HARIPRIYA SYNTEX PRIVATE LIMITED ,MUMBAI V. DCIT, CIRCLE 4(2)(2), MUMBAI

ITA 4521/MUM/2024

AI Insights

Haripriya Syntex Private Limited appealed against the order of the Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre, which confirmed a penalty of Rs. 3,44,140 levied by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961. The penalty was related to an addition made to the assessee's income, where a part of the interest expenditure was treated as capital expenditure. The Tribunal, referencing the Supreme Court's decision in CIT Vs Reliance Petroproducts Limited, held that the non-acceptance of a claim, even if it leads to a disallowance, does not constitute furnishing of inaccurate particulars of income.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 24127 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 17-10-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 04-09-2024
• Other Referred Cases: CIT Vs Reliance Petroproducts Limited [322 ITR 158](SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G. SANTOSH KUMAR
• Assessee Lawyers: V.H. JARIWALA
• Keywords: Set aside; Capital expenditure
• Section: 143(3); 271(1)(c)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “E” BENCH : MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER ITA No. 4521/Mum/2024 Assessment Year : 2012-13 Haripriya Syntex Private Limited, Jaihind Building No. 1A, 1st Floor, Room No. 2, Bhuleshwar, Mumbai PAN : AABCH1530N vs. DCIT, Circle–4(2)(2), 6th Floor, Aayakar Bhavan, M.K. Road, Mumbai (Appellant) (Respondent) Assessee by : Shri V.H. Jariwala Revenue by : Shri G. Santosh Kumar, Sr. DR Date of Hearing : 17/10/2024 Date of Pronouncement : 21/10/2024 PER B.R. BASKARAN, A.M : The assessee has filed this appeal challenging the order dt.10-07-2024 passed by the Ld. Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [„Ld.CIT(A)‟] and it relates to AY. 2012-13. The assessee is aggrieved by the decision of the Ld.CIT(A) in confirming the penalty Rs.3,44,140/- levied by the Assessing Officer (AO) u/s. 271(1)(c) of the Income Tax Act, 1961 („the Act‟). 2. The Ld.AR submitted that the assessment order was completed by the AO u/s. 143(3) of the Act making three types of additions. In the appellate proceedings, the Ld.CIT(A) deleted two types of additions and 2 ITA No. 4521/Mum/2024 granted partial relief in respect of one addition, viz., the disallowance of interest expenditure u/s. 36(1)(iii) of the Act. The Ld.AR submitted that the AO treated a part of interest expenditure as „capital expenditure‟ and accordingly, made adhoc disallowance of Rs.12,47,849/- out of interest expenditure claimed by the assessee. The Ld.CIT(A) reduced the disallowance to Rs.10,60,672/- and accordingly the AO levied penalty of Rs. 3,44,135/- on the above said amount sustained by Ld CIT(A) treating it as a case of furnishing of inaccurate particulars of income. 3. The Ld.AR submitted that the assessee has claimed interest expenditure treating it as revenue, but the AO has treated the same as capital in nature. Even the disallowance has been made on estimated basis. By placing reliance on the decision rendered by the Hon‟ble Supreme Court in the case of CIT Vs Reliance Petroproducts Limited [322 ITR 158](SC), the Ld.AR submitted that non-acceptance of claim made by the assessee will not result in furnishing inaccurate particulars of income. 4. The Ld.DR, on the contrary, supported the order passed by the Ld.CIT(A). 5. Having regard to the rival contentions, we are of the view that there is merit in the submissions made by the Ld.AR. The AO has made disallowance out of interest expenditure by capitalising a part of interst expenditure. Thus, the assessee has made claim which is not acceptable to the AO and accordingly impugned disallowance came to be made. The Hon‟ble Supreme Court in the case of Reliance Petroproducts Limited (supra) has held that a mere making of a claim, which is not sustainable under law would not amount to furnishing of inaccurate particulars of income. Accordingly we are of the view that the 3 ITA No. 4521/Mum/2024 Ld.CIT(A) was not justified in confirming the penalty levied by the AO u/s. 271(1)(c) of the Act. Accordingly, we set aside the order passed by the Ld.CIT(A) and direct the AO to delete the penalty levied u/s. 271(1)(c) of the Act for the year under consideration. 6. The assessee has raised certain legal issues. Since we have deleted penalty on merits, those legal issues are rendered academic in nature and hence we decline to address the same. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 21-10-2024 Sd/- Sd/- [NARENDER KUMAR CHOUDHRY] [B.R. BASKARAN] JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 21-10-2024 TNMM Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, “E” Bench, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai "