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SH. ANOOP KUMAR GUPTA,AJMER vs ITO, WARD-2(1), AJMER, AJMER | BharatTax

SH. ANOOP KUMAR GUPTA,AJMER vs. ITO, WARD-2(1), AJMER, AJMER

ITA 939/JPR/2024Status: DisposedITAT Jaipur29 August 2024AY 2014-15Bench: SHRI SANDEEP GOSAIN (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)1 pages

AI SummaryAllowed

Facts

The assessee filed an appeal against the order of the CIT(A) confirming the penalty levied by the AO under section 271(1)(c) of the Income Tax Act. The penalty was initiated due to disallowance of interest expenditure during assessment. The assessee contended that the penalty notice was vague and that the addition on which the penalty was based was reduced by the ITAT.

Held

The Tribunal found that the assessee was deprived of a proper hearing before the CIT(A) as the appeal was dismissed on the same day the assessee filed an adjournment application. The CIT(A) also failed to consider the reduced addition and the assessee's grounds of appeal.

Key Issues

Whether the penalty under section 271(1)(c) is sustainable when the notice was not specific and the assessee was denied a proper hearing before the CIT(A).

Sections Cited

271(1)(c), 274

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR

Before: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 939/JP/2024

Hearing: 27/08/2024Pronounced: 29/08/2024

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;arHkkbZ]ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 939/JP/2024 fu/kZkj.k o"kZ@Assessment Years :2014-15 cuke Sh. Anoop Kumar Gupta The ITO, 2nd Floor, Gurukripa- Anasagar Vs. Ward-2(1), Circular Road, Ajmer. Ajmer. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABMPG5571H vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assesseeby : Sh. P.C. Parwal (C.A.) jktLo dh vksj ls@Revenue by: Smt. Monisha Choudhary (Addl. CIT) lquokbZ dh rkjh[k@Date of Hearing : 27/08/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 29/08/2024 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM

This is an appeal filed by the assessee against the order of the Learned Commissioner of Income Tax Act (Appeals)-5, Jaipur [hereinafter referred to as “CIT(A)”], dated 08.05.2024 for the assessment years 2014- 15, which in turn arise from the order dated 18.03.2019 passed under section 271(1)(c) of the Income Tax Act, 1961 (here in after “ Act”), by the ITO, Ward-1(1), Ajmer.

2.

The assessee has raised the following grounds:-

Sh. Anoop Kumar Gupta vs. ITO “1. The ld. CIT(A) has erred on facts and in law in dismissing the appeal filed by the assessee on the ground that assessee has remained non-complaint without considering the fact that against the notice dt. 29.04.2024, assessee sought adjournment on 07.05.2024 which is not considered.

2. The Ld. CIT(A) has erred on facts and in law in confirming the levy of penalty of Rs. 2,57,261/- u/s 271(1)(c) of the IT act. He has further erred in ignoring the fact that addition of Rs. 8,32,568/- on which penalty has been levied is reduced to Rs. 1,49,008/- by AO vide its order dt. 24.06.2020 passed u/s 143(3)/250/254 of IT Act, 1961.

4. Aggrieved from that order of levying penalty assessee preferred an appeal before the ld. CIT(A). Based the grounds so taken and the submission so made by the assessee, the appeal of the assessee was decided on 08.05.2024 and the relevant finding of the ld. CIT(A) reads as under:- “5. DECISION: 5.1 Despite of the various opportunities, the appellant has neither filed any reply nor any documentary evidences in support of his pending appeal. Hence the appeal is decided on the basis of material available on record. 5.2 The non-compliance by the appellant clearly indicates that he has nothing to say in this regard and making efforts to hide the real facts of the case. 5.3 In the instant case, an addition of Rs. 8,32,568/- on account of disallowance out of expenditure incurred on interest was made as the appellant had not proved Sh. Anoop Kumar Gupta vs. ITO the nexus between the interest-bearing funds and its application. It is important to mention here that the assessee had filed an appeal before the Ld.CIT(A), Ajmer against the assessment order passed u/s143(3) of the I.T. Act, 1961 by the A.O., the same was dismissed by the Ld.CIT(A), Ajmer vide order dated 26.09.2017 in appeal No.625/2016-2017. 5.4 The AO had also mentioned in the penalty order that "the contention of the assessee had been duly considered but it was not found tenable. The assessee had given interest free advances of Rs. 1,35,91,216/-. The assessee had paid interest of Rs. 13,42,887/- on the unsecured loans of Rs. 2,19,21,894/- During the course of assessment proceedings as well as appellate proceedings the assessee had not been able to show that the interest free advances were given for business purposes. Neither the assessee furnished any Fund Flow statement to show that the interest free advances were given by the assessee out of his own capital or out of interest free funds. The above act of the assessee clearly falls under the ambit of furnishing of inaccurate particulars of income' as well as 'concealed the particulars of his income. In view of the above facts and circumstances of the case, it was a fit case for imposing of penalty under section 271(1)(C) of the Income-tax Act 1961 and accordingly a penalty of Rs.2,57,261/- was imposed under section 271(1)(c) of the Income-tax Act.1961." 5.5 The appellant has remained non-compliant at the appellate stage, without taking the chance to represent his case. Such non-compliance indicates that the appellant has no explanation to offer in the matter and there is no factual basis of the claims made in the grounds of appeal

