CHAROTAR GAS SAHKARI MANDALI LTD.,ANAND V. THE DY. CIT, ANAND CIRCLE, ANAND

ITA 247/AHD/2025

AI Insights

The case involves Charotar Gas Sahkari Mandali Ltd., which appealed against the penalty imposed by the Deputy Commissioner of Income Tax, Anand Circle, for the assessment year 2012-13. The penalty was levied for allegedly furnishing inaccurate particulars of income by claiming deductions for interest payments that were disallowed in earlier years but were later allowed. The Tribunal examined the circumstances under which the assessee claimed these deductions, particularly focusing on a one-time settlement of outstanding interest. The Tribunal concluded that the assessee's actions did not amount to furnishing inaccurate particulars of income, leading to the allowance of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705886 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2012-2013
• Laws Referred To: Section 271(1)(c) of the Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALPESH PARMAR
• Assessee Lawyers: ARTI N SHAH
• Keywords: Bonafide belief; Rectification of order
• Section: 143(3); 154; 271(1)(c); 43B

Judgement Text

"THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH Before Ms. Suchitra Kamble, Judicial Member And Shri Narendra Prasad Sinha, Accountant Member Charotar Gas Sahkari Mandali Ltd. Gas House, II-GIDC Anand, Sojitra Road, V U Nagar, Gujarat-388121 PAN: AAATC1831F (Appellant) Vs The Dy. CIT, Anand Circle, Anand (Respondent) Assessee by: Ms. Arti N Shah, A.R. Revenue by: Shri Alpesh Parmar, CIT-D.R. Date of hearing : 01-07-2025 Date of pronouncement : 04-07-2025 आदेश/ORDER Per Suchitra Kamble, Judicial Member: This is an appeal filed against the order dated 16-12-2024 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2012-13. 2. The grounds of appeal are as under:- “1. The Hon'ble CIT(A) erred in law and facts of the case by upholding the penalty levied under Section 271(1)(c) of the Act in case of the appellant for AY 2012-13. 2. The appellant reserves the right to add/alter or amend any of the ground of appeal.” 3. The assessee filed return of income on 11-09-2012 declaring total income of Rs. 16,72,93,060/-. The case was selected for scrutiny ITA No. 247/Ahd/2025 Assessment Year 2012-13 I.T.A No. 247/Ahd/2025 Charotar Gas Sahkari Mandali Ltd., A.Y. 2012-13 2 and the assessment was finalized u/s. 143(3) on 30-03-2015 determining the total income at Rs. 19,10,57,692/- after making following additions and disallowances:- Particulars Amount LIC Policy u/s. 37 2,94,652/- Gratuity Provision u/s. 43B 6,44,966/- Leave Encashment 4,50,668/- Interest payment on borrowed fund u/s. 43B(d) (total of Rs. 1,11,96,029/- + Rs. 1,11,78,317/-) 2,23,74,346/- Total 2,37,64,632/- The assessee had claimed deduction of Rs. 1,11,96,029/- and Rs. 1,11,78,317/- on account of interest disallowed u/s. 43B payable to Charotar Nagrik Sahkari Bank Ltd for A.Y. 2007-08 and 2009-10 respectively. During the year, one time settlement of outstanding interest of Rs. 7,57,43,1889/- as on 31-03-2011 was made and the assessee had paid interest of Rs. 87,37,340/- out of outstanding provision of interest. Due to this settlement, the disallowance of interest made u/s. 43B in A.Y. 2007-08 and 2009-10 was reversed in this year and claimed as deduction. The Assessing Officer had however disallowed the claim and also initiated penalty proceedings u/s. 271(1)(c) in this respect for furnishing inaccurate particulars of income. The interest of Rs. 1,11,78,317/- for A.Y. 2009-10 was later allowed by an order dated 10-02-2016. The assessee filed appeal against additions/disallowance, which was dismissed on 30-11-2016. As the Assessing Officer passed rectification order thereby allowing the relief to the assessee in respect of gratuity expenditure, leave encashment expenditure and CNSB interest expenditure. The assessee has withdrawn the appeal before the CIT(A) and hence it was dismissed. The Assessing Officer issued fresh show cause notice in respect of penalty u/s. 271(1)(c) on 08-02-2018. The assessee filed his submissions on 28-02-2018. The Assessing Officer passed penalty I.T.A No. 247/Ahd/2025 Charotar Gas Sahkari Mandali Ltd., A.Y. 2012-13 3 order dated 30-08-2018 thereby levying the penalty