Shervani Hospitalities Ltd, New Delhi v. DCIT, New Delhi

ITA 4120/DEL/2009 | 2001-2002
Pronouncement Date: 26-03-2010 | Result: Dismissed

Appeal Details

RSA Number 412020114 RSA 2009
Assessee PAN ASACS0211J
Bench Delhi
Appeal Number ITA 4120/DEL/2009
Duration Of Justice 5 month(s) 11 day(s)
Appellant Shervani Hospitalities Ltd, New Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 26-03-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 26-03-2010
Date Of Final Hearing 03-03-2010
Next Hearing Date 03-03-2010
Assessment Year 2001-2002
Appeal Filed On 15-10-2009
Judgment Text
I.T.A. NO. 4120 /DEL/2009 1/34 IN THE INCOME TAX APPELLATE TRIBUNAL NEW DELHI BENCH G BEFORE SHRI A. K. GARODIA ACCOUTANT MEMBER AND SHRI GEORGE MATHAN JUDICIAL MEMBER ITA NO. 4120 /DEL/2009 (ASSESSMENT YEAR 2001-02) SHERVANI HOSPITALITIES LTD. VS. DCIT CIRCLE 8(1 ) (FORMERLY KNOWN AS STAR HOTELS LTD. ) NEW DELHI. 11 SUNDER NAGAR NEW DELHI. (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AASACS0211J APPELLANT BY: SHRI SALIL AGGARWAL ADV. RESPONDENT BY: SMT. SURABHI AHLUWALIA SR. DR ORDER PER GEORGE MATHAN JM: 1. THIS APPEAL BY THE ASSESSEE HAS BEEN PREFERRED A GAINST THE ORDER OF LD. CIT(A) XI NEW DELHI IN APPEAL NO.256/2008-09 DATED 17.08.2009 FOR THE ASSESSMENT YEAR 2001-02. SHRI SALIL AGGARWAL ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE AND MS. SURAB HI AHLUWALIA SR. DR REPRESENTED ON BEHALF OF THE REVE NUE. 2. IT WAS THE SUBMISSION BY THE LD. A.R. THAT THE A SSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF HOTELS AND RESTAURANTS. IT WAS THE SUBMISSION THAT IN THE COU RSE OF I.T.A. NO. 4120 /DEL/2009 2/34 ASSESSMENT VARIOUS ADDITIONS HAVE BEEN MADE WHICH WERE SUBJECT MATTER OF APPEAL BEFORE THE CIT(A) AND SUBSEQUENTLY BEFORE THE ITAT. IT WAS THE SUBMISSIO N THAT IN THE DECISION OF THE TRIBUNAL CERTAIN RELIEF GIVEN BY THE CIT(A) HAVE BEEN REVERSED. IT WAS THE FURTH ER SUBMISSION THAT AFTER GIVING EFFECT TO THE ORDER OF CIT(A) AND THAT OF THE ITAT THE FOLLOWING ADDITION S MADE BY THE A.O. REMAINED: (I) DONATIONS TO AN EXTENT OF RS.10 494/- (II) THE LOSS OF SUBSIDIARY COMPANY OF AN AMOUNT OF RS.1 39 595/- (III) LOSS OF CLOSURE OF SOUTH EXTN. UNIT OF RS.25 37 521/- (IV) DEPRECIATION ON THE ASSETS PURCHASED FROM M/S. STAR HOSPITALITY TO AN EXTENT OF RS.3 03 433/- (V) CAPITAL EXPENDITURE FOR INTERIOR DESIGNING FOR AN AMOUNT OF RS.1 32 000/-. 2.1 IT WAS THE SUBMISSION THAT PENALTY PROCEEDING I NITIATED IN THE COURSE OF ASSESSMENT PROCEEDINGS HAD BEEN REPLI ED TO BY THE ASSESSEE AND THE REPLY OF THE ASSESSEE HAD N OT FOUND FAVOUR WITH THE A.O. AND THE PENALTY WAS LEVIED U/S 271(1)(C) OF THE ACT HAD ALSO BEEN CONFIRMED BY THE CIT(A). IT WAS THE SUBMISSION THAT THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS WERE SEPARATE PROCEEDINGS. FOR THIS PROPOSITION THE LD. A.R. PL ACED RELIANCE ON THE DECISION OF THE HON'BLE HIGH COURT OF I.T.A. NO. 4120 /DEL/2009 3/34 DELHI IN THE CASE OF CHETAN DASS LAXMAN DASS REPORT ED IN 214 ITR 726 WHEREIN THE HON'BLE HIGH COURT HAS HELD AS FOLLOWS: ALTHOUGH PENALTY HAS BEEN REGARDED AS AN ADDITIONA L TAX IN A CERTAIN SENSE AND FOR CERTAIN PURPOSES IT IS NOT POSSIBLE TO HOLD THAT PENALTY PROCEEDINGS ARE ESSEN TIALLY A CONTINUATION OF THE PROCEEDINGS RELATING TO ASSES SMENT WHERE A RETURN HAS BEEN FILED. FOR ALL PRACTICAL PURPOSES PROCEEDINGS FOR IMPOSITION OF PENALTY THO UGH EMANATING FROM PROCEEDINGS FOR ASSESSMENT ARE INDEPENDENT AND SEPARATE ASPECTS OF THE PROCEEDINGS AND THEREFORE THE TRIBUNAL IS JUSTIFIED IN CONSID ERING THE EVIDENCE AS DISCLOSED FROM RECORDS INDEPENDENTL Y WITHOUT IN ANY WAY CONSIDERING THE EARLIER FINDINGS IN THE QUANTUM APPEAL. 2.2 HE ALSO RELIED UPON THE DECISION OF HON'BLE HIG H COURT OF DELHI IN THE CASE OF J K SYNTHETICS LTD. REPORTED I N 219 ITR 267 WHEREIN THE HON'BLE HIGH COURT HAS HELD AS FOLLOWS: MOREOVER THE PROCEEDINGS FOR THE IMPOSITION OF PENALTY AND ASSESSMENT PROCEEDINGS ARE TWO SEPARATE PROCEEDINGS AND INDEPENDENT PROCEEDINGS AND THEREFORE SEPARATE AND DISTINCT PROVISIONS HAVE BE EN ENACTED IN THE STATUTE FOR INITIATION OF THE SAME. THEREFORE THE FINDINGS RECORDED BY THE TRIBUNAL IN THE QUANTUM APPEAL CANNOT BE SAID TO BE DECISIVE. IN T HE PENALTY PROCEEDINGS THE TRIBUNAL HAD NOT FOUND THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF THE INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF I TS INCOME. THERE WAS NO ERROR APPARENT FROM THE RECOR D WHICH HAD TO BE CORRECTED. I.T.A. NO. 4120 /DEL/2009 4/34 2.3 IT WAS THE SUBMISSION THAT IN REGARD TO THE ISS UE OF LOSS ON THE CLOSURE OF SOUTH EXTN. UNIT THE ASSESSEE HAD OP ENED A RESTAURANT BEING RODEO SOUTH EXTENSION IN MAY 2000 WHICH WAS CLOSED IN MARCH 2001. IT WAS THE SUBMISS ION THAT THE ASSESSEE WAS EXPECTING A TURNOVER OF MORE THAN RS.30 000/- PER DAY WHICH WAS THE BREAK EVEN REVENU E WHEREAS THE ASSESSEE WAS ABLE TO ATTAIN ONLY A TURN OVER OF RS.17 100/- PER DAY AND CONSEQUENTLY THE ASSESSEE W AS UNABLE TO BREAK EVEN AND AS THE ASSESSEE DID NOT EX PECT THE BUSINESS TO BREAK EVEN THE ASSESSEE HAD CLOSED DOW N THE SAID BUSINESS AND THE OPERATION LOSS EXPENSES WERE CHARGED OFF IN THE SAME ASSESSMENT YEAR. IT WAS THE FURTHE R SUBMISSION THAT THE LOSS ON THE CLOSURE OF THE UNIT WAS DISALLOWED BY THE A.O. WAS ON ACCOUNT OF THE FOLLOW ING 4 ITEMS BEING (I) PLANT & MACHINERY TO AN EXTENT OF RS.47 166/- (II) FURNITURE AND FIXTURES TO AN EXTE NT OF RS.19 978/- (III) COMPUTER TO AN EXTENT OF RS.32 2 59/- AND (IV) BUILDING ON LEASE TO AN EXTENT OF RS.24 38 118 /-. IT WAS THE SUBMISSION THAT THE BUILDING ON LEASE REPRE SENTED THE PARTITION WORK WOODEN FIXTURES AND WOODEN FLOO RING WALL TO CEILING FRAMEWORK SANITARY AND DRAINAGE ET C. IT WAS THE SUBMISSION THAT THESE WERE ACTUALLY CAPITAL EXPENDITURE ON WHICH THE ASSESSEE HAD CLAIMED I.T.A. NO. 4120 /DEL/2009 5/34 