The ACIT, Ahmedabad Circle-3,, Ahmedabad v. M/s. Madhur Shares & Stock Pvt. Ltd.,, Ahmedabad

ITA 1840/AHD/2006 | 2001-2002
Pronouncement Date: 31-05-2010 | Result: Dismissed

Appeal Details

RSA Number 184020514 RSA 2006
Assessee PAN AABCM5449D
Bench Ahmedabad
Appeal Number ITA 1840/AHD/2006
Duration Of Justice 3 year(s) 9 month(s) 23 day(s)
Appellant The ACIT, Ahmedabad Circle-3,, Ahmedabad
Respondent M/s. Madhur Shares & Stock Pvt. Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 31-05-2010
Date Of Final Hearing 29-04-2010
Next Hearing Date 29-04-2010
Assessment Year 2001-2002
Appeal Filed On 08-08-2006
Judgment Text
ITA.1840-06 A.Y.01-02 1 IN THE INCOME_TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD BEFORE SHRI T.K. SHARMA AND SHRI D.C. AGRAWAL. ITA. NO. 1840 /AHD/2006 (ASSESSMENT YEAR: 2001-02 ) THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-3 5 TH FLOOR INSURANCE BLDG. ASHRAM ROAD AHMEDABAD. VS MADHUR SHARES & STOCK PVT.LTD. MADHUR COMPLEX STADIUM CIRCLE NAVRANGPURA AHMEDABAD. (APPELLANT) (RESPONDENT) PAN: AABCM 5449D APPELLANT BY : SHRI B.S. GAHLOT CIT(DR) WIT H SMT. NEETA SHAH SR. D.R. RESPONDENT BY : SMT.URVASHI SHODHAN. ( (( ( )/ )/)/ )/ ORDER PER SHRI D.C. AGRAWAL THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. C.I.T.(A) DATED 17-5-2006 WHEREIN HE HAS CANCEL LED THE PENALTY OF RS.59 74 777/- LEVIED BY THE A.O. U/S. 271(1)(C ) OF THE ACT. 2. THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2001-02 THE A.O . MADE AN ADDITION OF RS.5 93 42 439/- IN THE RETURNED LOSS O F RS.47 51 790/- .THE ASSESSMENT ORDER WAS PASSED ON 31-3-2004 AFTER MAKING THE FOLLOWING ADDITIONS :- ITA.1840-06 A.Y.01-02 2 1. DEPRECIATION ON MEMBERSHIP CARD. RS. 1 89 844 2. BAD DEBTS. RS. 5 77 44 844 3. SUNDRY CREDITORS TREATED AS UNEXPLAINED CASH CREDIT. RS. 14 07 751 --------------------- TOTAL. RS.5 93 42 439 ============ 3. THE QUANTUM ORDER OF THE A.O. WAS CHALLENGED BEF ORE THE LD. C.I.T.(A) WHO CONFIRMED THE ADDITION OF RS.1 31 26 427/- OUT OF BAD DEBTS AND ALSO THE ADDITION MADE U/S. 68 AT RS.14 0 7 751/-. THE A.O. INITIATED THE PENALTY PROCEEDINGS U/S. 271(1)(C) AT THE TIME OF COMPLETION OF ASSESSMENT ORDER. IN RESPONSE TO THE SHOW CAUSE NOTICE ASSESSEE FURNISHED AN EXPLANATION MAKING FOL LOWING SUBMISSIONS :- I) FOR BAD DEBTS THE CIT (A) HAS ALLOWED SUBSTANTI AL RELIEF BY REDUCING THE DISALLOWANCE BY RS.446.18 LAKHS AND UPHELD MERELY A DISALLOWANCE OF RS./1 31 36 427/-. II) HE HAS ACCEPTED THE ASSESSEES ALTERNATIVE CLAI M FOR THE DEDUCTION U/S. 28 ALLOWING A SUBSTANTIAL RELIEF. III) THE ASSESSEE HONESTLY AND GENUINELY BELIEVES T HAT ITS CLAIM U/S. 36(1) DESERVES TO BE UPHELD AND HAS FILE D AN APPEAL TO THE ITAT. IV) THE ASSESSING OFFICER HAS FAILED TO INITIATE TH E PENALTY OVER THIS ISSUE AND HENCE THE PENALTY UNDER SECTION 271(1)(C) CANNOT BE INITIATED. ACCORDING TO THE ASS ESSEE MENTION OF THE INITIATION OF THE PENALTY AT THE END OF THE ASSESSMENT ORDER IS NOT ENOUGH. V) THE DEEMING PROVISIONS CONTAINED IN THE EXPLANAT IONS TO THE SECTION 271(1) ARE NOT APPLICABLE. ITA.1840-06 A.Y.01-02 3 4. THE A.O. HOWEVER DID NOT ACCEPT THE EXPLANATION FURNISHED BY THE ASSESSEE FOR THE FOLLOWING REASONS :- (1) THE ASSESSEE OFFICER DID NOT CONVINCINGLY PROVE THAT CLAIM MADE BY IT WAS BONAFIDE. IT DID NOT PROVE THE GENUI NENESS OF THE PARTIES WHOSE BAD DEBTS WERE DISALLOWED. THE CL AIMS MADE BY THE ASSESSEE WERE NOT IN THE NATURE OF REVENUE L OSS. (2) THE CLAIM OF THE ASSESSEE IS NOT SUPPORTED BY A NY DOCUMENTARY EVIDENCE. THERE ARE DECISIONS TO SUPPOR T THE VIEW THAT BAD DEBTS CANNOT BE ALLOWED TO A BROKER IN RES PECT OF THE LOSSES SUFFERED BY ITS CLIENTS IF THEY REFUSE TO P AY UP. (3) THE ONUS PLACED ON THE ASSESSEE UNDER EXPLANATI ON 1 TO SECTION 271(1)(C) IS NOT DISCHARGED. THE ASSESSEE H AS NOT SUBSTANTIATED THE EXPLANATION AND PROVED THAT EXPLA NATION WAS BONAFIDE. THE LD. A.O. DERIVED SUPPORT FROM THE DEC ISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. GURUBACHAN LAL 250 ITR-157. THE A.O. ACCORDINGLY LEVIED PENALTY IN RES PECT OF ADDITIONS SUSTAINED. 5. THE LD. C.I.T.(A) DELETED THE PENALTY ON THE GRO UND THAT (1) THERE IS NO MENTION OF INITIATION OF PENALTY PROCEE DINGS IN RESPECT OF DISALLOWANCE OF BAD DEBT OR BUSINESS LOSS. THUS TH ERE WAS NO SATISFACTION RECORDED BY THE A.O. IN RESPECT OF BAD DEBT/BUSINESS LOSS. (2) THE ADDITION IS MAINLY ON ACCOUNT OF DISA LLOWANCE OF THE CLAIM WHICH IS PARTLY SUSTAINED BY LD. C.I.T.(A). ( 3) THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT CLAIM WAS ALLOWABLE AND WHENEVER AMOUNT ITA.1840-06 A.Y.01-02 4 IS RECEIVED IN FUTURE HE WOULD BE LIABLE TO BE TAXE D U/S.41(1). (4) THE LD. C.I.T.(A) HELD THAT PENALTY IS NOT LEVIABLE IN VIEW OF THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF BURMAH S HELL OIL STORAGE & DISTRIBUTING CO. OF INDIA LTD. 112 ITR-592 AND I N THE CASE OF J.K. JAJOO REPORTED IN 281 ITR-411. 6. BEFORE US THE LD. D.R. SUBMITTED THAT ASSESSEE H AS MADE THE CLAIMS WITHOUT THERE BEING ANY BONAFIDE BELIEF THAT IT IS ALLOWABLE. THE CLAIM HAS NOT BEEN SUBSTANTIATED AND THEREFORE THE PENALTY WOULD BE LEVIABLE WITHIN THE MEANING OF CLAUSE 1B TO SECTION 271(1) (C ). 7. ON THE OTHER HAND LD. A.R. RELIED ON THE ORDER OF THE C.I.T.(A) 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THERE I S NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD. C.I.T.(A). IT IS BECAUSE THE SUBJECT MATTER OF PENALTY WAS THE ADDITION ON ACCOUNT OF BA D DEBTS WHICH HAVE BEEN TOTALLY DELETED BY THE TRIBUNAL IN THE OR DER OF EVEN DATE. IN OTHER WORDS ENTIRE CLAIM OF THE ASSESSEE HAS BEEN CONSIDERED AS BUSINESS LOSS. ONCE THE ADDITION DOES NOT SURVIVE N O PENALTY CAN BE LEVIED AS HELD IN ADDL. CIT VS. BADRIPRASAD KASHIPR ASAD (1993) 200 ITR 206 (ALL.); (2) ACIT VS. VIP INDUSTRIES (2009) 122 TTJ-289 (MUM); (3) CIT VS. MOHD BUX SOKAT ALI 265 ITR-326 (RAJ); ( 4) CIT VS. BENGAL JUTE MILLS CO. LTD. 174 ITR-402 (CAL.) AND (5) CIT VS. SHISHPAL 255 ITR-187 (RAJ.). AS THE ENTIRE ADDITION IS DELETED THERE IS NO CASE FOR SUSTAINING ANY PENALTY. ITA.1840-06 A.Y.01-02 5 9. AS A RESULT APPEAL FILED BY THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON 31/05/ 2010. SD/- SD/- ( T. K. SHARMA ) (D.C.AGRAWAL) JUDICIAL MEMBER. ACCOUNTANT MEMBER. AHMEDABAD. DATED: 31/ 05/2010. S.A.PATKI. 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.