DY.COMMISSIONER OF INCOME TAX, CIRCLE-5(2), AHMEDABAD vs. SHRI SATISH BABULAL SHAH, AHMEDABAD

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ITA 3413/AHD/2015Status: DisposedITAT Ahmedabad22 August 2017AY 2008-093 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order, following a previous decision in a co-owner's case. It was held that penalty under section 271(1)(c) cannot be automatically imposed merely because an addition was made, especially when the assessee disclosed all relevant documents and the explanation was not found to be non-bonafide.

What were the facts?

The Assessing Officer (AO) appealed against the CIT(A)'s deletion of penalty imposed under section 271(1)(c). The penalty was levied on additions made to the assessee's income, specifically a business loss claim and foreign travelling expenses.

What were the issues?

Whether penalty under section 271(1)(c) is leviable when the assessee has disclosed all relevant documents and the explanation for the claim was not found to be non-bonafide, despite additions being made to the income.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD SMC BENCH, AHMEDABAD

I.T.A. No.3413/Ahd/2015 Assessment Year: 2008-09 Page 1 of 3 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD SMC BENCH, AHMEDABAD [Coram: Pramod Kumar AM] I.T.A. No.3413/Ahd/2015 Assessment Year: 2008-09 Dy. Commissioner of Income Tax, ....................…Appellant Circle – 5(2), Ahmedabad. Vs. Satish Babulal Shah, ..........……. Respondent C/54, Silver Arc Building, Kavi Nanalal Marg, Near Ellisbridge Crossing, Navrangpura, Ahmedabad – 380006. [PAN: ADFPS 9266 C] Appearances by: Deepak Sutharia for the appellant N.B. Shah for the respondent Date of concluding the hearing: 21.08.2017 Date of pronouncing the order: 22.08.2017 O R D E R

1.

By way of this appeal, the Assessing Officer has challenged correctness of the order dated 22nd September 2015, passed by the learned CIT(A), Ahmedabad for the assessment year 2008-09, on the following grounds :- “1. The learned CIT(A) has erred in law and on facts in deleting the penalty of Rs.27,46,460/- imposed under section 271(1)(c) of the Act. “2. On the facts and circumstances of the case, the ld. CIT(A) ought to have upheld the order of the Assessing Officer. 3. It is, therefore, prayed that the order of the ld. CIT(A) may be set aside and the order of the Assessing Officer be restored to the above extent.”

I.T.A. No.3413/Ahd/2015 Assessment Year: 2008-09 Page 2 of 3 2. When this appeal was called out for hearing, learned counsel for the assessee invited my attention to the order dated 15.03.2013 passed by a Division Bench of this Tribunal in the case of co-owner i.e. ITA No.2368/Ahd/2012 DCIT vs. Shri Harsh S. Shah and submitted that the issue in appeal is squarely covered by the aforesaid decision. It was also submitted that since the penalty in question is imposed in respect of the same transaction in the hands of the co-owner, the aforesaid decision squarely applies to the facts of this case as well.

3.

Learned Departmental Representative did not dispute the submissions so made by the learned counsel for the assessee but nevertheless relied upon the stand of the Assessing Officer.

4.

I see no reasons to take any other view of the matter than the view so taken by the Division Bench on the same set of facts in the case of the co-owner. While upholding the action of the CIT(A) in deleting the penalty, the Division Bench has inter alia observed as follows :- “6. After hearing and perusing the records and the case laws relied upon by both the parties, we find that in his return of income assessee has claimed business loss of Rs. 86,72,132/-. During the course of assessment proceedings in respect of this claim, the assessee filed details comprising agreements between the assessee and the other parties i.e. Mr. Haider Sindhi and Others. However assessing officer was of the view that the evidence which has been produced by the assessee in support of his claim of business losses of Rs. 86,72,132/- cannot be relied upon to allow the claim of the assessee. In the opinion of the assessing officer this loss was notional loss only and he therefore added the same to the income of the assessee. Similarly, assessee’s claim of foreign travelling expenses amounting to Rs. 85,591/- was held to be not related with assessee’s business by the assessing officer and the claimed expenses were also added back to the income of the assessee. On these additions assessing officer has also levied penalty u/s 271(1)(c) of the Act. The assessee’s case has consistently been that there is no concealment of income or filing of inaccurate particulars of income on the part of the assessee as in respect

I.T.A. No.3413/Ahd/2015 Assessment Year: 2008-09 Page 3 of 3 of both these additions all the relevant documents and evidences were produced before the assessing officer and, therefore, it was not a fit case for levying penalty u/s 271(1)(c) of the Act. We find merit in the argument advanced on behalf of the assessee as assessment proceedings and penalty proceedings are separate. Simply, because addition has been made, penalty cannot be imposed automatically. In the instant case, there is no dispute about the fact that assessee disclosed all relevant documents in support of his claim of business loss and travelling expenses. In the absence of a finding of the assessing officer that explanation offered by the assessee in respect of both these additions was not bonafide, penalty u/s 271(1)(c) of the Act cannot be levied in this case. Therefore the Ld. CIT(A) has rightly deleted the penalty imposed by A.O. and the order passed by him is hereby upheld.”

5.

Respectfully following the views so taken by the Tribunal, I confirm the action of the leaned CIT(A) and decline to interfere in the matter.

6.

In the result, appeal is dismissed. Pronounced in the open court today on the 22nd day of August 2017.

Sd/- Pramod Kumar (Accountant Member) Dated: Ahmedabad, the 22nd day of August, 2017. PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) DR (6) Guard File By order

Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad

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