Chandrikaben N.Patel, Anand vs Assessee

IN THE INCOME TAX APPELLATE TRIBUNAL " B " BENCH, AHMEDABAD (BEFORE SHRI SHAILENDRA Kr. YADAV, J.M. & SHRI ANIL CHATURVEDI, A.M.)

I.T. A. No.2942& 2943/AHD/2011 (Assessment Year: 2001-02 & 2002-03)

Smt. Chandrikaben N. Patel V/S Asstt. Commissioner of 401 "Milestone", Opp. Icy Income-tax, Anand Circle, Spicy Restaurant Andand Anand. V.V. Nagar Road, Anand- 388001

(Appellant) (Respondent)

PAN: AENPP3438G

Appellant by : Shri Sunil H. Talati, A.R. Respondent by : Shri Roop Chand, Sr. D.R.

(आदे श)/ORDER

Date of hearing : 27-03-2015 Date of Pronouncement : 10 -04-2015

PER SHRI ANIL CHATURVEDI,A.M.

1. This appeal filed by the Assessee is against the order of CIT(A). IV, Baroda dated 07.09.2011 for A.Ys. 2001-02 & 2002-03.

2. Before us, both the parties submitted that though the appeals of the Assessees are of 2 different assessment years but facts and circumstances of both the years are similar except for the amounts and the submissions are also common for both the appeals and therefore both appeals can be heard 2 ITA No 2942 & 2943/AHD/2011 . A.Y. 2001-02 & 2002-03 together. We therefore proceed to dispose of both the appeals together for the sake of convenience and thus proceed with the facts in A.Y. 2001-02 ( ITA No. 2942/AHD/2011).

3. The relevant facts as culled out from the material on record are as under.

4. Assessee is an individual who filed her return for A.Y. 2002-02 on 30th July, 2001 declaring total loss of Rs. 29,75,720/-. Thereafter notice was issued u/s. 148 and subsequently the assessment was framed u/s. 143(3) vide order dated 23.03.2005 and the total income was determined at Rs. 8,90,740/- by making disallowances u/s. 14A, disallowance of short term capital loss and disallowance of claim of long term capital loss. Against the quantum addition made by the A.O, Assessee preferred appeal before ld. CIT(A) who granted partial relief to the Assessee by upholding the disallowance of short term capital losses but allowed partial relief on disallowance u/s. 14A. Aggrieved by the order of ld.CIT(A), the matter was carried before Tribunal where the Hon'ble Tribunal upheld the order of ld. CIT(A) with respect to deletion of disallowance u/s. 14A but set aside the issue of disallowance of capital gains to the file of ld. CIT(A). On the disallowances which were confirmed by ld. CIT(A), A.O vide order dated 18.02.2011 levied penalty of Rs. 6,52,267/- u/s. 271(1)(c) of the Act. Aggrieved by the order of A.O, Assessee carried the matter before ld. CIT(A) who vide order dated 07.09.2011 dismissed the appeal of the Assessee. Aggrieved by the aforesaid order of ld. CIT(A), Assesses is now in appeal before us and has raised the following grounds:-

1. The learned C.I.T. (Appeals) has erred in confirming the view and action of the A.C.I.T. in levying penalty of Rs.6,52,267/- inasmuch as the appellant has neither 3 ITA No 2942 & 2943/AHD/2011 . A.Y. 2001-02 & 2002-03 filed inaccurate particulars of income nor concealed the income within the meaning of section 271(1)(c) of the Income Tax Act, 1961 read with explanation thereto.

2. The learned C.I.T. (Appeals) has erred in confirming the decision of A.C.I.T. that disallowance of legitimate business expenditure in form of bank interest which is actually paid, is a concealment of income by furnishing inaccurate particulars of income. The legitimate business expenditure if disallowed does not amount to concealment.

3. The learned C.I.T. (Appeals) has erred in confirming the view and action of the A.C.I.T. that difference of opinion about certain income whether, short-term or long-

term loss amount to concealment of income or furnishing inaccurate particulars of income.

4. The learned C.I.T. (Appeals) has erred in not accepting previous year order of C.I.T. (Appeals), Baroda in appellant's own case on the ground that each assessment year under the act is separate assessment period and decision in one assessment does not hold good in respect of the matter decided in subsequent year. It is submitted that the appellant is same, fact is same, system of working is same and all facts are similar of both year then the order of previous year must be taken in to consideration.

5. Without prejudice to the above, the penalty calculated at 100% of tax evaded is not correct.

6. On the facts and legal matter above stated it is prayed that the penalty order be cancelled and the appeal should be allowed.

7. The order passed by ld. CIT(A) is bad in law and contrary to the provisions of law and facts. It is submitted that the same be held so now.

5. Before us, ld. A.R. submitted that though the Assessee has raised various grounds but the only issue is with respect to levy of penalty u/s. 271(1)(c).

