Kanvel Finance Pvt. Ltd., Ahmedabad V. The ITO, Ward-2(1)(2), Ahmedabad

ITA 1112/AHD/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7128 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 01-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R MAKWANA
• Keywords: Rule 8D
• Section: 271(1)(c); 14A

Judgement Text

ITA No.1112/Ahd/2018 A.Y. 2012-13 Page 1 of 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER (Conducted through Virtual Court) ITA No.1112/Ahd/2018 Assessment Year: 2012-13 Kanvel Finance Pvt. Ltd., vs. Income Tax Officer, 12-A and 14, Abhishree Ward - 2(1)(2), Ahmedabad. Corporate Park, Ambli Bopal Road, Ambli, Ahmedabad - 380 052. [PAN – AABCK 9223 F] (Appellant) (Respondent) Appellant by : Shri Sakar Sharma, A.R. Respondent by : Shri R R Makwana, Sr. D.R. Date of hearing : 30.11.2021 Date of pronouncement : 02.12.2021 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER : This appeal is filed by the assessee against the order dated 06.04.2018 passed by the CIT(A)-2, Ahmedabad for the Assessment Year 2012-13. 2. The ground of appeal raised by the assessee is as under : “The Ld. CIT(A) erred in law and on facts in confirming penalty of Rs.6,82,800/- u/s 271(1)(c) in respect of addition made u/s 14A. 3. The assessee is a Private Limited Company which is a RBI registered NBFC formed with the object of carrying out NBFC activities. The Assessing Officer observed that the assessee is a company engaged in the business of trading in shares, securities, futures & options. The assessment was completed on 13.02.2015 ITA No.1112/Ahd/2018 A.Y. 2012-13 Page 2 of 3 determining the total income of the assessee at Rs.21,227/- by making a disallowance of Rs.36,79,799/- under Section 14A read with Rule 8D and addition of Rs.9,629/- of interest. The Assessing Officer initiated the penalty proceedings for concealment of income and furnishing of inaccurate particulars of income. The Assessing Officer issued show cause notices under Section 271(1)(c) of the Act on 13.02.2015 and 14.03.2017. The assessee filed reply on 21.03.2017. The Assessing Officer levied penalty of Rs.6,82,800/- in respect of disallowance under Section 14A of the Act and for concealment of interest. 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. AR submitted that the quantum penalty was partly confirmed by the CIT(A) but the issue upon which the penalty was levied is a debatable issue and thus penalty cannot be sustained. 6. The Ld. DR relied upon the Assessment Order, penalty order and order of the CIT(A). 7. We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that while initiating the penalty under Section 271(1)(c) of the Act, the Assessing Officer has not given satisfaction upon which the penalty has to be levied. The Assessing Officer has only observed that there was furnishing of inaccurate particulars of income and at the same time mentioned that there is concealment of income. From the perusal of the records it can be seen that the addition made in the quantum appeal before the CIT(A), the CIT(A) has given part relief. The contentions of the assessee that it is Non-banking Financial Corporation has not been taken into consideration by the Assessing Officer as well as by the CIT(A). The treatment given by the assessee in its Profit & Loss Account as well as Balance Sheet has reflected the amount properly and thus there was no furnishing of inaccurate particulars of income or concealment of income on the part of the assessee. The Ld. AR pointed out the decision of Hon’ble Gujarat High Court in the case of Kanvel Finance Pvt. Ltd. thereby stating that there was amalgamation in this particular year and, therefore, the merger company and its liabilities has been implied ITA No.1112/Ahd/2018 A.Y. 2012-13 Page 3 of 3 in assessee’s Company. Thus, the limb of furnishing of inaccurate particulars of income and concealment of income does not apply in assessee’s case. Thus, penalty under Section 271(1)(c) levied by the Assessing Officer is not proper and justifiable. Hence, appeal of the assessee is allowed. 8. In the result, appeal of the assessee is allowed. Pronounced in the open Court on this 2 nd day of December, 2021. Sd/- Sd/- (WASEEM AHMED) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 2 nd day of December, 2021 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad