Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI SANDEEP GOSAIN, Honble & SHRI O.P.MEENA, Honble
सुनवाईकीतारीख/ Date of hearing: 11.02.2020 उ�घोषणाक�तार�ख/Pronouncement on: 14.02.2020 आदेश /O R D E R PER SANDEEP GOSAIN, JM: 1. These two appeals by the Assessee are directed against the common order of Ld.Commissioner of Income Tax(Appeals)-4, Surat dated 24.04.2017 for the assessment year 2011-12 and 2010-11.
Grounds raised
by the Assessee in read as under: “1. That on facts and circumstance of the case, the learned CIT(A) has grossly erred in sustaining penalty of Rs.2,85,660/-.
2. That on facts and circumstance of the case, the learned CIT(A) has grossly erred in sustaining penalty, inspite of, assessment order as passed by the learned AO being non speaking order with regard to disallowance of expenses, for which penalty has been imposed on the appellant.
Mukeshbhai Dungarbhai Daliya Vs. DCIT, Cen. Circle – 2, Surat/ITA No’s.10 & 11/SRT/2017 /A.Y.2011-12 & 10-11Page 2 of 7
The appellant craves leave to add, amend, alter, substitute, modify the above ground of appeal, if necessary on the basis of submissions to b made at the time of personal hearing.”
A.Y.2010-11: 3. The brief facts of the case are that the assessee had claimed brokerage income in his Return of Income, but in the absence of furnishing of details as called-for by the ld.Assessing Officer(AO), the said income was treated as unexplained cash credit u/s.68 of the Income Tax Act. Consequently, penalty proceedings were also initiated for filing inaccurate particulars of income. Later on, after providing an opportunity of hearing to the assessee, order of penalty u/s.271(1)(c) of the Act was passed thereby imposing penalty.
Being aggrieved with the order of imposing penalty, the assessee preferred appeal before the ld.CIT(A) and the ld.CIT(A) after considering the case of both the parties, partly allowed the appeal filed by the assessee.
Being aggrieved with the order of the ld.CIT(A), the assessee preferred appeal before us on the grounds mentioned hereinabove.
The solitary ground raised by the assessee relates to challenging the order of the ld.CIT(A) in sustaining the penalty in the present case. The ld.Authorised Representative(AR) submitted before us that although the ld.AO had treated the brokerage income as unexplained cash credit u/s.68 of the Income Tax Act and in the Mukeshbhai Dungarbhai Daliya Vs. DCIT, Cen. Circle – 2, Surat/ITA No’s.10 & 11/SRT/2017 /A.Y.2011-12 & 10-11Page 3 of 7 absence of the supply of required documents and imposed penalty for furnishing inaccurate particulars of income. It was further submitted that while computing the amount of tax in assessment order, income computation part, the ld.AO increased assessed income and reduced the net profit. Indirect expenses claimed in the profit and loss account were disallowed by the ld.AO. It was also submitted that the ld.AO in his assessment order, apart from treating the brokerage income as ‘unexplained cash credit’ neither discussed expenses claimed by the assessee, nor justified those to be incurred for the purpose of earning said income. Thus, resulting imposition of penalty on account passive disallowance of expenses, without offering any explanation or justification for the same. The ld.AR relied upon the statement of facts submitted before us and also drawn our attention to para no.7 of the statement of facts wherein the assessee placed reliance on the judicial pronouncements which reproduced below:
“The word 'particulars' must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous. In the instant case, there was no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c). A mere making of the claim, which is not sustainable in law by itself will not amount to furnishing of inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars. The Apex Court dismissed the petition on following grounds The revenue contended that since the assessee had claimed excessive deductions knowing that they were incorrect, it amounted to concealment of income. It was argued that the falsehood in accounts can take either of the two forms: (i) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income.
Mukeshbhai Dungarbhai Daliya Vs. DCIT, Cen. Circle – 2, Surat/ITA No’s.10 & 11/SRT/2017 /A.Y.2011-12 & 10-11Page 4 of 7 Such contention could not be accepted as the assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that, by itself, would not attract the penalty under section 271(1)(c). If the contention of the revenue was accepted, then in case of every return where the claim made was not accepted by the Assessing Officer for any reason, the assessee would invite penalty under section 271(1)(c). That is clearly not the intendment of the Legislature Mens Rea Not Necessary For Imposing Penalty u/s 271(1)(c)”
On the other hand, the ld.Departmental Representative(DR) relied upon the orders passed by the Revenue Authorities.
We have heard both the Counsels and perused the material placed on records, judgments cited by the parties as well as orders passed by the Revenue Authorities. From the facts of the present case, we noticed that merely because the assessee could not substantiated his stand of earning income on account of brokerage charges, the same was treated as cash credit u/s.68 of the Act by the ld.AO and penalty was imposed for furnishing inaccurate particulars of income. We notice that while computing the amount of tax in the assessment order, the ld.AO increased assessed income and reduced net profit as per profit and loss account. The ld.AO in his assessment order, apart from treating brokerage income as unexplained cash credit, neither discussed expenses claimed by the assessee in the order, nor justified those to be not incurred for the purpose of earning said income. Resultantly, the penalty was also upheld by the ld.CIT(A), On account of disallowance of expenses, which specifically not forming part of assessment order.
Mukeshbhai Dungarbhai Daliya Vs. DCIT, Cen. Circle – 2, Surat/ITA No’s.10 & 11/SRT/2017 /A.Y.2011-12 & 10-11Page 5 of 7
After considering the facts and circumstances as enumerated above, we also found that the ld.AO had made passive disallowance of expenses, without offering any explanation or justification in the same and has not proved beyond doubt any activity of concealment of income on the part of assessee. Moreover, the ld.AO had made arithmetic disallowance without offering any reason, explanation or decision in this regard, In the order of assessment, the ld.AO had not provided any reason for disallowance of expenses not even mentioned his express intention to disallow those expenses, thus in our view, penalty on the said reason is not imposable. Moreover, we find support from the decision of the Co-ordinate Bench of ITAT in the case of DCIT Vs. Kulwant Singh [2019] 104 taxmann.com 340 (Chandigarh Tribunal) wherein it has categorically been held that when all the facts with regard to the income were declared in the original return itself, then it cannot be taken as a case of concealment or furnishing of inaccurate particulars of income.
Even otherwise, where the satisfaction of the ld.AO while initiating the penalty proceedings u/s.271(1)(c) with regard to filing of inaccurate particulars of income while making claim of brokerage charges and it was not believed by the ld.AO and the ld.AO has considered the same as cash credit income u/s.68 of the Income Tax Act. Thus, we find support from the decision of Hon'ble Apex Court Mukeshbhai Dungarbhai Daliya Vs. DCIT, Cen. Circle – 2, Surat/ITA No’s.10 & 11/SRT/2017 /A.Y.2011-12 & 10-11Page 6 of 7 in the case of CIT Vs. Reliance Petro Products [2010] 322 ITR 158 wherein it has categorically been held that “mere making of a claim, which is not sustainable in law by itself will not amount to furnishing inaccurate particulars regarding the income of the assessee and such claim made in the return cannot amount to be inaccurate particulars. Thus, considering the totality of the facts and circumstances of the present case and also while relying upon the decision as mentioned above, we are of the considered view that penalty imposed in the present case is not sustainable in the eyes of law and thus we direct the same to be deleted, accordingly, grounds raised by the assessee are allowed.
In the result, appeal of the assessee in is allowed. for A.Y. 2011-12 12. Since, the given facts and circumstances are identical as in the above assessee’s own case in ITA.No.11/SRT/2017 for A.Y.2010-11. Therefore, our findings as contained therein shall apply mutatis mutandis to this appeal of the Revenue. Accordingly, following the same, grounds of appeal of the Assessee is allowed.
In the result, appeal of the assessee is allowed in is allowed.
Mukeshbhai Dungarbhai Daliya Vs. DCIT, Cen. Circle – 2, Surat/ITA No’s.10 & 11/SRT/2017 /A.Y.2011-12 & 10-11Page 7 of 7
In the result, both appeals filed by the assessee in and are allowed.
Order pronounced in the open court on 14-02-2020.