M/s. Prakash Construction Co., Anand V. The Income tax Officer, Ward-4, Anand

ITA 1291/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8641 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 09-03-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 29-03-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : A HMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI D.C. AGRAWAL, A.M.) I.T.A. NO. 1291/AHD./2007 ASSESSMENT YEAR : 2001-2002 M/S. PRAKASH CONSTRUCTION, ANAND -VS.- INCOM E TAX OFFICER, WARD-4, ANAND (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASEEM L. THAKKA R RESPONDENT BY : SHRI M.C. PANDIT, SR. D.R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 15.01.2007 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-IV, BARODA CONF IRMING THE PENALTY OF RS.2,79,717/- LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1 )(C) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2001-02. 2. BRIEFLY STATED THE FACTS ARE THAT IN THE ASSESSM ENT ORDER, THE ASSESSING OFFICER DISALLOWED THE INTEREST PAID/ PAYABLE TO BANK AMOUNTING TO RS. 14,15,089/- AND ALSO INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C). SUBSEQUENTLY, THE A.O. VIDE ORDER DATED 23.03.2006 LEVIED THE PENALTY OF RS.2,79,717/- UNDER SECTION 271(1)(C ) OF THE INCOME TAX ACT BEING 100% OF TAX SOUGHT TO BE EVADED IN RESPECT OF AFORESAID DISALLO WANCE OF INTEREST. 3. AGAINST THE PENALTY ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND IN THE IMPUGNED ORDER, T HE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE ACTION OF A.O. LEVYING T HE PENALTY OF RS.2,79,717/- UNDER SECTION 271(1)(C). AGGRIEVED BY THIS ORDER OF LEARNED COMMI SSIONER OF INCOME TAX(APPEALS), THE ASSESSEE IS IN APPEAL BEFORE US. 2 ITA NO. 1291/AHD/2007 4. AT THE TIME OF HEARING, ON BEHALF OF ASSESSEE SH RI S.N. DIVETIA APPEARED AND PRODUCED THE COPY OF DECISION DATED 17.02.2009 OF THE ITAT, D BENCH, AHMEDABAD IN ITA NO. 1823/AHD/2005 IN ASSESSEES OWN CASE FOR THE ASSESS MENT YEAR 2001-02, WHEREIN THE DISALLOWANCE OF INTEREST ON THE BASIS OF WHICH PENA LTY UNDER SECTION 271(1)(C) AMOUNTING TO RS.2,79,717/- IS LEVIED, IS DELETED. HE POINTED OUT THAT THE RELEVANT DISCUSSION DELETING THE ADDITION IS CONTAINED IN TRIBUNALS ORDER IN PARA 8 ON PAGES 4-5, WHICH READS AS UNDER :- 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE HAVE ALSO GONE THROUGH THE ORDER OF THE AUTHORITIES BELO W. FROM PERUSAL OF THE RECORDS, IT IS SEEN THAT THE ADVANCES WERE MADE OUT OF THE CURRENT ACCOUNT AND NOT OUT OF CASH CREDIT ACCOUNT AS CONTE NDED BY THE LD. A.R. BEFORE US. FURTHER, IT IS SEEN THAT THE ASSESSEE HA S GOT CURRENT ACCOUNT IN VALLABH VIDYANAGAR COMMERCIAL CO. OP. BANK AND IT H AS CASH CREDIT ACCOUNT IN CHAROTAR NAGRIK SAHAKARI BANK. THE ASSES SEE ALSO FURNISHED THE COPIES OF BANK ACCOUNT. HOWEVER, THE CIT.(A) HA S NOT CONSIDERED THIS ASPECT OF THE MATTER IN ITS PROPER PERSPECTIVE . THE ONUS IS ON THE REVENUE TO PROVE THE NEXUS BETWEEN THE BORROWED FUN DS AND INTEREST FREE ADVANCES, WHICH THE A.O. HAS NOT DONE. NO COGENT MA TERIAL OR EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE LD. D.R. THAT THE INTEREST BEARING FUNDS UTILIZED/ TRANSFERRED FOR NON-BUSINESS ACTIVI TY AND THE TRANSACTIONS ARE IN THE NATURE OF BUSINESS TRANSACTIONS. IN VIEW OF ABOVE, WE ARE OF THE VIEW THAT THERE WAS NO REASON FOR THE A.O. TO D ISALLOWANCE THE INTEREST AND THE CIT.(A) WAS ALSO NOT JUSTIFIED IN SUSTAINING THE DISALLOWANCE. WE REVERSE THE ORDER OF THE CIT.(A) A ND DIRECT THE A.O. TO DELETE THE DISALLOWANCE. THUS, THIS GROUND RAISED B Y THE ASSESSEE STANDS ALLOWED. 4.1. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMIT TED THAT WHERE THE ADDITION MADE IN THE ASSESSMENT ORDER ON THE BASIS OF WHICH PENALTY FOR CONCEALMENT IS LEVIED, IS DELETED, THERE REMAINS NO BASIS AT ALL FOR LEVYING THE PENALTY FOR CONCEALMENT AND, THEREFORE, PENALTY CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE CANCELLED. 5. ON THE OTHER HAND, SHRI M.C. PANDIT, SR. D.R. AP PEARING ON BEHALF OF THE REVENUE COULD NOT CONTROVERT THE AFORESAID SUBMISSIONS MADE BY TH E LD. COUNSEL OF THE ASSESSEE. 6. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW AS WELL AS THE DECISION DATED 17.02.2009 OF T HIS TRIBUNAL IN ITA NO. 1823/AHD/2005 IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2001-02 . IT IS PERTINENT TO NOTE THAT THE PENALTY WAS LEVIED IN RESPECT OF DISALLOWANCE OF RS.2,79,717/-, WHICH HAS BEEN DELETED BY ITAT IN QUANTUM APPEAL IN ITA NO. 1823/AHD/2005, ORDER DATED 17.02. 2009. THEREFORE, THERE REMAINS NO BASIS AT 3 ITA NO. 1291/AHD/2007 ALL FOR LEVYING THE PENALTY FOR CONCEALMENT. WE, TH EREFORE, CANCEL THE PENALTY OF RS.2,79,717/- CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN THE IMPUGNED ORDER. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 12.03.201 0 SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 12 / 03 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.