DEPRECIATION AND THE DEPRECIATION HAD ALSO BEEN ALL OWED BUT AS THE ASSESSEE HAD CLOSED DOWN THE UNIT AND TH E SAID ITEMS COULD NOT BE PUT TO USE IN ANY OTHER UNIT OF THE ASSESSEE THE SAME HAD TO BE DISCARDED. IT WAS THE SUBMISSION THAT THE LOSS WAS ON ACCOUNT OF WRITE OF F OF THE DEPRECIABLE ASSETS. IT WAS THE SUBMISSION THAT THE A.O. IN THE COURSE OF THE ASSESSMENT HAD HELD THAT THE WRI TE OF WAS A CAPITAL LOSS. IT WAS THE SUBMISSION THAT THE LD .CIT(A) HAD IN THE APPELLATE PROCEEDINGS DELETED THE DISAL LOWANCE HOLDINGS THAT NONE OF THE ITEMS COULD HAVE BEEN REM OVED AND PUT TO USE BY THE ASSESSEE ON CLOSURE AND THEY COULD ONLY BE ABANDONED. IT WAS THE SUBMISSION THAT THE ITAT HAD ON APPEAL FILED BY THE REVENUE REVERSED THE FIN DING OF LD. CIT(A). IT WAS THE SUBMISSION THAT THE ITAT HA D HELD THAT THE EXPENDITURE WAS CAPITAL IN NATURE AND THE DECISION RELIED UPON BY THE CIT(A) FOR DELETING THE DISALLOW ANCE WAS IN RELATION TO THE PERIOD BEFORE 1988-89 WHEN T HE EXPLANATION (1) TO SECTION 32(1) WAS NOT ON THE STA TUTE. IT HAS THE SUBMISSION THAT THE TRIBUNAL HAD HELD THAT THE PROVISIONS OF SECTION 32(1)(III) OF THE ACT WAS ALS O NOT APPLICABLE. IT WAS THE SUBMISSION THAT AS THE CIT( A) HAD FOUND FAVOUR WITH THE ASSESSEES EXPLANATION THE EXPLANATION AS GIVEN BY THE ASSESSEE WAS A POSSIBLE EXPLANATION. IT WAS THE FURTHER SUBMISSION THAT JU ST I.T.A. NO. 4120 /DEL/2009 6/34 BECAUSE A CLAIM MADE BY THE ASSESSEE WAS ERRONEOUS NO PENALTY WAS APPLICABLE. IT WAS THE FURTHER SUBMISS ION THAT AS PER THE PROVISIONS OF SECTION 271(1)(C) OF THE A CT AND THE EXPLANATION (1) THERETO WHAT WAS REQUIRED WAS T HAT THE ASSESSEE SHOULD HAVE FAILED TO GIVE AN EXPLANATION OR THE A.O. FINDS THE EXPLANATION WHICH HAS BEEN FURNISHE D BY THE ASSESSEE TO BE FALSE. IT WAS THE SUBMISSION T HAT NEITHER WAS THE CASE. IT WAS THE FURTHER SUBMISSION THAT A N ERRONEOUS CLAIM BY THE ASSESSEE WHICH IS NOT A FALS E CLAIM WOULD NOT LEAD TO THE LEVY OF PENALTY. FOR THIS PR OPOSITION HE PLACED RELIANCE ON THE DECISION OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF BACARDE MARTINI INDIA LTD. REPORTED IN 288 ITR 585 WHEREIN IT HAS BEEN HELD AS FOLLOWS: IT IS NOT A CASE WHERE THE ASSESSEE HAD NOT BEEN A BLE TO EXPLAIN ANY EXPENDITURE OR HAD FAILED TO GIVE AN Y DETAILS AND THE A.O. HAD ADDED THE SAME TO THE INCOME. IN DURGA TIMBER WORKS V. CIT (1971) 79 ITR 63 (DEL.) RELIED UPON BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE INCOME TAX OFFICER HAD NOTICED CASH CREDITS AND INVESTMENTS SHOWN IN THE BOOKS OF ACCOUNT AND ASKED THE ASSESSEE TO GIVE AN EXPLANATION. THE ASSESSEE COUL D NOT GIVE AN EXPLANATION OF THE ENTRIES NOR COULD IT EXPLAIN THE SOURCE OF INCOME AND ADMITTED THAT THE TWO AMOUNTS BE TREATED AS HIS CONCEALMENT. UNDER THEE CIRCUMSTANCES THE COURT OBSERVED THAT THERE WA S CONCEALMENT OF INCOME AND PENALTY WAS JUSTIFIED. I N THE PRESENT CASE THE ASSESSEE HAD EXPLAINED ALL THE EXPENDITURE AND HAD ACTUALLY INCURRED THE I.T.A. NO. 4120 /DEL/2009 7/34 EXPENDITURE BUT THE EXPENDITURE WERE DISALLOWED BECAUSE OF DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE A.O. THIS IS NOT A CASE WHERE A REVISED RETURN WAS FILED AS A RESULT OF DISCOVERY O F SOME FACTS BY THE A.O. OR INABILITY OF THE ASSESSEE TO EXPLAIN THE EXPENDITURE. THE REVISED RETURN WAS FI LED AS A RESULT OF DISCOVERY OF SOME FACTS BY THE A.O. OR INABILITY OF THE ASSESSEE TO EXPLAIN THE EXPENDITUR E WERE DISALLOWED BY THE COMMISSIONER OF INCOME TAX (APPEALS) FOR THE YEAR 1998-99 ALTHOUGH THE EXPENDITURE WERE NOT DOUBTED. THERE ARE CASES WHERE AN EXPENDITURE IS DISALLOWED BY THE A.O. AND IT IS ALLOWED BY THE COMMISSIONER OF INCOME-TAX (APPEALS). IT IS AGAIN DISALLOWED BY THE INCOME-TA X APPELLATE TRIBUNAL AND IN APPEAL ALLOWED BY THE HIGH COURT AND MAY BE DISALLOWED BY THE SUPREME4 COURT. MERELY BECAUSE THERE IS A DIFFERENCE OF OPINION FOR ALLOWING OR DISALLOWING THE EXPENDITURE BETWEEN THE ASSESSEE AND THE A.O. IT CANNOT BE SAI D THAT THE ASSESSEE HAD INTENTION TO CONCEAL THE INCOME. THE FILING OF THE REVISED RETURN EXCLUDING SOME OF THE DISALLOWED EXPENDITURE AND CLAIMING EXPENDITURE OFRS.2 CRORES WHICH WAS ACTUALLY SPENT BY THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR AS DEDUCTION DOES NOT AMOUNT TO CONCEALMENT OR FURNISHING INACCURATE PARTICULARS. THE ASSESSEE HA D GIVEN ALL PARTICULARS OF EXPENDITURE AND INCOME AND HAD DISCLOSED ALL FACTS TO THE A.O. IT IS NOT THE CASE OF THE A.O. OR THE APPELLANT THAT IN REPLY TO THE QUESTIONNAIRE OF THE A.O. SOME NEW FACTS WERE DISCOVERED OR THE A.O. HAD DUG OUT SOME INFORMATION WHICH WAS NOT FURNISHED BY THE ASSESSEE. 2.4 HE ALSO RELIED UPON THE DECISION IN THE CASE OF INTERNATIONAL AUDIO VISUAL COMPANY REPORTED IN 288 ITR I.T.A. NO. 4120 /DEL/2009 8/34 570 AND THE DECISION OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF NATH BROTHERS EXIM INTERNATIONAL LTD. 288 I TR 670 WHERE IT HAS BEEN HELD AS FOLLOWS: HELD DISMISSING THE APPEAL THAT THERE WAS FULL DISCLOSURE OF ALL RELEVANT MATERIAL. IT COULD NOT BE SAID THATS THE CONDUCT OF THE ASSESSEE ATTRACTED T HE PROVISIONS OF SECTION 271(1)(C). THE CANCELLATION OF PENALTY WAS JUSTIFIED. 2.5 HE FURTHER RELIED UPON THE DECISION OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF PHI SEEDS INDIA LTD. REPORT ED IN 301 ITR 13 (DEL.) WHEREIN IT HAS BEEN HELD AS FOLLO WS: HELD DISMISSING THE APPEALS THAT WHERE TWO OPTIONS WERE POSSIBLE ADOPTING ONE OF THEM COULD SCARCELY BE VIEWED AS MALA FIDE WITH AN INTENT TO EVADE PAYMENT OF INCOME-TAX. RECOMPENSE HAD BEEN PROVIDED FOR IN SECTION 234 OF THE ACT BY WAY OF LE VY OF INTEREST WHICH IN THE PRESENT CASE HAD BEEN PA ID WITHOUT DEMUR. THE TRIBUNAL HAD FOUND AS A FACT THAT THERE WAS NO CONCEALMENT OF INCOME. THE CANCELLATION OF PENALTY WAS JUSTIFIED. 2.6 IT WAS THE SUBMISSION THAT ALL THE DETAILS IN R ESPECT OF THE WRITE OFF WAS AVAILABLE IN THE RETURN AND WAS ALSO PRODUCED IN THE COURSE OF ASSESSMENT PROCEEDINGS AND JUST BE CAUSE THE A.O. WAS OF THE OPINION THAT THE CLAIM OF LOSS ON THE CLOSURE OF SOUTH EXTENSION UNIT WAS A CAPITAL LOSS AND THE SAME HAS BEEN UPHELD BY THE TRIBUNAL COULD NOT BE V IEWED AS A CONCEALMENT OF INCOME ESPECIALLY WHEN THE CIT( A) I.T.A. NO. 4120 /DEL/2009 9/34 HAD ACCEPTED THE CLAIM OF THE ASSESSEE. IT WAS THU S A SUBMISSION THAT THERE ARE TWO VIEWS POSSIBLE AND CONSEQUENTLY NO PENALTY WAS LEVIABLE. 2.7 IN REGARD TO THE LOSS OF THE SUBSIDIARY COMPANY IT WAS THE SUBMISSION THAT THE ASSESSEE HAD INCORPORATED A COM PANY IN NEPAL UNDER THE NAME M/S. STAR HOSPITALITY PVT. LTD. NEPAL AND THE SAID COMPANY WAS LIQUIDATED ON 02.02. 2000. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD CLAIMED LOSS OF RS.1 39 595/- UNDER A MISTAKEN IMPRESSION AND THE S AME HAD ALSO BEEN DISALLOWED BY THE A.O. IT WAS THE SUBMISSION THAT EVEN BEFORE THE CIT(A) THE ASSESSEE HAS THOUGH RAISED THE GROUND HAD NOT PRESSED THE SAME AND THE SAME HAD BEEN DISMISSED AS NOT PRESSED. IT WAS THE SUBMISSION THAT THE LOSS WAS ERRONEOUSLY CLAIMED A S THE ASSESSEE WAS UNDER THE BONA FIDE BELIEF THAT FROM T HE SECURITY DEPOSIT GIVEN TO THE LAND LORD AND THE LAN D LORD HAD DEDUCTED AN AMOUNT OF RS.1 45 345/- ON ACCOUNT OF BRINGING THE PREMISES USED BY THE ASSESSEE IN NEPAL TO THE SAME CONDITION AS IT WAS GIVEN TO THE ASSESSEE AND THE ASSESSEE HAD BEEN ABLE TO RECOVER ONLY AN AMOUNT OF RS.8 875/- AND THE BALANCE OF RS.1 39 595/- HAD BEE N CHARGED AS A LOSS. IT WAS THE SUBMISSION THAT IT W AS A MISTAKEN CLAIM ON WHICH NO PENALTY WAS EXIGIBLE. I.T.A. NO. 4120 /DEL/2009 10/34 2.8 IN REGARD TO THE ISSUE OF DEPRECIATION ON THE A SSETS BROUGHT FROM M/S. STAR HOSPITALITY PVT. LTD. NEPAL IT WAS THE SUBMISSION THAT THE ASSESSEE HAD ON THE WINDING UP OF M/S. STAR HOSPITALITY PVT. LTD. NEPAL TAKEN OVER AND TR ANSFERRED TO THE HEAD OFFICE ACCOUNT AS PER THE REPORT SUBMIT TED TO THE RBI PLANT & MACHINERY OF A VALUE OF RS.3 12 95 6/- FURNITURE AND FIXTURE OF RS.36 618/- COMPUTER OF RS.66 169/- AND WOODEN/PLANKS REMOVED FROM THE BUIL DING VALUED AT RS.9 LACS. IT WAS THE SUBMISSION THAT TH E A.O. HAD DISALLOWED DEPRECIATION ON THE SAID ITEM AND HA D MADE THE DISALLOWANCE OF RS.3 03 433/- ON THE GROUND THA T THE ASSET STATED TO HAVE BEEN BROUGHT FROM NEPAL WERE NOWHERE REFLECTED IN THE LEDGER ACCOUNT FILED AND N O PROOF FOR THE USE OF THE SAME BY THE ASSESSEE FOR RODEO S OUTH EXTENSION WAS PRODUCED. IT WAS THE SUBMISSION THAT THE FACT THAT THE ASSESSEE HAD BROUGHT BACK THE SAID IT EMS WAS CLEAR FROM THE LETTER TO THE RBI. IT WAS THE FURTH ER SUBMISSION THAT THAT IN THE REPLY TO THE PENALTY PROCEEDINGS THE ASSESSEE HAD SPECIFICALLY GIVEN TH E COPIES OF THE LEDGER ALSO. IT WAS THE SUBMISSION THAT THE DEPRECIATION ITSELF WAS FULLY ALLOWABLE AND IN THE COURSE OF PENALTY PROCEEDINGS THE PROOF OF THE ASSETS HAVING BEEN BROUGHT FORM NEPAL WAS PRODUCED IN THE FORM OF LEDG ER I.T.A. NO. 4120 /DEL/2009 11/34 ACCOUNT. IT WAS THUS THE SUBMISSION THAT NO PENALT Y ON THIS COUNT WAS EXIGIBLE. 2.9 IN RESPECT OF THE CAPITAL EXPENDITURE FOR INTER IOR DESIGNING IT WAS THE SUBMISSION THAT THE ASSESSEE HAD INCURRE D THE EXPENDITURE OF RS.1 65 000/- ON THE INTERIOR DESIGN ING OF THE PREMISES OF RODEO SOUTH EXTN. AND THE A.O. HAD HELD THE SAID EXPENDITURE TO BE CAPITAL EXPENDITURE AS T HE INTERIOR DESIGNING OF THE BUILDING AND RESTAURANT T AKEN ON RENT IS FOR A NEW ASSET AND OF ENDURING IN NATURE. IT WAS THE SUBMISSION THAT ON APPEAL THE CIT(A) HAD DELETED TH E ADDITION BUT ON THE REVENUES APPEAL THE TRIBUNAL HAD REVERTED THE FINDING OF CIT(A). HE RELIED UPON THE DECISION OF HON'BLE HIGH COURT OF ORISSA IN THE CAS E OF CIT VS INDIAN MEALS AND FERRO ALLOYS LTD. REPORTED IN 211 ITR 35 TO SUPPORT HIS CONTENTION THAT WHETHER A N EXPENDITURE IS CAPITAL OR REVENUE IS A MATTER OF OP INION. IT WAS THE SUBMISSION THAT JUST BECAUSE THE A.O. WAS O F THE OPINION THAT THE EXPENDITURE WAS A CAPITAL EXPENDIT URE IT WOULD NOT LEAD TO THE LEVY OF PENALTY. 2.10 IN REGARD TO THE PENALTY LEVIED AND CONFIRMED ON ACCOUNT OF THE DISALLOWANCE OF DONATION IT WAS THE SUBMISS ION THAT THE ASSESSEE HAD PAID AN AMOUNT OF RS.15 494/-. OU T OF THE SAID AMOUNT RS.10 000/- WAS PAID TOWARDS GUJARA T EARTHQUAKE RELIEF FUND THROUGH THE HINDUSTAN BENEVO LENT I.T.A. NO. 4120 /DEL/2009 12/34 TRUST AN AMOUNT OF RS.500 WAS GIVEN TO DELHI FIRE SERVICES AND AN AMOUNT OF RS.4 995/- TO VARIOUS OTH ERS. IT WAS THE SUBMISSION THAT THE A.O. HAD DISALLOWED THE CLAIM OF DEDUCTION ON THE GROUND THAT THE AMOUNT PAID THR OUGH M/S. HINDUSTAN BENEVOLENT TRUST WAS NOT ELIGIBLE FO R 100% DEDUCTION AS IT WAS NOT SET UP BY A STATE GOVERNMENT AND CONSEQUENTLY THE PROVISIONS OF SECTI ON 80G(2)(III)(GA) DID NOT APPLY. IT WAS THE FURTHER SUBMISSION THAT IN REGARD TO THE OTHER DONATIONS TO TALING TO RS.5 494/- RECEIPT COULD NOT BE PRODUCED AND THE SA ME HAD BEEN DISALLOWED. IT WAS THE SUBMISSION THAT ON THE DISALLOWANCE OF CLAIM OF EXPENDITURE MORE SO PAYMEN T OF DONATIONS NO PENALTY WAS EXIGIBLE. HE FURTHER RELI ED UPON THE DECISION OF MUMBAI BENCH OF ITAT IN THE CASE OF VIP INDUSTRIES TO SUPPORT HIS SUBMISSIONS THAT WHEN ALL THE NECESSARY PARTICULARS ARE DECLARED BY THE ASSESSEE IN ITS RETURN IT CANNOT BE SAID THAT THE ASSESSEE HAS CON CEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS IN RESPE CT OF THE CLAIM OF DEDUCTION WHICH STANDS REPELLED BY THE AUTHORITIES. THE FINDING OF ITAT MUMBAI A BENCH IN THE CASE OF ACIT VS. VIP INDUSTRIES LTD. REPORTED IN 1 22 TTJ 289 IS ALSO EXTRACTED HERE FOR BETTER APPRECIATION: HELD : THE NECESSARY ELEMENTS FOR ATTRACTING EXPLANATION 1 TO S. 271(1(C) ARE THREE-FOLD: (A) TH E PERSON FAILS TO OFFER THE EXPLANATION; OR (B) HE OF FERS I.T.A. NO. 4120 /DEL/2009 13/34 THE