ASHOK WAHI, MUMBAI v. DCIT CIR 24(1), MUMBAI

ITA 602/MUM/2010 | 2005-2006
Pronouncement Date: 16-09-2011 | Result: Allowed

Appeal Details

RSA Number 60219914 RSA 2010
Assessee PAN AAHPW5946Q
Bench Mumbai
Appeal Number ITA 602/MUM/2010
Duration Of Justice 1 year(s) 7 month(s) 22 day(s)
Appellant ASHOK WAHI, MUMBAI
Respondent DCIT CIR 24(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 16-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 16-09-2011
Date Of Final Hearing 12-09-2011
Next Hearing Date 12-09-2011
Assessment Year 2005-2006
Appeal Filed On 25-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI D BENCH BEFORE SHRI N.V.VASUDEVAN JUDICIAL MEMBER & SHRI T.R.SOOD ACCOUNTANT MEMBER I.T.A.NO.602/MUM/2010 A.Y 2005-06 MR. ASHOK WAHI 1501 QUIESCENT HEIGHTS MIND SPACE MALAD WEST MUMBAI 400 064. PAN: AAHPW 5946 Q VS. DY. COMMISSIONER OF I.T. CIRCLE 24(1) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJAY C. SHAH. RESPONDENT BY : SHRI M.R.KUBAL. DATE OF HEARING: 12-09-2011 DATE OF PRONOUNCEMENT: 16-09-2011 O R D E R PER T.R.SOOD AM: IN THIS APPEAL ASSESSEE HAS RAISED THE FOLLOWING GROUND: L EARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED I N CONFIRMING PENALTY LEVIED U/S.271(1) OF THE ACT BY LEARNED AS SESSING OFFICER ON THE PLEA THAT THE APPELLANT HAS FURNISHED INACCURAT E PARTICULARS OF INCOME BY CLAIMING INADMISSIBLE EXPENSES. 2. AFTER HEARING BOTH THE PARTIES WE FIND THAT DUR ING ASSESSMENT PROCEEDINGS AO NOTICED THAT ASSESSEE HAS CLAIMED EX PENSES OF RS.7 17 181/- AND THEREBY CLAIMED A LOSS OF RS.7 13 718/-. THE BOOKS OF ACCOUNT WERE PRODUCED. AO ULTIMATELY ISSUED SUMM ONS U/S.131 TO SHRI ASHOK WAHI AND RECORDED HIS STATEMENT WHICH HA S BEEN EXTRACTED AT PARA-4 OF HIS ORDER. ON THE BASIS OF ABOVE STATE MENT AO CONCLUDED THAT IT WAS CLEAR THAT EXPENSES CLAIMED BY THE ASSE SSEE WERE IN ITA NO.602 OF 10 2 PERSONAL NATURE AND WERE NOT INCURRED FOR THE PURPO SE OF BUSINESS BECAUSE MOST OF THE PRODUCTS PURCHASED FROM AMWAY W ERE IN FOR THE CONSUMPTION OF ASSESSEES FAMILY AND HIS FAMILY AND THE AMOUNT OF RS.3463/- WAS IN THE NATURE OF DISCOUNT AND ASSESSE E HAS SHOWN THE SAME AS COMMISSION ONLY TO CLAIM PERSONAL EXPENSES WHICH ARE NOT ALLOWABLE. ON THE BASIS OF THIS A SHOW CAUSE NOTIC E FOR LEVY OF PENALTY U/S.271(1) WAS ISSUED. IN RESPONSE IT WAS STATED THAT ASSESSEE WAS REQUIRED TO MAINTAIN UP-TO-DATE KNOWLEDGE OF INFORM ATION TECHNOLOGY COMPUTER SOFTWARE SAP AND BUSINESS MANAGEMENT FOR WHICH HE WAS REQUIRED TO ATTEND VARIOUS SEMINARS AND LECTURES AN D EXPENDITURE WAS INCURRED FOR SUCH SEMINARS ETC. AND SUCH EXPENSES ARE GENUINE PROFESSIONAL EXPENDITURES. THE AO OBSERVED THAT SIN CE ASSESSEE IS ONLY A SALARIED EMPLOYEE THEREFORE THE EXPENSES CLAIME D WERE ONLY AGAINST THE COMMISSION INCOME WHICH IS NOT ALLOWABL E BECAUSE THEY ARE IN THE NATURE OF PERSONAL EXPENSES. THE AO ULTI MATELY LEVIED 100% PENALTY ON THIS AMOUNT. 