Adarsh Plant Protect Ltd., Anand V. The ACIT.,Anand Circle, Anand

ITA 1168/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1076 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2002-2003
• Appeal Filed On: 26-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD ,.., BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ./ I.T.A. NO.1168/AHD/2013 ( / ASSESSMENT YEAR : 2002-03) ADARSH PLANT PROTECT LTD. 604, GIDC ESTATE VITHAL UDYOGNAGAR ANAND 388 121 / VS. THE ACIT ANAND CIRCLE ANAND % ./ ./ PAN/GIR NO. : AABCA 6650 Q ( %( / APPELLANT ) .. ( )*%( / RESPONDENT ) %(+ / APPELLANT BY : -NONE- )*%(,+ / RESPONDENT BY : SHRI SANJAY KUMAR, SR.DR -, / DATE OF HEARING 08/07/2016 ./0, / DATE OF PRONOUNCEMENT 18/07/2016 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-IV, BARODA DATE D 25/02/2013 FOR ASSESSMENT YEAR (AY) 2002-03, WHEREBY LEVY OF PENAL TY LEVIED U/S.271(1)(C) OF THE ACT BY A.O. WAS UPHELD BY THE LD. CIT(A). 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- ITA NO.1168/AHD /2013 ADARSH PLANT PROTECT LTD. VS. ACIT ASST.YEAR 2002-03 - 2 - 2.1. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN BUSINESS OF MANUFACTURING AND SALE OF AGRICULTURAL EQUIPMENTS. ASSESSEE FILED ITS RETURN OF INCOME FOR AY 2002-03 ON 29/10/2002 SHOWI NG TOTAL LOSS OF RS.70,18,213/-. THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') VIDE O RDER DATED 18/03/2005 AND THE TOTAL LOSS WAS DETERMINED AT RS.53,48,763/- INTER-ALIA BY DISALLOWING THE INTEREST OF RS.10,08,306/- BY HOLDI NG THAT THERE WAS DIVERSION OF INTEREST-FREE ADVANCE FOR OTHER THAN B USINESS PURPOSE. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER (AO ), ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A) WHO VIDE ORDER DATE D 17/11/2009 (IN APPEAL NO.CAB/IV-A-100/05-06) GRANTED PARTIAL RELIE F TO THE ASSESSEE BY CONFIRMING THE ADDITION ON ACCOUNT OF DISALLOWAN CE OF INTEREST TO THE EXTENT OF RS.4,73,510/- AND THEREBY GRANTING RELIE F TO THE EXTENT OF RS.5,34,396/-. ON THE DISALLOWANCE OF INTEREST OF RS.4,73,510/- THAT WAS UPHELD BY LD.CIT(A), AO VIDE ORDER DATED 30/03/2011 HELD THAT ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND THEREBY CONCEALED THE INCOME AND THEREFORE ASSESSEE WAS LEVIABLE FOR PENA LTY U/S.271(1)(C) OF THE ACT AND ACCORDINGLY LEVIED PENALTY OF RS.1,69,1 00/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO UPHELD THE ORDER OF AO BY HOLDING AS UNDER:- 10.2 AS CAN BE SEEN FROM THE ABOVE, THE LD. CIT( A) (I.E. MY PREDECESSOR) HAS HELD THAT THE ASSESSING OFFICER MADE ANALYSIS OF LOANS AND ADVANCES AS PER LIST-A AND LIST-C AFTER T AKING INTO ACCOUNT ITA NO.1168/AHD /2013 ADARSH PLANT PROTECT LTD. VS. ACIT ASST.YEAR 2002-03 - 3 - EXPLANATION FURNISHED BY APPELLANT IN RESPECT OF VA RIOUS ENTRIES. AS PER THE LD. CIT(A) THE DETAILS FILED BY THE APPELLANT B EFORE ASSESSING OFFICER WERE AS PER REMARKS COLUMN ON PAGE 5 & 6 OF THE ASS ESSMENT ORDER. AS PER THE LD. CIT(A) THE APPELLANT COULD NOT BE ABLE TO REBUT AO'S CONCLUSION THAT ADVANCES IN LIST-A WERE NEITHER TOW ARDS PURCHASES NOR HAD ANY OTHER BUSINESS PURPOSE. IN RESPECT OF LIST-C ALSO, APPELLANT COULD NOT SUBSTANTIATE ITS CLAIM T HAT THE ADVANCES WERE FOR EXPENSES OR FOR MACHINERY. APPELLANT'S CONTEN TION THAT IT HAD NON- INTEREST BEARING CAPITAL OR IN OTHER WORDS, INTERE ST FREE FUNDS