EXPLANATION WHICH IS FOUND BY THE AUTHORITIES T O BE FALSE OR (C) THE PERSON OFFERS EXPLANATION WHICH H E IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SU CH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS REL ATING TO THE SAME HAVE BEEN DISCLOSED BY HIM. IT IS VIVI D THAT THE FIRST ELEMENT IS NOT SATISFIED BECAUSE THE ASSE SSEE AHS OFFERED THE EXPLANATION ABOUT THE CLAIM OF DEDUCTION. THE CASE OF THE ASSESSEE ALSO DOES NOT FALL IN SECOND CATEGORY. HE MADE A CLAIM FOR DEDUCTION AT ONE HUNDRED PER CENT U/S 35 IN RESPECT OF THE CAR U SED BY IT FOR THE PURPOSE OF R&D AND THE A.O. HAS NOT FOUND THAT SUCH CAR WAS NOT USED FOR THE PURPOSE OF R&D. FURTHER S. 35(1)(IV) STATES THAT THE DEDUCTIO N IN RESPECT OF ANY EXPENDITURE OF A CAPITAL NATURE ON SCIENTIFIC RESEARCH RELATED TO THE BUSINESS CARRIED ON BY THE ASSESSEE SHALL BE ALLOWED. THUS IF CAPITA L EXPENDITURE IS INCURRED ON SCIENTIFIC RESEARCH RELA TING TO THE BUSINESS CARRIED ON BY THE ASSESSEE THE ENT IRE AMOUNT IS DEDUCTIBLE UNDER S. 35(1)(IV). ALBEIT TH E ASSESSEE HAS LOST ITS CLAIM UNDER HIS SECTION AT HUNDRED PER CENT DEDUCTION ON THE MOTOR CAR PURCHASED AND USED BY IT FOR SCIENTIFIC R&D BUT THE A.O. HAD ALLOWED DEPRECIATION AT 20 PER CENT ON THE COST OF CAR PURCHASED. IT HAS NOT BEEN DENIED BY T HE A.O. THAT THE CAR WAS NOT USED IN CONNECTION WITH T HE ACTIVITIES RELATING TO R&D. THUS IT IS CLEAR THAT THE ASSESSEE OFFERED EXPLANATION WHICH WAS NOT FOUND T O BE FALSE BY THE A.O. THE THIRD INGREDIENT FOR THE APPLICABILITY OF THE DEEMING PROVISION IS THAT THE PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE. THE ASSESSEES CASE DOES NOT FALL WITHI N THE PARAMETERS OF THIS PROVISION ALSO FOR THE REASON TH AT HE OFFERED EXPLANATION THAT HT CAR WAS USED FOR THE PURPOSES OF SCIENTIFIC R&D. HIS EXPLANATION IS BON A FIDE AND THIS FACT HAS NOT BEEN REFUTED BY THE A.O. I.T.A. NO. 4120 /DEL/2009 14/34 SIMPLY BECAUSE THE A.O. CHOSE TO NEGATIVE THE ASSESSEES CLAIM IN ENTIRETY IT WOULD NOT IPSO FAC TO MEAN THAT THE EXPLANATION IS NOT BONA FIDE. WHETHE R AN EXPLANATION IS BONA FIDE OR NOT DEPENDS ON THE CUMULATIVE EFFECT OF THE ATTENDING CIRCUMSTANCES PREVAILING IN EACH CASE. NO STRAITJACKET FORMULA C AN BE DEVISED FOR ASCERTAINING WHETHER OR NOT THE EXPLANATION OFFERED BY THE ASSESSEE IS IN THE R&D ACTIVITY FOR WHICH DEDUCTION UNDER S.35 WAS CLAIME D AT RS.47.40 LACS WHICH INCLUDED A SUM OF RS.23.23 LACS TOWARDS PURCHASE OF CAR FOR THE R&D ACTIVITY. THE FACTS THAT THE ASSESSEE HAD CARRIED OUT R&D ACTIVITY AND THE CAR WAS ALSO PURCHASED BY IT FOR T HE USE BY THE R&D STAFF HAVE NOT BEEN DENIED BY THE A. O. THE EXPLANATION OF THE ASSESSEE FOR CLAIMING FULL DEDUCTION UNDER S.35 CANNOT BE SAID TO BE FANCIFUL. FURTHER THE ASSESSEE DISCLOSED ALL THE FACTS RELAT ING TO ITS CLAIM BY WAY OF STATEMENT ANNEXED TO THE AUDIT REPORT WHICH FORMS PART AND PARCEL OF THE RETURN O F INCOME IN WHICH IT HAS BEEN SPECIFICALLY MENTIONED ABOUT THE R&D EXPENSES DEBITED TO THE P & L A/C INCLUDING DEPRECIATION. HENCE THE CASE OF THE ASSESSEE CANNOT BE COVERED IN THE THIRD CATEGORY AL SO. UNDER THESE CIRCUMSTANCES IT IS PATENT THAT THE NECESSARY CONDITIONS FOR INVOKING EXPLN. 1 TO S.271(1)(C) ARE LACKING. IT IS AUSTERE FROM THE LANGUAGE OF S.271(1)(C) THAT THE PENALTY IS IMPOSAB LE FOR THE CONCEALMENT OF THE PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME . THE LITERAL MEANING OF THE WORD CONCEAL IS TO HI DE. BE THAT AS IT MAY IN ORDER TO BE COVERED WITHIN TH E MISCHIEF OF THIS SECTION THE ACT (INTENTIONAL OR UNINTENTIONAL) OF THE ASSESSEE SHOULD RESULT INTO T HE CONCEALMENT OF INCOME. IN A CASE WHERE A GENUINE CLAIM IS MADE FOR DEDUCTION WHICH IS NOT ACCEPTED B Y THE REVENUE BUT ALL THE NECESSARY PARTICULARS ARE I.T.A. NO. 4120 /DEL/2009 15/34 DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME I T CANNOT BE SAID BY ANY STRETCH OF IMAGINATION THAT T HE ASSESSEE HAS CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF THE CLAIM OF DEDUCTION WHICH STANDS REPELLED BY THE AUTHORITIES. IF PENALTY IS IMPOSED UNDER SUCH CIRCUMSTANCES ALSO THEN PROBABLY THERE WILL REMAIN NO COURSE OPEN TO THE ASSESSEE FOR GENUINELY CLAIMING A DEDUCTION WHICH IN HIS OPINION IS ADMISSIBLE BECA USE THE FEAR OF SUCH CLAIM BEING REJECTED IN EVENTUALIT Y WILL EXPOSE HIM TO THE RIGOR OF PENALTY. OBVIOUSLY SUC H A PROPOSITION IS BEYOND ANY RECOGNIZED CANON OF LAW. PENALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMEN T PROCEEDINGS AND HENCE IT BECOMES AMPLY CLEAR THAT ANY ADDITION MADE DOES NOT AUTOMATICALLY LEAD TO TH E IMPOSITION OF PENALTY U/S 271(1)(C). IN THE PENALT Y PROCEEDINGS THE ASSESSEE IS GIVEN A CHANCE TO EXPLA IN HIS CASE. IF HE SUCCESSFULLY EXPLAINS HIS POSITION AND IS NOT TRAPPED WITHIN THE PARAMETERS OF CL. (C) OF S. 271(1) ALONG WITH THE EXPLANATIONS DEEMING THE CONCEALMENT OF INCOME THE PENALTY CANNOT BE IMPOSED. ADVERTING TO THE FACTS OF THE INSTANT CAS E ADMITTEDLY HE ASSESSEE HAD BONA FIDELY MADE A CLAI M FOR DEDUCTION U/S 35 IN RESPECT OF COST OF CAR PURCHASED FOR THE PURPOSE OF R&D ACTIVITY BY DISCLOSING ALL THE NECESSARY PARTICULARS IN THE AUD IT REPORT. THE FACTS THAT THE CAR WAS PURCHASED BY TH E ASSESSEE AND ALSO USED FOR THE PURPOSE OF THE BUSIN ESS HAVE NOT BEEN CONTROVERTED BY THE ASSESSING OFFICER . FURTHER THE GRANTING OF DEPRECIATION AT 20 PER CEN T INSTEAD OF HUNDRED PER CENT DEDUCTION CLAIMED BY TH E ASSESSEE SHOWS THAT THERE WAS A GENUINE DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER ON THIS ASPECT OF THE MATTER. IT CANNOT BE SAID THAT THE ASSESSEE UNDER SUCH CIRCUMSTANCES HAS CONCEALED HIS INCOME AND IS CAUGHT WITHIN THE FOUR I.T.A. NO. 4120 /DEL/2009 16/34 CORNERS OF SECTION 271(1)(C). THEREFORE CIT(A) HA S RIGHTLY NOT IMPOSED PENALTY ON THIS ADDITION UNIO N OF INDIA & ORS. VS. DHARAMENDRA TEXTILE PROCESSORS & ORS. (2008) 219 CTR (SUPREME COURT) 617: (2008) 306 ITR 277 (SUPREME COURT) EXPLAINED AND APPLIED. 