3. ON APPEAL THE ACTION OF THE AO WAS CONFIRMED BY THE LD. CIT(A). 4. BEFORE US LD. COUNSEL OF THE ASSESSEE REFERRED TO PAGE-2 OF THE PAPER BOOK WHICH IS A COPY OF THE ACKNOWLEDGMENT O F THE RETURN AND POINTED OUT THAT AGAINST COLUMN LOSS TO BE CARRIED FORWARD NIL FIGURE WAS RETURNED. HE ALSO FILED DATE OF COMPLETION OF A SSESSMENT PROCEEDINGS AND A CHART FOR OTHER YEARS AND SUBMITT ED THAT NO BUSINESS LOSS WAS BROUGHT FORWARD AND SET OFF EVEN IN A.YRS. 2006-07 ITA NO.602 OF 10 3 TO 2009-10. THEN HE REFERRED TO PAGE-3 WHICH IS A COPY OF COMPUTATION FOR A.Y 2005-06 WHEREIN ONLY IN THE INT ERNAL COLUMN THIS BUSINESS LOSS WAS MENTIONED BUT ACTUALLY NO SUCH L OSS HAS BEEN EITHER CARRIED FORWARD OR CLAIMED. IN FACT NO CLAIM OF TH ESE EXPENSES HAD ULTIMATELY MADE IN THE RETURN AND THEREFORE THERE WAS NO QUESTION OF LEVY OF PENALTY. 5. ON THE OTHER HAND LD. DR REFERRED TO THE REPLY OF QUESTION NO.12 IN THE ASSESSMENT ORDER AND POINTED OUT THAT ASSESSEE HAS CLEARLY ADMITTED IN HIS STATEMENT THAT ASSESSEE HAS CLAIMED SUCH EXPENSES. HE ALSO STRONGLY RELIED ON PARA-6 OF THE APPELLATE ORDER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND FIND THAT IT SEEMS TO BE A CASE OF WRONG PRESENTATION OF ACCO UNTS BEFORE THE AO. MAY BE ASSESSEE HAD DECLARED COMMISSION INCOME AND SHOWN EXPENSES UNDER WRONG ADVICE BUT THE SAME WERE ACTUA LLY NOT CLAIMED ULTIMATELY. THE INCOME HAS BEEN COMPUTED BY THE AO VIDE PARA-7 WHICH IS AS UNDER: SUBJECT TO THE ABOVE REMARKS THE TOTAL INCOME OF T HE ASSESSEE IS COMPUTED AS UNDER: GROSS TOTAL INCOME AS PER RETURN OF INCOME RS.26 7 0 122 ADD: COMMISSION INCOME RS. 3 463 GROSS TOTAL INCOME AS ASSESSED RS.26 73 585 LESS: DEDUCTIONS UNDER CHAPTER VIA RS. 12 667 RS.26 60 918 LOSS TO BE CARRIED FORWARD AS PER RETURN OF INCOME RS.12 80 771 LESS: LOSS DISALLOWED RS. 7 13 718 ---------------- LOSS ALLOWED TO BE CARRIED FORWARD RS. 5 67 053. ITA NO.602 OF 10 4 THE ABOVE CLEARLY SHOWS THAT NO ADDITION HAS BEEN M ADE FOR THE YEAR IN RESPECT OF EXPENSES CLAIMED. THE ACKNOWLEDGMENT OF THE RETURN FOR A.Y 2005-06 CLEARLY SHOWS THAT NO CARRIED FORWARD L OSS HAS BEEN CLAIMED AND IT WAS CATEGORICALLY STATED THAT NO CAR RIED FORWARD OR SET OFF OF BUSINESS LOSS WAS CLAIMED IN ANY YEAR AFTER 2005-06. QUESTION NO.12 AND ANSWER TO THE SAME IS AS UNDER: Q.12 WHY WAS SUCH CLAIM MADE IN THE INCOME & EXPEND ITURE A/C FOR THE YEAR ENDED 31-03-2005 OF RS.7 17 181/- AND CLAIMED A LOSS OF RS.7 13 718? A.12 THESE EXPENSES ARE GENERAL IN NATURE FOR ATTEN DING SEMINARS CONDUCTED BY AMWAY ENTERPRISES WHICH INCLUDES THE T RAVEL EXPENSES ALSO AND THIS YEAR WE HAVE NOT SET IT OFF AGAINST ANY OTHER INCOME. TI WAS ONLY THE PROJECTION OF THE ACC OUNTS IF IT IS WRONG I WILL RECTIFY FROM THE NEXT YEAR. THE ABOVE CLEARLY SHOWS THAT ASSESSEE HAS NOT SET O FF THESE EXPENSES AGAINST ANY INCOME BUT IT WAS ONLY A WRONG PROJECTI ON OF THE ACCOUNTS. PARA-6 OF THE CIT(A)S ORDER READS AS UNDER: 6. I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER IN ASSESSMENT ORDER AS WELL AS PE NALTY ORDER AND SUBMISSIONS OF THE APPELLANT. THE APPELLANT HAS FUR NISHED INACCURATE PARTICULARS OF INCOME BY CLAIMING PERSONABLE EXPENS ES AS BUSINESS EXPENDITURE. NOT ONLY THIS BUT IN COMPUTATION OF IN COME LOSS OF RS.12 80 771/- WAS CLAIMED TO BE CARRIED FORWARD WH ICH INCLUDES LOSS OF RS.7 13 718/- ALSO. THE APPELLANTS ARGUMENT THA T NO SET OFF OF LOSS WAS CLAIMED IN THIS YEAR OR IN FUTURE YEARS IS NOT ACCEPTABLE BECAUSE CARRY FORWARD OF LOSS HAS BEEN CLAIMED IN THE STATE MENT OF INCOME FILED BY THE APPELLANT. THE APPELLANT HIMSELF ADMIT TED BEFORE THE ASSESSING OFFICER IN HIS STATEMENT U/S.131 THAT HE WILL RECTIFY THE ACCOUNTS FROM NEXT YEAR. IT IS VERY CLEAR FROM THE FACTS DISCUSSED ABOVE THAT EXPENDITURE OF RS.7 17 181/- HAS NO RELE VANT WITH THE MEAGER COMMISSION INCOME OR DISCOUNT EARNED BY THE APPELLANT. THE APPELLANT HAS NOT EXPLAINED AS TO HOW THE CASE LAWS RELIED BY HIM ARE SIMILAR TO THE FACTS OF THIS CASE. IN FACT THE APP ELLANT HAS FURNISHED INACCURATE PARTICULARS OF INCOME BY CLAIMING PERSON AL EXPENDITURE AS BUSINESS EXPENDITURE AND THEREFORE THE ASSESSING OF FICER WAS FULLY JUSTIFIED IN IMPOSING PENALTY U/S.271(1). GROUNDS OF APPEAL ARE DISMISSED. ITA NO.602 OF 10 5 THE LD. CIT(A) HAS SIMPLY MENTIONED THAT ASSESSEE H AS FURNISHED WRONG PARTICULARS BUT THE FACT REMAINS THAT NO CLA IM OF THESE EXPENSES HAS BEEN ADJUSTED AGAINST ANY INCOME AND NO ADDITIO N EVEN TO INCOME HAS BEEN MADE. THEREFORE THERE IS NO QUESTION OF L EVY OF PENALTY. HENCE WE DELETE THE PENALTY. 7. IN THE RESULT ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 6/9/2011. SD/- SD/- (N.V.VASUDEVAN) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 2011. P/-*