6. Before us, ld. A.R. reiterated the submissions made before A.O and ld. CIT(A) and further submitted that Assessee had filed complete details along with the return of income in respect of both the claims and also filed the 4 ITA No 2942 & 2943/AHD/2011 . A.Y. 2001-02 & 2002-03 necessary details whenever asked for. He further submitted that the addition have been sustained only due to the difference of opinion between the Assessee and the Revenue department and therefore it cannot be termed as either concealment of income or furnishing inaccurate particulars of income as contemplated u/s. 271(1)(c) of the Act. He further placed reliance on the decision of Delhi High Court in the case of ACIT vs. Jindal Equipment Leasing and consultancy Services (2011) 11 Taxman.com 309 (Del). With respect to the long term capital loss which was considered as short term capital loss by the department, he submitted that when there is difference of opinion between the Assessee and the Revenue authorities in respect of change of head of income no penalty can be levied u/s. 271(1)(c) of the Act as it strictly neither concealment of income nor furnishing inaccurate particulars of income. He also placed reliance on the decision in the case of CIT vs. Anant Overseas Pvt. Ltd. (2015) 54 Taxman.com 211 (Del) and in the case of CIT vs. Smt. Neenu Dutta (2013) 35 Taxman.com 454 and the decision in the case of CIT vs. Amit Jain (2013) 33 Taxman.com 178 (Del). He also placed on record the copy of the aforesaid decision. He therefore submitted that considering all the facts the penalty be deleted. Ld. D.R. on the other hand supported the order of A.O and ld. CIT(A).

7. We have heard the rival submissions and perused the material on record. We find that penalty u/s. 271(1)(c) has been levied on two counts (i) on disallowance u/s. 14A and (ii) on account of disallowance of capital loss. It is also a fact that disallowance on account of short term capital loss was set aside by the Co-ordinate Bench of Tribunal to the file of ld. CIT(A) to decide the issue afresh. With respect to the levy of penalty on the disallowance made u/s. 14A, we find that the Co-ordinate Bench of Tribunal 5 ITA No 2942 & 2943/AHD/2011 . A.Y. 2001-02 & 2002-03 in the case of ACIT vs. Jindal Equipment Leasing (supra) has held that the allocation of expenses u/s. 14A is beset with lot of problems and the issue was led to rest by introduction of Rule 8D in the year 2008. Therefore even in the absence of any attempt on the part of Assessee to segregate the expenditure, it could be said that the question of disallowance and its quantification was contentious which led to the inference that the difference of opinion between the Assessee and the authorities was bona fide and therefore it was held that ld.

CIT(A) was right in deleting the penalty. With respect to the change in head of income we find that in the case of CIT Vs. Anant Overseas Pvt. Ltd. (supra), the Hon'ble High Court has held that where Assessee has disclosed all particulars relating to capital gain, no penalty could be levied u/s. 271(1)(c) merely because A.O treated such capital gain as business income of the Assessee. The Hon'ble Delhi High Court in the case of CIT vs. Amit Jain (supra) has held that where Assessee returns of income in question as short term capital gain but A.O assessed the said income as income from business, penalty u/s. 271(1)(c) was not leviable. We further find that Hon'ble Gujarat High Court in the case of CIT vs. Gujarat Insecticides Ltd. (2013) 35 Taxman.com 313 (Guj) has held that in the absence of either concealment or non furnishing particulars of income mere fact that certain additions were made rejecting Assessee's claim in the course of assessment proceedings would not lead to imposition of penalty in the present case. The submission of the Assessee that it has filed all the details with respect to expenditure before the A.O has not been controverted by the ld.

D.R. Further, for levy of penalty there has to be evidence or material to show that the Assessee has deliberately furnished inaccurate particulars of income. It also a settled law that penalty proceedings are entirely distinct from assessment proceedings and howsoever relevant and 6 ITA No 2942 & 2943/AHD/2011 . A.Y. 2001-02 & 2002-03 good the findings in assessment proceedings may be, they are not conclusive as far as penalty proceedings are considered. It is also well settled that the parameters of judging the justification for addition made in assessment case of an assessee is different from the penalty imposed on account of concealment of income or filing inaccurate particular of income and that certain disallowances/additions could legally be made in assessment proceedings on the preponderance of probabilities but no penalty could be imposed u/s. 271(1)(c) of the Act on the preponderance of probabilities and the Revenue has to prove that the claim made by the Assessee was not genuine. In view of the aforesaid facts and considering the decisions cited hereinabove, we are of the view that no penalty can be levied in the present case, we therefore direct its deletion.

8. In the result, thus the grounds of Assessee is allowed.

9. Thus the appeal of Assessee is allowed.

ITA No. 2943/AHD/2011 for A.Y. 2002-03. 10. In the present cases, since both the parties have admitted before us that since the facts and circumstances of the case are identical to that in A.Y. 2001-02 in ITA No. 2942/AHD/2011, we therefore for the reasons stated hereinabove while deciding the appeal for A.Y. 2001-02 in ITA No. 2942/AHD/2011 (supra) and for similar reasons allow the grounds of Assessee in the present appeal.

7 ITA No 2942 & 2943/AHD/2011 . A.Y. 2001-02 & 2002-03

11. In the result, both the appeals of Assessee are allowed.

Order pronounced in Open Court on 10 - 04 - 2015.

Sd/- Sd/- (SHAILENDRA Kr. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad. TRUE COPY Rajesh

Copy of the Order forwarded to:- 1. The Appellant. 2. The Respondent. 3. The CIT (Appeals) - 4. The CIT concerned. 5. The DR., ITAT, Ahmedabad. 6. Guard File. By ORDER

Deputy/Asstt.Registrar ITAT,Ahmedabad