2.11 HE FURTHER RELIED UPON THE DECISION OF PUNE BE NCH OF ITAT IN THE CASE OF CAMBAY SOFTWARE INDIA PVT. LTD. TO S UBMIT THAT THE REJECTION OF ASSESSEES BONA FIDE CLAIM WO ULD NOT LEAD TO AUTOMATIC PENALTY AND BEFORE THE PENALTY IS LEVIED THE A.O. HAS TO SATISFY THAT THE ASSESSEE HAS CONCE ALED ITS INCOME OR THE ASSESSEE HAS FURNISHED INACCURATE PAR TICULARS OF INCOME AND THAT THE CASE OF THE ASSESSEE IS COVE RED BY THE DEEMING FICTION OF ONE OF THE EXPLANATIONS APPE NDED TO SECTION 271(1)(C) OF THE ACT. 2.12 HE ALSO RELIED UPON THE DECISION OF HON'BLE HI GH COURT OF DELHI IN THE CASE OF LOTUS TRAINS TRAVELS PVT. LTD. REPORTED IN 177 TAXMAN 37 (DEL.) TO SUPPORT HIS CONTENTION T HAT IF THE ASSESSEE FURNISHES MATERIAL FACT RELEVANT TO TH E CLAIM IT WOULD NOT BE SAID THAT THE ASSESSEE HAS CONCEALED I TS INCOME BY FURNISHING INACCURATE PARTICULARS SO AS T O ATTRACT PENALTY U/S 271(1)(C) OF THE ACT. IT WAS THUS THE S UBMISSION THAT THE PENALTY AS LEVIED WAS LIABLE TO BE CANCELL ED. 3. IN REPLY THE LD. D.R. DREW OUR ATTENTION TO PAGE 1 OF THE ASSESSMENT ORDER. IT WAS SUBMITTED THAT THE ASSESS EE HAD FILED A LOSS RETURN AND AFTER MAKING THE DISALLOWAN CE OF THE I.T.A. NO. 4120 /DEL/2009 17/34 INCOME THE ASSESSMENT HAD RESULTED IN A POSITIVE FI GURE. IT WAS THE FURTHER SUBMISSION THAT THE FACT THAT THE A SSESSEE HAS NOT FILED ANY FURTHER APPEAL FROM THE DECISION OF THE TRIBUNAL ON THREE OF THE ISSUES AND THE FACT THAT T HE ASSESSEE HAS NOT FILED APPEAL AGAINST THE ORDER OF THE CIT(A ) ON TWO OF THE ISSUES CLEARLY SHOWS THAT THE ASSESSEE HAS C ONCEALED PARTICULARS OF ITS INCOME. IT WAS THE FURTHER SUBM ISSION THAT THE ASSESSEE HAS BEEN CORNERED IN THIS CASE IN REGARD TO THE CONCEALMENT OF THE FACT IN THE ASSESSMENT AS AL SO IN THE REPLY TO THE SHOW CAUSE NOTICE OF PENALTY. THE REP LY GIVEN IS TOTALLY UNSUBSTANTIATED AND THE EVIDENCES FILED ALONG WITH THE REPLY TO THE SHOW CAUSE NOTICE ALSO CLEARL Y PROVE THAT THE ASSESSEE HAS CONCEALED ITS INCOME. SHE FU RTHER RELIED UPON THE DECISION OF THE HON'BLE SUPREME COU RT IN THE CASE OF DHARMENDRA TEXTILE PROCESS AND OTHERS REPORTED IN 306 ITR 277 (S.C.) TO SUPPORT HER CONTE NTION THAT THE PENALTY U/S 271(1)(C) OF THE ACT IS A CIVI L LIABILITY AND MENS REA OF THE ASSESSEE NEED NOT BE PROVED BY THE A.O. IN REPLY THE LD. A.R. SUBMITTED THAT NONE OF THE LOWER AUTHORITIES HAVE GIVEN A FINDING THAT THE EXP LANATION AS GIVEN BY THE ASSESSEE IS FALSE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE H ON'BLE SUPREME COURT IN THE CASE OF THE DHARMENDRA TEXTILE S PROCESS AND OTHERS REPORTED IN 306 ITR 277 HAS HELD THAT I.T.A. NO. 4120 /DEL/2009 18/34 PENALTY U/S 271(1)(C) OF THE ACT IS A CIVIL LIABILI TY. HOWEVER IT HAS NOT BE SAID THAT ANY OF THE ADDITION AS MADE IN THE ASSESSMENT AND SUSTAINED IN THE APPELLATE PROCEEDINGS WOULD LEAD TO AN AUTOMATIC LEVY OF PENA LTY. IN THE DECISION OF MUMBAI BENCH OF ITAT IN THE CASE OF VIP INDUSTRIES LTD. REFERRED TO SUPRA THE TRIBUNAL HAS SPECIFICALLY EXPLAINED THE DECISION IN THE CASE OF DHARMENDRA TEXTILES PROCESS. THIS HAS ALSO BEEN EXTRACTED EARLIER. WE ARE ALSO IN FULL AGREEMENT WI TH THE EXPLANATION AS GIVEN IN THE SAID DECISION. HOWEVER WHETHER AN EXPLANATION IS BONA FIDE OR NOT WOULD DE PEND ON THE CUMULATIVE EFFECT OF THE FACTS AND EXPLANATI ONS SUBMITTED IN EACH CASE. IT IS NOT AS IF EVERY CASE WHERE DISALLOWANCE IS MADE AND CONFIRMED PENALTY WOULD BECOME AUTOMATIC. AS RIGHTLY POINTED OUT BY THE LD . A.R. PENALTY PROCEEDINGS AND ASSESSMENT PROCEEDINGS ARE SEPARATE AND INDEPENDENT PROCEEDINGS. THIS VIEW HA S ALSO BEEN REPEATEDLY EXPRESSED BY THE VARIOUS COURTS IN CLUDING THE HON'BLE JURISDICTIONAL HIGH COURT OF DELHI IN T HE CASE OF CHETAN DASS LAXMAN DASS AND IN THE DECISION IN T HE CASE OF J K SYNTHETICS LTD. REFERRED TO SUPRA. ONC E IT IS FOUND THAT THE PENALTY PROCEEDINGS ARE SEPARATE AND INDEPENDENT PROCEEDINGS IT WOULD HAVE TO BE HELD T HAT EVEN THOUGH AN ADDITION IS MADE IN THE ASSESSMENT A ND THE I.T.A. NO. 4120 /DEL/2009 19/34 SAME HAS BEEN CONFIRMED IN THE APPELLATE PROCEEDING S LIBERTY IS AVAILABLE TO THE ASSESSEE TO PRODUCE ALL SUCH EVIDENCES IN THE COURSE OF PENALTY PROCEEDINGS TO S UPPORT HIS CLAIM AS MADE IN THE RETURN WHICH HAS BEEN REJE CTED BY THE A.O. AND THE APPELLATE AUTHORITY. WITH THIS IN MIND IF WE SEE VARIOUS ADDITIONS WHICH HAVE BEEN MADE DURIN G THE COURSE OF ASSESSMENT AND HAD BEEN CONFIRMED IN THE APPELLATE PROCEEDINGS AND THE EXPLANATION GIVEN BY THE ASSESSEE IT APPEARS AS FOLLOWS: I) DONATIONS - RS.10 494/- IT IS NOTICED THAT IN THE RETURN FILED THE ASSESSE E HAD CLAIMED DONATION OF RS.15 494/- AND THE A.O. HAD DISALLOWED DONATION TO THE EXTENT OF RS.10 494/-. THE DONATIONS WERE OF 3 CATEGORIES. 1 ST ONE BEING TO HINDUSTAN BENEVOLENT TRUST FOR AN AMOUNT OF RS.10 000/- WHICH HAVE BEEN CLAIMED AS 100% EXEMPTION: HINDUSTAN BENEVOLENT TRUST WAS FOUND TO NOT FALL WITHIN THE PROVISIONS OF SECTION 80G(2)(III)(GA) AND CONSEQUENTLY THE A.O. HAD ALLOWED ONLY 50% OF THE SAME. 2 ND DONATION WAS IN REGARD TO THE DELHI FIRE SERVICES FOR AN AMOUNT OF RS.500/- AND THE 3 RD TO VARIOUS OTHER FOR AN AMOUNT OF RS.4 995/-. THE ASSESSEE WAS UNABLE TO PRODUCE THE RECEIPT IN RESPECT OF THE DONATION GIVEN TO DELHI F IRE I.T.A. NO. 4120 /DEL/2009 20/34 SERVICES AND VARIOUS OTHERS AND CONSEQUENTLY THESE TWO AMOUNTS HAD ALSO BEEN DISALLOWED. THUS A TOTAL DISALLOWANCE OF RS.10 495/- OUGHT TO HAVE BEEN MADE BUT HAD BEEN MADE OF RS.10 494/-. THE ASSESSEE HAS NOT CONTESTED THIS ADDITION. IN THE R EPLY TO THE SHOW CAUSE NOTICE WHICH WAS FOUND AT PAGE 2 - 8 OF THE PAPER BOOK THE ASSESSEE HAS NOT MADE ANY SUBMISSION. THE ASSESSEE IN THE COURSE OF HEARING BEFORE US HAS ONLY SUBMITTED THAT IT WAS ONLY BECAU SE THE DONATION TO HINDUSTAN