AT ITS DISPOSAL HAS NOT BEEN SUPPORTED WITH ANY FACTS AN D FIGURES. THESE OBSERVATIONS OF LD. CIT(A) CLEARLY SHOW THAT THE AP PELLANT HAD NOT FILED ACCURATE PARTICULARS OF INCOME BEFORE THE AO IN RES PECT OF ITS CLAIM OF INTEREST EXPENDITURE. THOUGH THE APPELLANT HAD TAK EN PLEA BEFORE THE AO THAT THE ADVANCES IN LIST-A WERE TOWARDS PURCHAS ES AND FOR OTHER BUSINESS PURPOSES, BUT THIS PLEA COULD NOT BE JUSTI FIED BY THE APPELLANT AS IS CLEARLY OBSERVED BY THE LD. CIT(A). THE LD. CIT(A) HAS HELD THAT THE APPELLANT COULD NOT REBUT AO'S CONCLUSION THAT ADVANCES IN LIST-A WERE NEITHER TOWARDS PURCHASES NOR HAD ANY OTHER BU SINESS PURPOSE. FURTHER IN RESPECT OF LIST-C ALSO, APPELLANT COULD NOT SUBSTANTIATE ITS CLAIM THAT THE ADVANCES WERE FOR EXPENSES OR FO R MACHINERY. AGAIN APPELLANT'S CONTENTION THAT IT HAD NON-INTEREST BEA RING CAPITAL OR IN OTHER WORDS, INTEREST FREE FUNDS AT ITS DISPOSAL WE RE ALSO NOT SUPPORTED WITH ANY FACTS AND FIGURES AND THESE FACTS CLEARLY ESTABLISH THAT THE APPELLANT HAD FAILED TO FILE ACCURATE PARTICULARS O F INCOME. THE LD. CIT(A) HAS FURTHER OBSERVED THAT ON THE OTHER HAND DUE TO APPELLANT FACING FINANCIAL DIFFICULTIES AND AVAILING WAIVER OF INTEREST ON BANK LOANS UNDER ONE TIME SETTLEMENT (OTS) SCHEME, ITS N ET WORTH MUST HAVE ERODED. THE LD. CIT(A) HAS OBSERVED THAT IN ANY .CA SE, SINCE THE APPELLANT HAD NOT FURNISHED ANY DETAILS, FACTS AND FIGURES ON THIS ASPECT, SUCH A CLAIM COULD NOT BE ENTERTAINED. THE LD. CI T(A) HAS FINALLY HELD THAT CONSIDERING ALL ASPECTS, ASSESSING OFFICER'S C ONCLUSION THAT INTEREST BEARING FUNDS WERE DIVERTED FOR NON BUSINESS PURPOS E AND THEREFORE, INTEREST ON NON-INTEREST BEARING LOANS/ADVANCES ET C. TO RELATIVES AND OTHERS REQUIRED TO BE DISALLOWED, WAS ON SOUND F OOTING. FROM THESE OBSERVATIONS OF LD. CIT(A) IT CAN CLEARLY BE HELD T HAT THE APPELLANT HAD FILED INACCURATE PARTICULARS OF INCOME IN RESPECT OF ITS CLAIM OF INTEREST EXPENDITURE AS IT HAD NOT FURNISHED ANY DETAILS, F ACTS AND FIGURES IN ITA NO.1168/AHD /2013 ADARSH PLANT PROTECT LTD. VS. ACIT ASST.YEAR 2002-03 - 4 - RESPECT OF SUCH CLAIM. THE CLAIM OF INTEREST EXPEND ITURE OF THE APPELLANT WAS NOT LEGITIMATE AND THE VARIOUS CASE LAWS AS CIT ED BY THE APPELLANT'S AR IN ABOVE SUBMISSION ARE NOT APPLICABLE TO ITS CA SE. CONSIDERING ALL THESE FACTS, I HOLD THAT THE AO HAS CORRECTLY LEVIE D THE PENALTY OF RS.1,69,100/- U/S 271(1)(C) OF THE IT ACT AND THERE FORE THE SAME IS CONFIRMED. THUS, THE GROUNDS OF APPEAL OF THE AP PELLANT ARE REPRODUCED IN EARLIER PARAGRAPHS ARE DISMISSED. 2.2. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED FOLLOWING GROUND:- 1. THE LD. CIT(A)-IV, BARODA HAS ERRED IN LAW AND IN F ACTS IN CONFIRMING THE ACTION OF LD. AO IN LEVYING PENALTY OF RS.1,69,100 U/S 271(1)(C) OF THE ACT ON THE ADDITION OF RS.4,73,510 MADE ON ACCOUNT OF ALLEGED DIVERSION OF INTEREST BEARING FUNDS FOR NON BUSINESS PURPOSES ON THE GROUND THAT THE APPELLANT HAD FILED INACCURATE PARTICULARS OF INCOME. THE LD. CIT(A) HAS FAILED TO TAKE COGNIZANCE OF THE IMPORTANT FACT THAT THE APPELLANT HAD SUFFIC IENT INTEREST FREE FUNDS AVAILABLE FOR GIVING THE IMPUGNED INTEREST FR EE ADVANCES. THE PENALTY BEING BAD IN LAW AND CONTRARY TO FACTS IS P RAYED TO BE DELETED. 