Shri Rajendra Bhandari, Bhopal v. The Assistant Commissioner of Income Tax 1(1), Bhopal

ITA 581/IND/2010 | 2002-2003
Pronouncement Date: 13-09-2011 | Result: Allowed

Appeal Details

RSA Number 58122714 RSA 2010
Bench Indore
Appeal Number ITA 581/IND/2010
Duration Of Justice 1 year(s) 3 day(s)
Appellant Shri Rajendra Bhandari, Bhopal
Respondent The Assistant Commissioner of Income Tax 1(1), Bhopal
Appeal Type Income Tax Appeal
Pronouncement Date 13-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 13-09-2011
Assessment Year 2002-2003
Appeal Filed On 09-09-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNALINDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NOS. 581 AND 582/IND/2010 A.YS. 2002-03 AND 2003-04 SHRI RAJENDRA BHANDARI BHOPAL PAN AAXPB-2648A :: APPELLANT VS ASSISTANT COMMISSIONER OF INCOME TAX 1(1) BHOPAL :: RESPONDENT APPELLANT BY : S/SHRI H.P. VERMA & ASHISH GOYAL RESPONDENT BY : SHRI ARUN DEWAN SR. DR DATE OF HEARING : 6.9.2011 DATE OF PRONOUNCEMENT : 12 .9.2011 O R D E R PER R.C. SHARMA ACCOUNTANT MEMBER BY WAY OF THESE APPEALS THE ASSESSEE SEEKS TO CHA LLENGE THE CONSOLIDATED ORDER OF THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS) DATED 1.6.2010 CONFIRMING THE PENALTY LEV IED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. 2 2. BRIEFLY THE FACTS OF THE CASE ARE THAT SEARCH A ND SEIZURE ACTION U/S 132 OF THE ACT WAS CARRIED OUT AT THE RE SIDENTIAL PREMISES OF THE ASSESSEE AND SURVEY OPERATIONS U/S 133A WERE ALSO CONDUCTED IN THE BUSINESS PREMISES OF M/S RAJ DEVELOPERS BHOPAL. IN RESPONSE TO THE NOTICES U/S 153A OF THE ACT THE ASSESSEE SUBMITTED THAT THE ORIGINAL RETURNS FILED FOR THE ASSESSMENT YEAR 2002-03 DECLARING TOTAL INCOME OF R S.51 343/- AND FOR THE ASSESSMENT YEAR 2003-04 DECLARING LOSS OF RS.1 50 000/- MAY BE TREATED AS RETURN IN COMPLIANC E TO NOTICES U/S 153A. THE ASSESSING OFFICER ACCORDINGLY FRAMED THE ASSESSMENTS U/S 153A READ WITH SECTION 143(3) OF TH E ACT WERE COMPLETED WHEREIN APART FROM OTHER ADDITIONS ADDIT ION OF RS.96 000/- IN EACH ASSESSMENT YEAR ON ACCOUNT OF CLAIM OF BOGUS SALARY SHOWN TO BE PAID TO SMT. REENA BHANDAR I W/O SHRI JAYANT BHANDARI BROTHER OF THE ASSESSEE WAS MADE. THE ADDITIONS MADE BY THE ASSESSING OFFICER IN BOTH THE ASSESSMENT YEARS WERE CONFIRMED UPTO THE LEVEL OF THE TRIBUNAL . THEREAFTER THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE THE ASSESSING OFFICER HELD THAT THE ASSESSEE FAILED TO FURNISH CORRECT AND ACCURATE PARTICULARS OF INCOME FOR THE ASSESSME NT YEARS 3 2002-03 AND 2003-04 TO THE EXTENT OF RS. 96 000/- A ND THUS WAS LIABLE FOR PENALTY U/S 271(1)(C) OF THE ACT. HE AC CORDINGLY LEVIED PENALTY U/S 271(1)(C) OF THE ACT AT RS. 19 500/- FO R THE ASSESSMENT YEAR 2002-03 AND AT RS. 10 000/- FOR THE ASSESSMENT YEAR 2003-04. ON APPEAL LEARNED COMMISSIONER OF IN COME TAX (APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT IT WAS THE CASE OF CLAIMING FALSE EXPENDITURE AND FURNISHING OF INACCURATE PARTICULARS OF INCOME TO THE EXTENT O F RS.96 000/- IN EACH YEAR. HE THEREFORE CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER. FELT AGGRIEVED NOW THE ASSESSE E IS BEFORE US. 