BENEVOLENT TRUST WAS NOT ELIGIBLE FOR 80G(2)(III)(GA) THE ADDITION HAD BEEN MADE. THE FACT SHOWS OTHERWISE. THE DISALLOWANCE ON THIS COUNT WAS ONLY RS.5 000/- AND THE BALANCE O F RS.5 494/- WAS ON ACCOUNT OF THE FACT THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE TO SHOW THE CLAIM OF DONATION. EVEN IN THE PENALTY PROCEEDINGS THE ASSESSEE HAS NOT GIVEN ANY EXPLANATION NOR PRODUCED ANY EVIDENCE IN RESPECT OF THIS DISALLOWANCE OF DONATION. THE ASSESSEE HAS ALSO NO T BEEN ABLE TO SHOW HIS BONA FIDE FOR MAKING THE CLAI M THAT THE DONATION TO HINDUSTAN BENEVOLENT TRUST WAS ELIGIBLE FOR 100% EXEMPTION I.E. WHETHER THE RECEIP T CLAIMED THE TRUST TO BE ELIGIBLE FOR 80G(2)(III)(GA ). IN THESE CIRCUMSTANCES THE ASSESSEE HAVING FAILED TO I.T.A. NO. 4120 /DEL/2009 21/34 OFFER AN EXPLANATION IN REGARD TO THE DISALLOWANCE THE PENALTY U/S 271(1)(C) ON THIS DISALLOWANCE IS LIABLE TO BE UPHELD AND WE DO SO. II) LOSS OF SUBSIDIARY COMPANY - 1 39 595/- IN REGARD TO THE LOSS OF SUBSIDIARY COMPANY IT IS NOTICED THAT THE ASSESSEE HAS CLAIMED THAT LOSS UND ER THE HEAD HEAD OFFICE. THE SUBMISSION OF THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS WA S THAT A SUM OF RS.1 45 345/- HAD BEEN DEDUCTED BY TH E LAND LORD OF THE PREMISES TAKEN ON LEASE BY M/S. ST AR HOSPITALITY PVT. LTD. M/S. STAR HOSPITALITY PVT. L TD. WAS DISSOLVED IN FEB 2000 AND THE A.O. HAD HELD THA T IF ANY EXPENDITURE HAD RELATED TO ASSOCIATES OR A WHOLLY OWNED SUBSIDIARY SUCH EXPENDITURE WOULD NOT BE CONSIDERED IN THE HANDS OF THE ASSESSEE AS THE ASSOCIATE OR SUBSIDIARY WERE SEPARATELY TAXABLE ENT ITY. EVEN THOUGH THE ASSESSEE HAS FILED AN APPEAL TO THE CIT(A) ON THIS ISSUE THE SAME WAS NOT PRESSED IN TH E APPELLATE PROCEEDINGS. IN THIS REPLY GIVEN TO THE SHOW CAUSE NOTICE IT IS NOTICED THAT THE ASSESSEE HAS NOT GIVEN ANY REPLY IN RESPECT OF THE SAID DISALLOWANCE. IN THE HEARING BEFORE US IT HAS BEE N THE SUBMISSION OF THE ASSESSEE THAT IT WAS A MISTAK E AND AN ERRONEOUS CLAIM AND WHEN THE ASSESSEE CAME I.T.A. NO. 4120 /DEL/2009 22/34 TO KNOW THE MISTAKE HE HAD ACCEPTED THE SAME AND HAD NOT PROCEEDED WITH THE APPEAL. OTHER THAN CLAIMING ONLY THAT IT IS AN ERRONEOUS CLAIM MADE NOTHING HAS BEEN PRODUCED BEFORE US OR BEFORE THE LOWER AUTHORITIES EITHER IN THE ASSESSMENT PROCEEDINGS OR IN THE PENALTY PROCEEDINGS TO SHOW THAT ERROR HAD OCCURRED. ERROR COULD BE IN THE NAT URE OF ARITHMETIC ERROR OR IN THE NATURE OF FACTUAL ERR OR. BUT IT IS FOR THE ASSESSEE TO EXPLAIN THE ERROR AND HOW IT HAS CREPT IN. HERE IT IS NOTICED THAT THIS IS NOT A CASE WHERE THE ASSESSEE HAS GIVEN AN EXPLANATION AN D THE SAME HAS BEEN REJECTED IT IS A CASE WHERE NO EXPLANATION IS GIVEN. IN THESE CIRCUMSTANCES THE PENALTY PROCEEDINGS BEING INITIATED IN THE ASSESSME NT PROCEEDINGS AND THE ASSESSEE HAVING BEEN GIVEN AN OPPORTUNITY IN THE PENALTY PROCEEDINGS TO SUBSTANTI ATE ITS CASE AND THE ASSESSEE HAVING FAILED TO DO SO MO RE SO THE ASSESSEE HAVING NOT FILED ANY EXPLANATION T HE BONA FIDES OF THE ASSESSEE DOES NOT STAND AS ESTABLISHED AND CONSEQUENTLY WE ARE OF THE VIEW THA T THIS ADDITION DOES CALL FOR A LEVY OF PENALTY AND CONSEQUENTLY THE LEVY OF PENALTY AS CONFIRMED BY TH E LD. CIT(A) ON THIS ISSUE STANDS UPHELD. I.T.A. NO. 4120 /DEL/2009 23/34 III) DEPRECIATION ON THE ASSETS PURCHASED FROM M/S. STAR HOSPITALITY PVT. LTD.:- IN REGARD TO THE DEPRECIATION ON THE ASSETS PURCHAS ED FROM M/S. STAR HOSPITALITY PVT. LTD. IT IS NOTICED THAT THE ASSESSEE HAD A SUBSIDIARY COMPANY UNDER THE NAME OF STAR HOSPITALITY PVT. LTD. WHICH IS OPERATI NG A RODEO RESTAURANT IN NEPAL. ON THE DISSOLUTION OF THE SAID STAR HOSPITALITY PVT. LTD. THE ASSESSEE H AS CLAIMED TO HAVE BEEN TAKEN OVER THE ASSETS AND THE SAME WERE TRANSFERRED TO THE HEAD OFFICE ACCOUNTS. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESS EE HAD BEEN DIRECTED TO SHOW THAT THESE ASSETS BEING PLANT & MACHINERY HAVING A VALUE OF RS.3 12 956/- FURNITURE AND FIXTURES AT A VALUE OF RS.36 618/- COMPUTER HAVING A VALUE OF RS.66 169/- WOODEN PLANKS REMOVED FROM THE BUILDING VALUING RS.9 LACS HAD BEEN USED BY THE ASSESSEE. THE ASSESSEE HAD NO T PRODUCED THE PROOF OF THE USE OF THE ASSETS AND CONSEQUENTLY THE A.O. HAD DISALLOWED THE DEPRECIATION. IT IS NOTICED BY THE A.O. THAT THE A SSETS STATED TO HAVE BEEN BROUGHT FROM NEPAL WERE NOWHERE REFLECTED IN THE LEDGER ACCOUNT FILED. CONSEQUENTLY HE HAD DISALLOWED THE DEPRECIATION. ON APPEAL BEFORE THE LD. CIT(A) IN THE QUANTUM I.T.A. NO. 4120 /DEL/2009 24/34 PROCEEDINGS THE LD. CIT(A) HAD VIDE HIS ORDER DATE D 20.12.2004 ALLOWED THE ASSESSEES CLAIM OF DEPRECIATION. WHILE ALLOWING THE DEPRECIATION THE LD. CIT(A) HAS GIVEN A FINDINGS THAT THE EVIDENCE O N RECORD APPEARS THAT THE ASSETS WERE TRANSFERRED IN 2000-01 AND THE SAME HAD BEEN USED THE SOUTH EXTENSION RESTAURANT WHICH HAD OPENED IN MAY 2000 AND CLOSED DOWN IN MARCH 2001. SINCE THE RESTAURANT WAS OPENED DURING 2001-02 AND CIT(A) HAD DIRECTED TO ALLOW THE DEPRECIATION BUT HAD GIVE N A DIRECTION TO THE A.O. TO WITHDRAW THE DEPRECIATION ON THE ASSETS ALLOWED DURING THE ASSESSMENT YEAR 2000- 01. ON THE APPEAL BY THE REVENUE TO THE TRIBUNAL THE TRIBUNAL HAD REVERSED THE FINDING OF THE ORDER OF CIT(A) VIDE ITS ORDER IN I.T.A. NO.1206/DEL/2005 DATED 25.45.2008. WHILE REVERSING THE ORDER OF LD. CIT(A) THE TRIBUNAL HAD HELD THAT THE FINDING OF LD . CIT(A) WAS NOT BASED ON ANY EVIDENCE THAT THE ASSET S WERE ACTUALLY USED. IT IS AN ACCEPTED FACT THAT TH E PENALTY PROCEEDINGS ARE SEPARATE FROM ASSESSMENTS PROCEEDINGS. THUS IN THE ASSESSMENT PROCEEDINGS THE DISALLOWANCE OF DEPRECIATION IS BASICALLY ON TW O GROUNDS ONE BEING NON AVAILABILITY OF EVIDENCE OF T HE LEDGER ACCOUNT AND PHYSICAL USE AT RODEO SOUTH I.T.A. NO. 4120 /DEL/2009 25/34 EXTENSION ALONG WITH PURCHASE BILL FOR HAVING BROUGHT THE SAID ASSETS FROM NEPAL AND 2 ND