3. ON THE DATE OF HEARING, NONE APPEARED ON BEHA LF OF APPELLANT- ASSESSEE NOR ANY ADJOURNMENT APPLICATION HAS BEEN F ILED. SINCE THERE IS NO APPEARANCE ON BEHALF OF ASSESSEE, WE PROCEED TO DECIDE THE APPEAL EX- PARTE , QUA THE ASSESSEE, ON THE BASIS OF DETAILS AVAILAB LE ON RECORD. 3.1. BEFORE US, LD.SR.DR SUPPORTED THE ORDER OF LOW ER AUTHORITIES. 4. WE HAVE HEARD THE LD.SR.DR, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. IN THE PRESENT CASE, AO HAD DISALLOWED INTEREST OF RS.10,0 8,306/- AS HE WAS OF ITA NO.1168/AHD /2013 ADARSH PLANT PROTECT LTD. VS. ACIT ASST.YEAR 2002-03 - 5 - THE VIEW THAT ASSESSEE HAD DIVERTED INTEREST- BEARI NG FUNDS FOR NON- BUSINESS PURPOSES. WHEN THE MATTER WAS CARRIED BEF ORE THE LD.CIT(A), THE DISALLOWANCE WAS RESTRICTED TO RS.4,73,510/- AN D ON SUCH DISALLOWANCE, PENALTY U/S.271(1)(C) OF THE ACT HAS BEEN LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND THE REBY CONCEALING THE INCOME. A CASE FOR LEVY OF PENALTY FOR CONCEALMENT OF INCOME HAS TO BE EVALUATED IN TERMS OF PROVISIONS OF EXPLANATION 1 T O SECTION 271(1)(C) OF THE ACT, AS PER WHICH IF IN RELATION TO ANY ADDITIO N IN THE ASSESSMENT, THE ASSESSEE OFFERS NO EXPLANATION OR OFFERS EXPLANATIO N WHICH IS FOUND TO BE FALSE OR IS NOT ABLE TO SUBSTITUTE THE EXPLANATION AND IS ALSO NOT ABLE TO PROVE THAT THE EXPLANATION IS BONAFIDE, THE ADDITIO N MADE WOULD AMOUNT TO CONCEALMENT OF PARTICULARS, OF INCOME. IT IS WE LL SETTLED THAT THE PARAMETERS OF JUDGING THE JUSTIFICATION FOR ADDITIO N MADE IN THE ASSESSMENT CASE OF THE ASSESSEE IS DIFFERENT FROM T HE PENALTY IMPOSED ON ACCOUNT OF CONCEALMENT OF INCOME OR FILING INACCURA TE PARTICULARS OF INCOME AND THAT CERTAIN DISALLOWANCE/ADDITION COULD LEGALLY BE MADE IN THE ASSESSMENT PROCEEDINGS ON THE PREPONDERANCE OF PROBABILITIES BUT NO PENALTY COULD BE IMPOSED U/S. 271(1)(C) OF THE ACT ON THE PREPONDERANCE OF PROBABILITIES AND REVENUE HAS TO PROVE THAT THE CLAIM OF EXPENSES BY THE ASSESSEE WAS NOT GENUINE OR WAS INFLATED TO RED UCE ITS TAX LIABILITY. FURTHER, MERELY BECAUSE ADDITIONS HAVE CONFIRMED IN APPEAL OR NO APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ADDITIONS MADE, IT CANNOT BE THE SOLE GROUND FOR COMING TO THE CONCLUSION THAT ASSESSEE H AS CONCEALED ANY ITA NO.1168/AHD /2013 ADARSH PLANT PROTECT LTD. VS. ACIT ASST.YEAR 2002-03 - 6 - INCOME. FURTHER, IN THE PRESENT CASE, THERE IS N OTHING ON RECORD TO DEMONSTRATE THAT ASSESSEE HAD FILED INACCURATE PART ICULARS OF INCOME OR HAD CONCEALED THE PARTICULARS OF INCOME. WE ALSO G ET SUPPORT FROM THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. REPORTED AT (2010) 322 ITR 1 58 (SC), WHEREIN THE HONBLE APEX COURT HAS HELD THAT A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOU NT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. 4.1. CONSIDERING THE TOTALITY OF THE AFORESAID FA CTS AND RELYING ON THE FORESAID JUDGEMENT OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD.(SUPRA), WE ARE OF THE VIEW THAT IN THE PRESENT CASE NO CASE FOR LEVY OF PENALTY U/S. 271(1 )(C) OF THE ACT HAS BEEN MADE OUT. WE THUS DIRECT THE DELETION OF PENALTY U/ S. 271(1)(C) OF THE ACT. THUS, THE GROUND OF ASSESSEE IS ALLOWED. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 18/07/2016 SD/- SD/- .. () () ( S.S. GODARA ) ( ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 18/ 07 /2016 4..,.../ T.C. NAIR, SR. PS