Raghu Nandan Jalan, Delhi v. ITO, New Delhi

ITA 652/DEL/2010 | 1998-1999
Pronouncement Date: 21-05-2010 | Result: Allowed

Appeal Details

RSA Number 65220114 RSA 2010
Bench Delhi
Appeal Number ITA 652/DEL/2010
Duration Of Justice 3 month(s) 10 day(s)
Appellant Raghu Nandan Jalan, Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 21-05-2010
Date Of Final Hearing 12-04-2010
Next Hearing Date 12-04-2010
Assessment Year 1998-1999
Appeal Filed On 11-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI A.D.JAIN JM AND SHRI R.C.SHARMA AM ITA NO.652/DEL/2010 ASSESSMENT YEAR : 1998-99 SHRI RAGHU NANDAN JALAN PROP. ANAND TRADERS 1162 KUCHA MAHAJANI CHANDNI CHOWK DELHI. PAN NO.ACDPJ8289M. VS. INCOME TAX OFFICER WARD-29(4) NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : MRS.SWEETY KOTHARI AR. RESPONDENT BY : SHRI H.K.LAL SR.DR. ORDER PER R.C.SHARMA AM : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A) DATED 6.1.2010 FOR THE AY 1998-99 IN THE MATTER OF PENAL TY IMPOSED U/S 271(1)(C) OF THE IT ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS INCOME FROM TWO PROPRIETORSHIP CONCERNS JALAN SILVER PALACE AND ANAND TRADERS. THE ASSESSEE CARR IES ON DOMESTIC TRADING IN SILVER THROUGH JALAN SILVER PALACE AND EXPORTS GOLD JEWELLERY THROUGH ANAND TRADERS. DURING THE RELEVANT YEAR THE ASSESSEE CL AIMED DEDUCTION U/S 80HHC IN RESPECT OF ITS GOLD JEWELLERY EXPORT BUSINESS. IN THE RELEVANT ASSESSMENT YEAR WHILE COMPLETING THE ORIGINAL ASSESSMENT U/S 143(3) ON 19.3.2001 AT RS.3 68 980/- AGAINST THE RETURNED INCOME OF RS.2 65 910/- THE A O RE-COMPUTED THE DEDUCTION U/S 80HHC AT RS.3 620 (AS AGAINST THE CLAIM OF RS.1 06 691) BY INCLUDING THE TURNOVER OF BOTH THE BUSINESSES IN THE TOTAL TURNO VER. THIS ACTION OF THE AO WAS CONFIRMED IN FIRST APPEAL. THE ITAT AS PER ITS ORD ER DATED 25.6.2004 SET ASIDE THE ORDER OF THE AO WITH A DIRECTION TO THE AO TO DETER MINE WHETHER THE ASSESSEE WAS A MANUFACTURER OR SIMPLY A TRADER OF GOLD JEWELLERY EXPORTS. IN THE ASSESSMENT ITA-652/DEL/2010 2 ORDER PASSED U/S 250/143(3) THE AO GAVE A FINDING THAT THE ASSESSEE WAS A MANUFACTURER EXPORTER AND HENCE THE PROVISIONS OF S ECTION 80HHC(3)(A) WERE APPLICABLE. THE ACTION OF THE AO WAS ONCE AGAIN CO NFIRMED IN FIRST APPEAL. BEFORE THE ITAT THE ASSESSEE SUBMITTED THAT HE WAS A MERCHANT EXPORTER AND HENCE DEDUCTION U/S 80HHC SHOULD HAVE BEEN CALCULAT ED U/S 80HHC(3)(B) WHICH IS SILENT ABOUT TOTAL TURNOVER. THE TRIBUNAL IN ITS ORDER DATED 9.3.2007 UPHELD THE ORDER OF THE CIT(A) HOLDING THAT THE ASSESSEE WAS A MANUFACTURER OF GOLD JEWELLERY AND NOT A TRADER IN GOLD. IN THE PENALTY PROCEEDINGS THE AO REJECTED THE SUBMISSIONS OF THE ASSESSEE AND IMPOSED PENALTY OF RS.30 921/- FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 3. BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ORDE R OF THE AO LEVYING THE PENALTY U/S 271(1)(C) AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS GONE T HROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT PENALTY WAS IMPOSE D ONLY WITH RESPECT TO THE COMPUTATION OF CLAIM OF DEDUCTION U/S 80HHC. IN TH E COURSE OF SCRUTINY ASSESSMENT THE AO HAS RECOMPUTED THE DEDUCTION CLA IMED BY THE ASSESSEE U/S 80HHC AND WITH REGARD TO DISALLOWANCE OF PART OF TH E CLAIM THE PENALTY WAS IMPOSED. FROM THE RECORD WE FOUND THAT THERE WAS NO INACCURATE FURNISHING OF PARTICULARS OF INCOME BY THE ASSESSEE NOR DID ASSE SSEE CONCEAL ANY PART OF ITS INCOME. ASSESSED INCOME WAS DIFFERENT THAN RETURNE D INCOME ONLY DUE TO CHANGE IN COMPUTATION OF DEDUCTION U/S 80HHC. WHEN THE PE NALTY WAS PROPOSED TO BE LEVIED THE ASSESSEE HAS FURNISHED BONA-FIDE EXPLAN ATION WITH REGARD TO ASSESSEES ENGAGEMENT IN BUSINESS OF MANUFACTURE AND EXPORT OF GOLD JEWELLERY AND ITS COMPUTATION OF DEDUCTION U/S 80HHC. HON'BLE SUPREM E COURT IN THE CASE OF RELIANCE PETRO PRODUCTS (P) LTD. 322 ITR 158 WHIL E CONFIRMING THE ORDER OF HONBLE HIGH COURT DELETING THE PENALTY IMPOSED U/S 271(1)(C) FOR DENIAL OF ASSESSEES CLAIM OF DEDUCTION OF INTEREST EXPENDITU RE HAS CATEGORICALLY OBSERVED THAT BY ANY STRETCH OF IMAGINATION MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS . ACCORDINGLY IT WAS HELD THAT DECLINE OF ASSESSEES CLAIM OF INTEREST AGAINST THE LOAN UTILIZED FOR MAKING INVESTMENT IN TAX FREE SECURITIES WILL NOT AMOUNT TO FURNISHING OF INACCURATE ITA-652/DEL/2010 3 PARTICULARS SO AS TO ATTRACT PENALTY U/S 271(1)(C) OF THE ACT. HON'BLE SUPREME COURT IN THIS CASE AFTER CONSIDERING THE PROPOSITIO N OF LAW LAID DOWN IN THE CASE OF DILIP N.SHROFF 291 ITR 519 (SC) AND DHARMENDER TE XTILE PROCESSORS 306 ITR 277 (SC) HELD AS UNDER:- A MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINAB LE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PA RTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDI TURE WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE THAT BY ITSELF WOULD NOT IN OUR OPINION ATTRACT THE PENAL TY UNDER SECTION 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVE NUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTE D BY ASSESSING OFFICER FOR ANY REASON THE ASSESSEE WILL INVITE PE NALTY UNDER SECTION 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF T HE LEGISLATURE. 5. IN VIEW OF THE ABOVE RESPECTFULLY FOLLOWING THE PROPOSITION OF LAW LAID DOWN BY HON'BLE SUPREME COURT THE INSTANT CASE IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C). ACCORDINGLY WE REVERSE THE FINDING AND CONCLUSION OF THE LOWER AUTHORITIES AND ALLOW THE APPEAL IN FAVOUR OF THE ASSESSEE. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. DECISION PRONOUNCED IN THE OPEN COURT ON 21 ST MAY 2010. SD/- SD/- (A.D.JAIN) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21.05.2010. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT DEPUTY REGISTRAR ITA-652/DEL/2010 4