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREFU LLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN TH IS CASE PENALTY HAS BEEN IMPOSED WITH RESPECT TO DISALLOWANCE OF CL AIM OF SALARY PAID TO SMT. REENA BHANDARI. WE FIND THAT SMT. REE NA BHANDARI IS A POST GRADUATE WITH B.SC. AND M.A. (SOCIOLOGY). SHE WAS PAID SALARY FOR LOOKING AFTER THE BUSINESS AFFAIRS OF TH E CONCERN. EVEN DURING THE COURSE OF SEARCH STATEMENT OF HER HUSBA ND WAS RECORDED WHEREIN HE STATED THAT WHENEVER HE REMAINE D OUT OF BHOPAL FOR BUSINESS PURPOSES HIS WIFE USED TO ATTE ND OFFICE I.E. 2 OR 3 DAYS IN A WEEK TO CONTROL STAFF FOR WHICH SALA RY WAS PAID. MERELY BECAUSE SMT. REENA BHANDARI WAS NOT COMFORTA BLE WHILE 4 GIVING THE STATEMENT DISALLOWANCE OF SALARY WAS MA DE. HOWEVER THE LEARNED CIT(A) AFTER CONSIDERING THE ENTIRETY OF FACTS DELETED THE DISALLOWANCE OF SALARY AND ALLOWED THIS GROUND IN FAVOUR OF THE ASSESSEE. HOWEVER IN FURTHER APPEAL THE TRIB UNAL AGAIN CONFIRMED THE DISALLOWANCE. TWO DIFFERENT APPELLATE AUTHORITIES HAVE TAKEN DIFFERENT VIEWS THEREFORE THE ISSUE WA S DEBATABLE. THE VIEW TAKEN BY THE ASSESSEE WAS NOT UNREASONABLE AND THE EXPLANATION FURNISHED BY HIM EVEN IF NOT ACCEPTED CANNOT BE SAID TO BE UNTENABLE IN LAW. IN VIEW OF THE DECISI ON IN THE CASE OF PFIZER PHARMACEUTICALS INDIA PRIVATE LIMITED; 135 T TJ 337 NO PENALTY CAN BE LEVIED FOR SUCH DIFFERENCE OF OPINIO N. WE ALSO FIND THAT THE SALARY RECEIVED BY SMT. REENA BHANDARI WAS DULY OFFERED TO DEPARTMENT BY FILING RETURN EVEN PRIOR TO SEARCH AND THE SAME WAS ACCEPTED. UNDER THESE FACTS AND CIRCUMSTANCES MERELY NOT ACCEPTING THE ASSESSEES EXPLANATION WILL NOT WARRA NT A SITUATION FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 4. HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PE TRO PRODUCTS; 322 ITR 158 AFTER CONSIDERING THE PROPOS ITION OF LAW LAID DOWN IN THE CASE OF DILIP N.SHROFF 291 ITR 5 19 (SC) AND DHARMENDER TEXTILE PROCESSORS 306 ITR 277 (SC) O BSERVED THAT MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY 5 ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PA RTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM M ADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE W HICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVEN UE THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE O F EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSESSING O FFICER FOR ANY REASON THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF TH E LEGISLATURE. FROM THIS DECISION OF THE SUPREME COURT IT BECOMES CRYSTAL CLEAR THAT MERE DISALLOWANCE OF CLAIM OF EXPENSES DOES NO T ATTRACT PENALTY U/S 271(1) OF THE ACT. 5. IN VIEW OF THE ABOVE DISCUSSION WE DO NOT FIND THESE CASES TO BE FIT FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 6. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.9.2011. SD SD (JOGINDER SINGH) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 13.9.2011 COPY TO APPELLANT/RESPONDENT/CIT/CIT(A)/DR 6 DN/-