of Rs. 34,59,573/- which is equal to the 100% of tax in respect of income of Rs. 1,11,96,029/- being interest for A.Y. 2006-07, claimed as deduction in this year. 4. Being aggrieved by the penalty order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The ld. A.R. submitted that the assessee filed return of income on 11-09-2012 thereby claiming interest of Rs. 1,11,96,029/- that of assessment year 2007-08 and also claimed interest of Rs. 1,11,78,317/- of assessment year 2009-10. The assessee, in respect of income of Rs. 6,70,05,849/- being interest which was not paid earlier at one time settlement had credited it in the profit and loss account of the assessment year 2012-13. As the Revenue has denied the same in the assessment year 2007-08 and 2009-10, the present assessment order for assessment year 2012-13 was passed on 30-03- 2018 thereby disallowing the interest of Rs. 1,11,96,029/- but the same was deleted by the Tribunal vide order dated 10-07-2015 in respect of assessment year 2007-08. The rectification application though filed prior to the appeal filed before the Tribunal, the order u/s. 154 was passed on 10-02-2016 thereby deleting all disallowances and allowing the interest of assessment year 2007-08 to the extent of Rs. 1,11,96,029/- and interest of Rs. 1,11,78,317/- of assessment year 2009-10. The ld. A.R. submitted that this cannot be termed as furnishing inaccurate particulars of income for assessment year 2012- 13 as the assessee has entered into one time settlement in the assessment year 2012-13 only in respect of waiver of interest. Thus, the penalty order is not justified. 6. The ld. D.R. submitted that the assessee has not paid the difference in respect of interest which was not included in the settlement and therefore penalty was validly levied by the Assessing I.T.A No. 247/Ahd/2025 Charotar Gas Sahkari Mandali Ltd., A.Y. 2012-13 4 Officer. The ld. D.R. relied upon the penalty order and the order of the CIT(A). 7. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that in the year 2007-08, the interest of Rs. 1,11,96,029/- disallowed u/s. 43B of the Act has been allowed vide order of the Tribunal dated 10-07-2015 and the subsequent order u/s. 154 dated 10-02-2016, the quantum appeal for the assessment year 2012-13 has been withdrawn before the CIT(A) by the assessee since the assessee has got the relief. Once the matter has been settled and the assessee due to the circumstantial relief given by the Tribunal and the Revenue has withdrawn the appeal before the CIT(A). The treatment given in the profit and loss account for the present assessment year i.e. 2012-13 which was filed along with the returns filed on 11-09-2012 by the assessee cannot be treated as furnishing inaccurate particulars of income or concealment of income as at that point of time, the assessee was not allowed deduction of the interest of Rs. 1,11,96,029/- in respect of assessment year 2007-08. Since the assessee has entered into one time settlement in the assessment year 2012-13, and had credited income of Rs. 6,70,05,849/- being interest not paid as one time settlement, in the Profit and Loss Account. Therefore, the assessee had claimed deduction for interest of Rs. 1,11,96,029/- disallowed u/s. 43B in assessment year 2007-08, in the current year, under bonafide belief, on treating the unpaid interest as income. It is relevant to consider that disallowance made in A.Y. 2007-08 was not allowed as relief in appeal, at the time when the return for A.Y. 2012- 13 was filed. Therefore, the claim of the assessee as made in the return for assessment year 2012-13 cannot be held as outrightly inaccurate. In view of these facts, the Assessing Officer was not correct in imposing penalty u/s. 271(1)(c) of the Act, in respect of this claim. Thus, invocation of Section 271(1)(c) is not justified and hence the appeal of the assessee is allowed. I.T.A No. 247/Ahd/2025 Charotar Gas Sahkari Mandali Ltd., A.Y. 2012-13 5 8. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 04-07-2025 Sd/- Sd/- (Narendra Prasad Sinha) (Suchitra Kamble) Accountant Member Judicial Member Ahmedabad : Dated 04/07/2025 आदेश क\u0006 \u0007\bत ल प अ\u000fे षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील\u0012य अ\u0013धकरण, अहमदाबाद "