF EXTRA CLAIM RAISED BY THE ASS ESSEE FOR DEDUCTION U/S 80HHC IN THE COURSE OF ASSESSMENT PROCEEDINGS. WE H AVE ALSO NOTED THAT NO EXTRA DEDUCTION WAS CLAIMED BY THE ASSESSEE U/S 80H HC ON THE BASIS OF EXTRA INCOME DECLARED IN THE RETURN OF INCOME ON ACCOUNT OF EXCESS STOCK OF RS.115.68 LAKHS AND HENCE WE ARE IN AGREEMENT WITH LD AR OF T HE ASSESSEE THAT THE ISSUE IN DISPUTE BEFORE US IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL DECISION RENDERED IN THE CASE OF SHRI AK JAIN (SUPR A) IN WHICH ONE OF US I.E. ACCOUNTANT MEMBER IS A PARTY. IN THAT CASE ALSO SU RVEY WAS CARRIED OUT IN THE CASE OF THE ASSESSEE ON 23.10.2001 AND AS PER SURVE Y REPORT IT WAS REPORTED THAT AS PER UN-SIGNED KACHHA AGREEMENT TO SELL FOR PROPERTY AT GURGAON IT WAS NOTED THAT TOTAL SALE CONSIDERATION WAS SHOWN AT RS .35.57 LAKHS AND THE ASSESSEES SHARE WAS RS.11.90 LAKHS BEING 1/3 RD SHARE BUT IN THE REGULAR AGREEMENT FOR SALE THE ASSESSEE HAS SHOWN HIS PART OF SALE CONSIDERATION AT RS.4 23 333/- AND HENCE THERE WAS UNDER RECORDING O F SALE CONSIDERATION TO THE EXTENT OF RS.7 66 666/-. IN THE RETURN OF INCOME F ILED BY THE ASSESSEE THE ASSESSEE HAS INCLUDED THIS EXTRA INCOME OF RS.7 66 666/- AS MISC. INCOME. IN THAT CASE ALSO RETURNED INCOME AND ASSESSED INCOME WAS SAME BUT STILL THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS IN THAT CASE ALSO U/S 271(1) (C) AND PENALTY WAS LEVIED OF RS.2 34 600/- ON ACCOUNT OF SUCH EXTRA SALE CONSIDERATION WHICH WAS INCLUDED BY THE ASSESSEE IN THE RETURN OF INCOME ON THE BASIS OF SURVEY CONDUCTED U/S 133A. IN THAT CASE THE ISSUE WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE AND IT WAS HELD THAT WHEN THE ASSESSED . I.T.A. NO.310308/DEL/ 6/7 INCOME AND RETURNED INCOME ARE SAME THERE IS NO CO NCEALMENT OF INCOME. FOR COVERING THE CASES OF SEARCH WHERE THE ASSESSEE INC LUDES EXTRA INCOME IN RETURN OF INCOME FILED AFTER THE DATE OF SEARCH THERE ARE TWO EXPLANATIONS IN SECTION 271(1) THAT ARE EXPLANATION-5 & 5A FOR COVERING THE CASES OF SEARCH BEFORE IST JUNE 2007. AND SEARCH AFTER 1.6.2007 RESPECTIVELY BUT THERE IS NO SUCH EXPLANATION IN SECTION 271 WITH REGARD TO SURVEY CA SES TO HOLD THAT EVEN IF THE ASSESSEE HAS INCLUDED ANY INCOME IN THE RETURN OF I NCOME FILED BY THE ASSESSEE AFTER THE DATE OF SURVEY THERE WILL BE DEEMED CONC EALMENT OF INCOME OR DEEMED FURNISHING OF INACCURATE PARTICULARS OF INCOME AS P ROVIDED IN EXPLANATION 5 & 5A FOR SEARCH CASES AND THESE EXPLANATIONS CANNOT APPL Y TO SURVEY CASES AND SINCE THE ASSESSEE HAS INCLUDED THIS EXTRA INCOME IN THE RETURN OF INCOME FILED BY THE ASSESSEE IT CANNOT BE HELD THAT THERE IS ANY CONCE ALMENT OF INCOME IN THE RETURN OF INCOME FILED BY THE ASSESSEE. SINCE WE HAVE NOT ED THAT NO EXTRA DEDUCTION WAS CLAIMED BY THE ASSESSEE U/S 80HHC IN THE RETURN OF INCOME FILED BY THE ASSESSEE IT CANNOT BE CASE OF LEVY OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME ONLY FOR THE REASON THAT THE ASSESSEE HAS DECLARED THE INCOME UNDER THE HEAD INCOME FROM BUSINESS AND THE SAME WAS ASSESSED AS INCOME FROM OTHER SOURCES WITHOUT RESULTING IN ANY DENIAL OF ANY DEDUCTION CLAIMED BY THE ASSESSEE. WE HAVE ALREADY NOTED THAT DEDUCTION OF RS.47.98 LAKHS CLAIMED BY THE ASSESSEE. U/S 80HHC IS AVAILAB LE TO THE ASSESSEE AND HAS BEEN ALLOWED TO THE ASSESSEE EVEN AFTER EXCLUDING T HIS EXTRA INCOME OF RS.115.98 LAKHS FROM BUSINESS INCOME. REGARDING THE CONTENTION OF LD DR OF THE REVENUE THAT PENALTY IS TO BE IMPOSED TO THE EXTENT OF EXTRA DEDUCTION CLAIMED BY THE ASSESSEE U/S 80HHC AS PER REVISED CLAIM OF SUCH DEDUCTION TO THE EXTENT OF RS.129.10 LAKHS FILED BY THE ASSESSEE TO THE ASSESS ING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS WE HAVE ALREADY NOTED THAT NO SUCH PENALTY HAS BEEN LEVIED BY THE ASSESSING OFFICER ON ACCOUNT OF THIS WRONG CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80HHC OF THE ACT. IN FACT IN THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER U/S 271(1)( C) THERE IS NOT EVEN A REFERENCE TO THIS EXTRA CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80HHC AND HENCE W E CANNOT GO INTO THIS ASPECT AS TO WHETHER ANY PENALTY IS LEVIABLE OR NOT ON ACCOUNT OF THIS CLAIM OF THE . I.T.A. NO.310308/DEL/ 7/7 ASSESSEE FOR EXTRA DEDUCTION U/S 80HHC IN THE COURS E OF ASSESSMENT PROCEEDINGS. IN VIEW OF ABOVE DISCUSSION WE ARE O F THE CONSIDERED OPINION THAT NO PENALTY IS LEVIABLE IN THE PRESENT CASE U/S 271( 1)(C) AND HENCE WE DELETE THE SAME. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON 9TH APRIL 2010. SD/- SD/- (A.D. JAIN) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 09. 4.2010. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)- NEW DELHI. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DELHI. TRUE COPY. BY ORDER (ITAT NEW DELHI).