3. It is submitted that assessee has total interest free funds of Rs.1,43,08,760/- comprising of own capital of Rs.60,48,228/-, advance received against sale of property Rs.31,50,000/- and interest free advance of Rs.51,10,532/- which is more than the investment of Rs.1,35,91,216/- made by the assessee. However, the Hon’ble ITAT at Pg 5 of the order has held that advance received against sale of property cannot be regarded as interest free funds available with the assessee for making investment in the shares of company. It is for this reason that ultimately the disallowance was restricted to Rs.1,49,008/- but when assessee has truly and correctly disclosed all the facts, only because the contention of assessee is not fully accepted, it would not mean that assessee has concealed any income or furnished inaccurate particulars of income. For this purpose, reliance is placed on the following cases:- CIT Vs. Reliance Petroproducts Pvt. Ltd. 322 ITR 158 (SC) A glance at the provisions of section 271(1)(c) of the Income-tax Act, 1961suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word "particulars" used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A 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. Such a claim made in the return cannot amount to furnishing inaccurate particulars. Equest India (P) Ltd. Vs. ITO (2011) 136 TTJ 574/48 DTR 386 (Mum.) (Trib.) Merely because the assessee has a different perception of the situation than the AO, even though, in the ultimate analysis, the stand of the AO is to be upheld, it cannot be said that the assessee has concealed any particulars. The admission or rejection of a claim is a subjective exercise and whether a claim is accepted or rejected has nothing to do with furnishing of inaccurate particulars of income. What is a correct claim and what is an incorrect claim is a matter of opinion.

4.

Otherwise also, in the notice issued u/s 274 read with sec. 271(1)(c), penalty proceedings u/s 271(1)(c) is initiated for concealment of income or furnishing of inaccurate particulars of income. Thus, in the absence of any specific charge against the assessee in the penalty notice, consequent penalty imposed by AO is illegal and bad in law. Reliance in this connection is placed on the following cases:- CIT Vs. SSA’S Emerald Meadows (2016) 242 Taxman 180 (SC) Where Tribunal relying on decision of Division Bench of Karnataka High Court rendered in case of CIT Vs. Manjunatha Cotton & Grinning Factory 359 ITR 565, allowed appeal of assessee holding that notice issued by AO u/s 274 r.w.s. 271(1)(c) was bad in law, as it did not specify under which limb of section 271(1)(c) penalty proceedings had been initiated, i.e. whether concealment of particulars of income or furnishing of inaccurate particulars of income and High Court on appeal held that matter was covered by aforesaid decision of Division Bench and therefore there was no substantial question of law arising for determination, there was no merit in SLP filed by revenue and same was liable to be dismissed. PCIT Vs. Blackroak Securities (P.) Ltd. (2024) 297 Taxman 69 (Delhi) (HC) Where AO initiated penalty proceedings u/s 271(1)(c) without specifying as to whether penalty was being levied on account of concealment of income or for reason that assessee had furnished inaccurate particulars, impugned penalty order had rightly been set aside by Tribunal. PCIT Vs. Unitech Reliable Projects (P) Ltd. (2023) 294 Taxman 507 (Delhi) (HC) Where AO had triggered penalty proceedings u/s 271(1)(c) against assessee, it was necessary for him to indicate broadly as to the limb under which penalty proceedings were triggered. Tribunal having found that notice issued u/s 274 did not specify as to limb under which penalty was sought to be imposed quashed penalty proceedings, no substantial question of law arose for consideration. Kaveri Associates Vs. ACIT (2020) 275 Taxman 545 (Kar.) (HC)

5.

It is prayed that since all facts are on record, the appeal be decided on merit instead of remanding the matter back to the AO/CIT(A) for which reliance is placed on the following cases:- Zuari Leasing & Finance Ltd. Vs. ITO (2008) 112 ITD 205 (Del.) (Trib.) (TM) The Honb’le ITAT at Para 10 of the order held as under:- “10. It is clear from above that primary power, rather obligation of the Tribunal, is to dispose of the appeal on merits. The incidental power to remand, is only an exception and should be sparingly used when it is not possible to dispose of the appeal for want of relevant evidence, lack of finding or investigation warranted by the circumstances of the case. Remand in a casual manner and for the sake of remand only or as a short cut, is totally prohibited. It has to be borne in mind that litigants in our country have to wait for long to have fruit of legal action and expect the Tribunal to decide on merit. It is, therefore, all the more necessary that matter should be decided on merit without allowing one of the parties before the Tribunal to have another inning, particularly when such party had full opportunity to establish its case. Unnecessary remands, when relevant evidence is on record, belies litigant’s legitimate expectations and is to be deprecated. Having regard to aforesaid principle, it is necessary to look into records to see whether there is sufficient material on record to dispose of the issue on merit and there is no need to remand the issue to provide a fresh inning to the Revenue.” Srimanta Shankar Academy Vs. ITO (2007) 107 ITD 99 (Gauhati) (Trib.) (TM) The Honb’le ITAT at Para 10 of the order held as under:- “It is true that remand of a matter is discretionary. But such discretion is required to be shown to be exercised in a judicial manner. In the case of Saurashtra Packaging (P) Ltd. vs. CIT (1996) 131 CTR (Guj) 40 : (1993) 204 ITR 443 (Guj), their Lordships of Gujarat High Court have observed that where matter can be disposed of by the Tribunal on the basis of material already on record, a remand Sh. Anoop Kumar Gupta vs. ITO should not be resorted to. It is always necessary to avoid multiplicity of proceeding and to save time. There are large number of decisions of High Courts and Supreme Court where instead of directing the Tribunal to make a reference of question under s. 256(2), the Courts while disposing of reference application answered the question sought to be referred and directed the Tribunal to proceed in a particular manner. All this is done to save time and multiplicity of proceeding. I am convinced that such a course to save time should have been adopted in this case and remand of the matter is totally unnecessary. I say so for the reasons and after noting following facts available on record.” In view of above, penalty imposed is unjustified and the same be deleted.”