Appeal details
Counselvise Citation
[2013] 120 COUNSELVISE.COM (IT) 0449 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
10 month(s) 1 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
22-03-2013
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
B
Next Hearing Date
05-02-2013
Assessment Year
2005-2006
Appeal Filed On
21-05-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NOS. 1326/AHD/2010 ASSESSMENT YEARS :2003-04 & ITA NOS. 1105/AHD/2012 ASSESSMENT YEARS :2005-06 THE INCOME-TAX OFFICER, WARD 4(1), AHMADABAD, NAVJIVAN TRUST BIDG., OFF. ASHRAM ROAD, AHMEDABAD V/S . M/S GROWTH COMPUSOFT EXPORTS LTD. B-1, SHRI KRISHNA CENTER, MITHAKHALI CROSS ROAD, NAVRANGPURA, AHMEDABAD PAN NO. A A A CG 7619L (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI Y.P. VERMA, SR. D. R. /BY RESPONDENT NONE /DATE OF HEARING 05.02.2013 /DATE OF PRONOUNCEMENT 22.03.2013 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THESE ARE TWO APPEALS FILED BY THE REVENUE IN ITA N OS. 1326/AHD/10 & 1105/AHD/12, WHICH HAVE EMANATED FROM THE ORDERS OF CIT(A)-VIII, AHMEDABAD, DATED 02.02.2010 FOR A.Y. 2003-04 & 21.0 2.2012 FOR A.Y. 2005- 06 RESPECTIVELY. THESE TWO APPEALS WERE HEARD TOGE THER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAK E OF CONVENIENCE. THE SOLE GROUND OF APPEAL IS AGAINST DELETING THE PENAL TY OF RS.14,71,522 FOR A.Y. 03-04 LEVIED U/S.271(1)(C) AND RS.5,48,533/- U/S.27 1(1)(C) LEVIED ON DISALLOWANCE U/S. 43B OF RS. 14,99,750/- BEING INTE REST PAYABLE TO GSFC FOR A.Y. 05-06. ITA NOS. 1326 /AHD/10 A.Y. 03-04 & 1105 AHD OF 2012 A.Y. 05-06 PAGE 2 2. THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.11.2003 FOR A.Y. 03-04 DECLARING INCOME AT LO SS RS.1,55,26,636/-. THE ASSESSMENT WAS COMPLETED BY PASSING ORDER U/S. 143( 3) OF THE ACT ASSESSING THE INCOME AT RS.57,45,535/-. WHILE FRAMING THE AS SESSMENT FOLLOWING WERE ADDED TO THE TOTAL INCOME OF THE ASSESSEE COMPANY, AS PER THE DETAILED DISCUSSION IN THE ASSESSMENT ORDER: (1) DISALLOWANCE OF PROFESSIONAL FEES RS. 35000 (2) DISALLOWANCE OF STAMP DUTY FOR RENEWAL OF LEASE RS. 5000 (3) DONATION RS. 11000 (4) DISALLOWANCE OF VALUATION FEES RS. 2500 (5) DISALLOWANCE OF BANK GUARANTEE RENEWAL FEES RS. 60100 (6) DISALLOWANCE O UT OF ANNUAL FEES PAID TO CLUB RS. 10500 (7) INTEREST U/S 37 RS. 29287663 (8) AMOUNT OF INTEREST CONVERTED TO LOAN RS. 3218223 (9) DISALLOWANCE ON ACCOUNT OF SALARY AND WAGES RS. 974702 RS. 33604688 THE A.O. OBSERVED THAT THE ASSESSEE HAD FURNISHED I NACCURATE PARTICULARS OF ITS INCOME TO THAT EXTENT AND THEREBY UNDERSTATED I TS INCOME BY FURNISHING INACCURATE PARTICULARS OF INCOME THEREBY CONCEALING THE PARTICULARS OF INCOME BY MEANS OF CLAIMING INCORRECT DEDUCTION AS MENTION ED ABOVE. ACCORDINGLY, PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT WERE I NITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND NOTICE U/S. 27 4 READ WITH SECTION 271(1)(C) OF THE ACT WAS ISSUED. THE CIT (APPEALS) VIII, AHMADABAD, VIDE HIS ORDER NO. CIT(A) VIII/ITO. 4(1)/238/ 05-06 DATED 27 .04.2007 HAD PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND THEREBY CONF IRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER, AS UNDER: (1) DONATION RS. 11000 (2) INTEREST U/S 37 RS. 775000 (3) AMOUNT OF INTEREST CONVERTED TO LOAN RS. 3218223 RS. 40,04,223 ITA NOS. 1326 /AHD/10 A.Y. 03-04 & 1105 AHD OF 2012 A.Y. 05-06 PAGE 3 THE LD. A.O. HAD GIVEN REASONABLE OPPORTUNITY OF BE ING HEARD BEFORE IMPOSING PENALTY U/S.271(1)(C) OF THE IT ACT, WHICH WAS NOT REPLIED BY THE APPELLANT BEFORE THE A.O. THEREFORE, HE IMPOSED THE PENALTY ON DONATION OF RS. 11,000/-, INTEREST U/S.7,75,000/- AND AMOUNT OF INT EREST CONVERTED TO LOAN RS.32,18,223/- IN TOTAL RS.40,04,223/- BECAUSE THE APPELLANT HAD UNDERSTATED ITS INCOME AND BY THAT MEANS CONCEALING THE PARTICU LARS OF INCOME TO THAT EXTENT. THE MINIMUM PENALTY OF RS.14,71,522/- WAS IMPOSED I.E. 100% OF TAX SOUGHT TO BE EVADED IN RESPECT OF CONCEALED INCOME FOR A.Y. 03-04. 2.1 IN A.Y. 05-06, THE APPELLANT HAD NOT PAID INTER EST OF RS.14,99,750/- U/S.43B TO GSFC. THE A.O. HELD THAT THE APPELLANT FURNISHED INACCURATE PARTICULARS OF INCOME. THEREFORE, HE INITIATED PEN ALTY U/S.271(1)(C) ON IT. AFTER CONSIDERING THE ASSESSEES REPLY, HE FINALLY IMPOSE D 100% PENALTY OF RS.5,48,533/- ON DISALLOWANCE U/S.43B OF RS.14,99,7 50/-. 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE CIT(A) WHO HAD DELETED THE PENALTY BY OBSERVING THAT THE ORIGINAL DISALLOWANCE MADE U/S.40A(2)(B) OF THE IT ACT RS.29,87,663/- BY CALCULATING THE DISALLOWANCE @ 14% ON THE AGGREGATE DEBIT BALANCE OF THE PARTIES U/S.36(1)(II), WHICH WAS REDUCED TO RS.7.75 LACS. THE DISALLOWANCE OF RS.32,18,223/- WAS MADE U/S. 43B OF THE IT ACT AS G SFC HAD CONVERTED INTEREST OUTSTANDING AS ON 31.03.2003 AS A LOAN. T HE APPELLANT ARGUED THAT CONVERSION OF INTEREST PAYMENT IN LOAN WAS A PAYMEN T U/S.43B OF THE IT ACT. THE DONATION OF RS.11,000/- WAS NOT ALLOWABLE AS RE TURN INCOME WAS LOSS. THE LD. CIT(A) FURTHER ANALYZED THE EXPLANATION 1 T O SECTION 271(1)(C) AND ITA NOS. 1326 /AHD/10 A.Y. 03-04 & 1105 AHD OF 2012 A.Y. 05-06 PAGE 4 ALSO RELYING IN CASE OF KANBAY SOFTWARE INDIA PVT. LTD. VS. DCIT IN ITA NO.300/PN/07, A.Y. 2002-03, CIT VS.HARSHVARDHAN CHE MICALS AND MINERALS LTD. 259 ITR 212, (RAJASTHAN), ITAT, AHMADABAD, DEC ISION IN CASE OF GUJARAT CREDIT CORPORATION LTD. VS. ACIT 113 ITD 133, WHEREIN IT WAS HELD BY THE COURT THAT WHEN THE ADDITION IS ARGUABLE, CONTROVER SIAL OR DEBATABLE DEDUCTION CLAIMED, THE CLAIM COULD NOT BE SAID TO BE FALSE, O THERWISE IT WOULD BECOME IMPOSSIBLE FOR ANY ASSESSEE TO RAISE ANY CLAIMS OR DEDUCTIONS WHICH MIGHT BE DEBATABLE. THE ITAT, AHMADABAD BENCH IN CASE OF GUJ ARAT CREDIT CORPORATION LTD. (SUPRA) HELD THAT MERE REJECTION O F THE ASSESSEES CLAIM WOULD NOT BE SUBSTANTIAL TO HOLD THE ASSESSEE TO BE GUILTY OF CONCEALMENT. THUS, HE ALLOWED THE APPEAL PARTLY FOR A.Y. 03-04. 3.1 IN A.Y. 05-06, THE CIT(A) ALSO DELETED THE PENALTY AND GAVE SIMILAR FINDINGS TO A.Y. 03-04. LD. CIT(A), IN THIS YEAR, RELIED UPON IN CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD., HINDUSTAN STEELS LTD. VS. STATE OF ORISSA, 83 ITR 26 (SC). 4. NOW THE REVENUE IS BEFORE US. IN BOTH ASSESSMEN T YEARS, THE LD. SR. D.R. RELIED UPON THE ORDER OF THE A.O., WHEREAS FRO M THE SIDE OF ASSESSEE, NO ONE APPEARED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS FROM THE REV ENUE AND PERUSED THE MATERIAL ON RECORD. THERE WERE THREE ADDITIONS, NA MELY, DONATION, INTEREST AND INTEREST NOT PAID TO THE GSFC U/S. 43B OF THE I T ACT. THE ASSESSEE HAS GIVEN THE INFORMATION ABOUT ALL THE DEDUCTIONS BEFO RE THE A.O. IN RETURN. NOTHING HAS BEEN CONCEALED. AS PER A.O., THESE ARE THE DISALLOWANCES BUT ARE DEBATABLE. THE EXPLANATION FILED BY THE APPELL ANT WAS NOT FALSE AND THE ITA NOS. 1326 /AHD/10 A.Y. 03-04 & 1105 AHD OF 2012 A.Y. 05-06 PAGE 5 EXPLANATION 1 OF SECTION 271(1)(C) IS NOT SQUARELY APPLICABLE ON THE ASSESSEE. THE REVENUE ALSO HAD NOT PROVED THE CONCEALMENT OF INCOME OR INACCURATE PARTICULARS OF INCOME IN THIS CASE. THEREFORE, WE CONFIRM THE ORDER OF THE CIT(A). 6. IN THE COMBINED RESULT, REVENUES APPEALS IN BOT H YEARS ARE DISMISSED. THESE ORDERS PRONOUNCED IN OPEN COURT ON 22.03.2013 SD/- SD/- ( MUKUL KR. SHRAWAT ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;