PROOF OF USAGE OF THE SAID ASSETS IN THE BUSINESS OF RESTAUR ANT RODEO SOUTH EXTN. IN THE COURSE OF PENALTY PROCEEDINGS THE ASSESSEE HAS GIVEN A REPLY ON THE ISSUE WHEREIN HE HAS REFERRED TO THE REPORT OF RBI. A PERUSAL OF THE PAPER BOOK AT PAGES 104-117 SHOWS THE CORRESPONDENCE WITH THE RBI FOR APPLYING FOR PERMISSION TO CLOSE DOWN THE BUSINESS OF STAR HOSPITALITY PVT. LTD. WHOLLY OWNED SUBSIDIARY OF STAR HOTELS LTD. IN THE SAID CORRESPONDENCE IN ITE M NOS. 7 8 9 & 10 IN THE CORRESPONDENCE SUBMITTED T O THE RBI AND FROM RBI IS MENTIONED THAT THE TRANSFER IS REFLECTED IN THE FINANCIAL ACCOUNTS THOUGH THE COPIES OF THE SAME ARE NOT AVAILABLE IN THE PAPER BOOK. STAR HOTELS LTD. HAS BROUGHT BACK THE ASSETS MENTIONED THEREIN. MORE SPECIFICALLY IN THE LETTER DATED 14 TH JUNE 2002 WHICH IS FOUND AT PAGES 107- 110 OF THE PAPER BOOK TO HAVE BEEN BROUGHT INTO INDIA FROM NEPAL ON THE LIQUIDATION OF THE BUSINESS OF STAR HOSPITALITY PVT. LTD. AS PER THE SAID LETT ER DATED 14.06.2002 ADDRESSED TO RBI FOUND AT PAGE 107 IN PARA 7 IT HAS BEEN CATEGORICALLY MENTIONED T HAT THE ASSETS HAVE BEEN TRANSFERRED TO STAR HOTELS LTD . I.T.A. NO. 4120 /DEL/2009 26/34 AND HAS BEEN REFLECTED IN THE ANNUAL REPORT FOR THE FINANCIAL YEAR 1999-2000. THE ANNUAL REPORT OF STA R HOTELS LTD. FOR THE FINANCIAL YEAR 1999-2000 HAS NO T BEEN PRODUCED BEFORE US OR BEFORE THE LOWER AUTHORITIES. THUS THE EVIDENCE OF THE ASSETS SPECIFIED TO HAVE BEEN TRANSFERRED FROM M/S. STAR HOSPITALITY PVT. LTD. NEPAL TO THE ASSESSEE STILL REMAINS UNPROVED. HOWEVER THE LEDGER ACCOUNT WHICH WAS FOUND AT PAGES 111-117 OF THE PAPER BOOK DOES NOT SUPPORT THIS STAND IN SO FAR AS IT DOES NO T SHOW THE TRANSFER FROM M/S. STAR HOSPITALITY PVT. LTD. NEPAL TO THE ASSESSEE. ALL IT SHOWS IS OPENI NG BALANCE. OBVIOUSLY WHEN AN ASSET IS TAKEN OVER TH E CONSIDERATION FOR THE SAME MUST HAVE FLOWN FROM THE ASSESSEE TO M/S. STAR HOSPITALITY PVT. LTD. NEPAL ESPECIALLY IN VIEW OF THE FACT THAT STAR HOSPITALIT Y PVT. LTD. WAS UNDER LIQUIDATION. IN THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAS MENTIONED THAT THE ASSETS WERE TAKEN BY THE ASSESSEE COMPANY AT BOOK VALUE. FURTHER THE LEDGER ACCOUNT ALSO DOES NOT SHOW THE TRANSFER OF THESE ASSETS TO THE RODEO SOUT H EXTENSION UNIT. IN THESE CIRCUMSTANCES THE LEDGER ACCOUNT PRODUCED DOES NOT SHOW THE ACTUAL TRANSFER OF THE ASSETS TO THE ASSESSEE COMPANY FOR THE USE I N I.T.A. NO. 4120 /DEL/2009 27/34 THE RODEO SOUTH EXTENSION. THUS EVEN IN THE PENALTY PROCEEDINGS THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THE TAKE OVER OF THE ASSETS AND THE USE OF THE SAME. THE FACT THAT THE ASSESSEE HAS FAILED TO PRO VE THE OWNERSHIP OF THE SAID ASSETS AS ALSO THE USAGE OF THE SAID ASSET IN THE COURSE OF ASSESSMENT PROCEEDINGS OR IN THE COURSE OF APPELLATE PROCEEDIN GS BEFORE THE TRIBUNAL OR IN THE COURSE OF PENALTY PROCEEDINGS BEFORE THE A.O. OR THE LD. CIT(A) OR BEFORE US IT CANNOT BE SAID THAT THE CLAIM OF THE ASSESSEE IS BONA FIDE. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE PENALTY AS LEVIED BY THE A.O. AND AS CONFIRMED BY THE LD .CIT(A) ON THIS ISSUE IS LIA BLE TO BE UPHELD AND WE DO SO. IV) LOSS ON CLOSURE OF SOUTH EXTENSION UNIT: - IN REGARD TO THE ISSUE OF DISALLOWANCES OF LOSS ON THE CLOSUR E OF SOUTH EXTENSION UNIT IT IS NOTICED THAT IN THE COU RSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAD CLAIMED A LOSS ON ACCOUNT OF CLOSURE OF RODEO SOUTH EXTENSION UNIT TO AN EXTENT OF RS.25 37 521/-. IT IS NOTICED THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESS EE HAS SUBMITTED THAT THE LOSS IS ON ACCOUNT OF WRITE OFF OF THE PLANT & MACHINERY FOR A VALUE OF RS.47 166.- FURNITURE AND FIXTURES FOR THE VALUE OF RS.19 978/- I.T.A. NO. 4120 /DEL/2009 28/34 COMPUTER OF A VALUE OF RS.32 259/- AND BUILDING ON LEASE OF VALUE OF RS.24 238 118/-. THE A.O. IN THE COURSE OF ASSESSMENT PROCEEDINGS HAS DISALLOWED THE LOSS HOLDING THAT THE ASSETS DESCRIBED WERE PART AN D PARCEL OF THE BLOCK OF ASSETS OF THE ASSESSEE COMPA NY AND DEPRECIATION AS PER THE I T RULES HAD BEEN CLAIMED ON ALL THE ASSETS. SINCE THE ASSETS WERE DEPRECIABLE ASSET AND WERE OF CAPITAL NATURE AND PA RT OF THE BLOCK OF ASSETS BROUGHT HERE THE LOSS ON TH ESE ASSETS IS A CAPITAL LOSS AND CANNOT BE ALLOWED AS EXPENDITURE REVENUE IN NATURE. IT WAS ALSO NOTICED BY THE A.O. THAT THE ASSESSEE HAS NOT FURNISHED ANY PROOF OF ANY SCRAP VALUE OR REALIZABLE VALUE OF THE ASSETS HAD ALSO NOT BEEN RECOVERED ON THE CLOSURE O F THE UNIT AND IF THERE WAS A SCRAP VALUE WHICH IS REALIZED THE SAME SHOULD HAVE BEEN REDUCED FROM THE BLOCK OF ASSETS AND THE WDV AFTER DEPRECATION WAS AVAILABLE TO THE ASSESSEE. IT IS NOTICED THAT THE CIT(A) IN THE APPELLATE PROCEEDINGS HAD DELETED THE DISALLOWANCE BY HOLDING THAT THE ASSESSEE COULD NOT HAVE REMOVED ANY OF THE ITEMS ON CLOSURE AND AS THE Y CAN ONLY BE ABANDONED THE ASSESSEE WAS ENTITLED TO THE WRITE OFF OF THE SAID AMOUNT OF LOSS. IN THE A PPEAL OF THE REVENUE TO THE TRIBUNAL THE TRIBUNAL HAS I.T.A. NO. 4120 /DEL/2009 29/34 CATEGORICALLY GIVEN A FINDING THAT THE WRITE OFF UN DER THE REVENUE HEAD WAS NOT PERMISSIBLE IN VIEW OF THE SPECIFIC PROVISION U/S 32(1)(III) OF THE ACT. THE TRIBUNAL HAS ALSO CATEGORICALLY GIVEN A FINDING THA T THE DECISION RELIED UPON BY THE LD. CIT(A) FOR DELETING THE DISALLOWANCE RELATING TO THE PERIOD PR IOR TO THE ASSESSMENT YEAR 1988-89 WHEN THE EXPLANATION (1) TO SECTION 32(1) WAS NOT ON THE STATUTE. IN THE COURSE OF PENALTY PROCEEDINGS THE ASSESSEE HAS MENTIONED THAT THE CLAIM WAS BASED UPON SOME LEGAL LINES OF REASONING AND IT CANNOT BE SAID TO BE AS ABSURD CLAIM. WHEN THERE IS SPECIFIC PROVISION IN THE STATUTE AND WHEN THE ACCOUNTS OF THE ASSESSEE ARE UNDER AUDIT NON-APPLICATION OF A SPECIFIC PROVISION CANNOT GIVE ANY LEVERAGE FOR BON A FIDES TO THE ASSESSEE. HERE EVEN THOUGH THE ASSESS EE HAS GIVEN AN EXPLANATION IN THE PENALTY PROCEEDINGS THE EXPLANATION AS GIVEN BY THE ASSESSEE CANNOT BE SUBSTANTIATED BY ANY FORM OF HAIR SPLITTING OR LEGA L JUGGLERY. BESIDES THIS IT IS ALSO NOTICED THAT T HE ASSESSEE HAS EARLIER MENTIONED THAT IT HAD BROUGHT IN PLANT & MACHINERY OF A VALUE OF RS.3 12 956/-ON THE LIQUIDATION OF STAR HOSPITALITY PVT. LTD. NEPAL WH ICH MACHINERY HAD BEEN USED IN THE RODEO SOUTH I.T.A. NO. 4120 /DEL/2009 30/34 EXTENSION RESTAURANT. HOWEVER THE PLANT & MACHINERY FOUND TO HAVE BEEN WRITTEN OF IS OF A VAL UE OF RS.47 166/-. HOW CAN THIS HAPPEN? WHAT HAPPENED TO THE BALANCE OF PLANT & MACHINERY? THE ASSESSEE WAS ABLE TO BRING BACK PLANT & MACHINERY ON THE LIQUIDATION OF SUBSIDIARY IN NEPAL AS PER TH EIR LETTER TO RBI BUT ON THE CLOSURE OF A UNIT IN SOUTH EXTENSION DELHI THE ASSESSEE IS NOT ABLE TO USE THE PLANT & MACHINERY AND HAS TO ABANDON THE SAME IS TOO FAR FETCHED CLAIM TO SUBSTANTIATE ANY BONA FIDE . FURNITURE AND FIXTURES FROM STAR HOSPITALITIES PVT. LTD. NEPAL IS OF A VALUE OF RS.36 618/- WHILE WHAT IS WRITTEN OF IS RS.19 978/-. COMING TO THE ISSUE OF BUILDING ON LEASE THE LD. CIT(A) IN THE APPELLATE ORDER IN THE QUANTUM PROCEEDINGS HAS TERMED THE SAME TO INCLUDE THE PARTITION AND FIXING OF WOODEN FIXTURES WOODEN FLOORING FALSE CEILING FRAME WORK SANITARY AND DRAINAGE. IN THE LETTER ADDRESSED TO THE RBI IN RESPECT OF BRINGING BACK THE MOVABLE ASSETS MORE SPECIFICALLY THE LETTER DATED 14.06.2002 AN AMOUNT OF RS.9 LACS HAS BEEN SHOWN AS WOOD/PLANKS REMOVED FROM THE BUILDING ON RENT. IF SUCH ITEMS CAN BE REMOVED FROM A BUILDING ON RENT IN NEPAL AND BE I.T.A. NO. 4120 /DEL/2009 31/34 USED IN RODEO SOUTH EXTENSION RESTAURANT AS CLAIMED BY THE ASSESSEE IT SHOWS THAT AT LEAST SUC H ITEMS WERE DISMENTABLE. THEN HOW CAN IT BE SAID THAT THE TOTAL OF THE AMOUNT SHOWN UNDER THE BUILDI NG ON LEASE HAD TO BE ABANDONED. THUS ON ALL THESE COUNTS THE CLAIM OF THE ASSESSEE LACKS BONA FIDES A ND CONSEQUENTLY THE EXPLANATION AS GIVEN BY HE ASSESSE E BEING NOT SUBSTANTIATED THE PENALTY AS LEVIED BY T HE A.O. AND AS CONFIRMED BY THE LD. CIT(A) IS UPHELD. V) CAPITAL EXPENDITURE FOR INTERIOR DESIGNING:- IN REGARD TO THE ISSUE OF CAPITAL EXPENDITURE FOR INTERIOR DESIGNING IT IS NOTICED THAT IN THE COURSE OF ASSESSMENT PROCEEDING THE ASSESSEE HAS INCURRED AN AMOUNT OF RS.1 65 000/-TOWARDS THE ARCHITECT FEE FOR THE DESIGNING OF RODEO SOUTH EXTN. RESTAURANT. THE A.O. HAD DISALLOWED THE SAME ON THE GROUND THAT THE SAID EXPENDITURE WAS CAPITAL EXPENDITURE. IN T HE COURSE OF 1 ST APPELLATE PROCEEDINGS THE LD. CIT(A) HAD DELETED THE DISALLOWANCE ON THE GROUND THAT THE SAID EXPENDITURE RELATE TO THE RODEO SOUTH EXTN. UNIT WHICH HAD BEEN CLOSED DOWN ON THE SAME GROUND THAT THE CIT(A) HAD DELETED THE DISALLOWANCE OF THE LOSS ON ACCOUNT OF RODEO SOUTH EXTN. THE TRIBUNAL HAD REVERSED THE FINDING OF LD. CIT(A) ON I.T.A. NO. 4120 /DEL/2009 32/34 THIS ISSUE ON THE SAME GROUND AS THE LOSS ON THE RODEO SOUTH EXTN. UNIT HAVE BEEN REVERSED. IN THE PENALTY PROCEEDINGS THE ASSESSEE HAS NOT GIVEN ANY REPLY TO EXPLAIN ITS STAND OTHER THAN MENTIONING TH AT THE QUESTION AS TO WHETHER THE EXPENDITURE IS CAPIT AL OR REVENUE IS A DEBATABLE QUESTION ON WHICH TWO VIEWS ARE POSSIBLE. UNDISPUTEDLY THE EXPENDITURE HAVE BEEN INCURRED BEFORE THE COMMENCEMENT OF THE OPERATION IN RESPECT OF RODEO SOUTH EXTN. UNIT. AN Y PRE COMMENCEMENT EXPENDITURE IS WELL ACCEPTED AS A CAPITAL EXPENDITURE. THERE IS NO DISPUTE ON THIS. THE LD. CIT(A) HAS ALSO NOT GIVEN ANY REASON FOR ALLOWING THE SAID EXPENDITURE IN THE QUANTUM APPELLATE PROCEEDINGS NOR HAS THE ASSESSEE BEEN ABL E TO JUSTIFY ITS CLAIM AND SUBSTANTIATE ITS EXPLANATI ON GIVEN IN THE COURSE OF PENALTY PROCEEDINGS OR BEFOR E US. THE ISSUE AS TO WHETHER EXPENDITURE IS CAPITAL OR REVENUE WOULD DEPEND UPON THE FACTS OF EACH CASE. THE FACTS IN THE ASSESSEES CASE CLEARLY SHOW THAT THE SAID EXPENDITURE WAS A PRE-COMMENCEMENT EXPENDITURE AND THE SAME WAS CAPITAL IN NATURE. IN THESE CIRCUMSTANCES THE PENALTY AS LEVIED BY THE A. O. AND AS CONFIRMED BY THE CIT(A) IS FOUND TO BE ON RIGHT FOOTING AND THE SAME IS UPHELD. I.T.A. NO. 4120 /DEL/2009 33/34 THE DECISIONS AS QUOTED BY THE LD. A.R. OF HON'BLE JURISDICTIONAL HIGH COURT AND THE COORDINATE BENCHE S OF THIS TRIBUNAL WOULD NOT COME TO THE RESCUE OF TH E ASSESSEE IN SO FAR AS IN ALL THOSE CASES IT HAS BE EN HELD THAT WHERE THERE IS DIFFERENCE OF OPINION FOR ALLOWING OR DISALLOWING THE EXPENDITURE BETWEEN THE ASSESSEE AND THE A.O. IT CANNOT BE SAID THAT THE ASSESSEE HAD INTENTION TO CONCEAL ITS INCOME. IN A LL THOSE CASES THE ASSESSEE HAD GIVEN ALL THE PARTICU LARS OF EXPENDITURE AND THE INCOME AND HAD DISCLOSED ALL THE FACTS TO THE A.O. IN THE PRESENT ASSESSEES C ASE THE FACTS ITSELF ARE MISSING. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. HAS ASKED FOR EVIDENCES HAVE NOT BEEN PRODUCED NOR HAS THE ASSESSEE BEEN ABLE TO SUBSTANTIATE ITS CLAIM EVEN I N THE PENALTY PROCEEDINGS OR IN THE APPELLATE PROCEEDINGS. THE ASSESSEE HAS NOT BEEN ABLE TO EVE N EXPLAIN THE CIRCUMSTANCES IN WHICH IT HAS CLAIMED T HE EXPENDITURE WHICH HAVE BEEN DISALLOWED BY THE A.O. IN THESE CIRCUMSTANCES THE BONA FIDES OF THE ASSES SEE HAVE NOT BEEN PROVED AND WE ARE OF THE VIEW THAT TH E DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT A ND THE COORDINATE BENCHES OF THIS TRIBUNAL AS REFERRED TO BY THE ASSESSEE DO NOT HELP THE ASSESSEE. IN THES E I.T.A. NO. 4120 /DEL/2009 34/34 CIRCUMSTANCES THE APPEAL OF THE ASSESSEE IS DISMISSED. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE STANDS DISMISSED. 6. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT O N 26 TH MAR. 2010. SD./- SD./- (A.K. GARODIA) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:26 TH MAR. 2010 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR ITAT NEW DELHI