M/S.M TITANIUM APARTMENTS PRIVATE LIMITED, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1(2)(2), MUMBAI

ITA 1398/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6273 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 07-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATISH CHANDRA RAJORE
• Assessee Lawyers: NARAYAN ATAL
• Keywords: Set aside
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B , MUMBAI BEFORE S HRI SHAMIM YAHYA (AM ) AND SHRI RAM LAL NEGI (JM) ITA NO. 1398 /MUM/2018 ASSESSMENT Y EAR: 2013 - 14 M/S M TITANIUM APARTMENTS PRIVATE LIMITED, 2 ND FLOOR, SHREENIWAS HOUSE, HAZARIMAL SOM ANI MARG, FORT, MUMBAI - 400001 PAN: AAFCM6810Q VS. THE DY. CIT, CIRCLE - 1(2)(2), 535, AAYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NARAYAN ATAL ( A R ) REVENUE BY : SHRI SATISH CHANDRA RAJORE (D R ) DATE OF HEARING: 18/03 /201 9 DATE OF PRONOUNCEMENT: 07 / 0 6 /201 9 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 21.12.2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 2 (FOR SHORT THE CIT(A) , MUMBAI, FOR THE ASSESSMENT YEAR 2013 - 14 , WHEREBY THE LD. CIT(A) HAS DISMISSED T HE APPEAL FILED BY THE ASSESSEE AGAINST THE PENALTY ORDER PASSED U/S 271 (1) (C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING LOSS OF RS. 24,67,729/ - . THE AO COMPLETED ASSESSMENT U/S 143(3) OF THE ACT DETERMINING THE TOTAL I NCOME OF RS. 2,48,011/ - AFTER MAKING DISALLOWANCE OF RS. 27,15,573/ - . ACCORDINGLY, THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND LEVIED PENALTY OF RS. 8,39,167/ - . IN THE FIRST APPEAL THE L D. CIT(A) UPHELD THE ACTION OF THE AO AND CONFIRMED THE PENALTY. THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). 2 ITA NO. 1398 / MUM/2018 ASSESSMENT YEAR: 2013 - 14 3 . T HE ASSESSEE HAS PREFERRED THE PRESENT APPEAL AGAINST THE SAID ORDER ON THE FOLLOWING EFF ECTIVE GROUNDS : - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 2, MUMBAI (HEREAFTER REFERRED TO AS CIT (A) ERRED IN CONFIRMING THE PENALTY OF RS. 8,39,167/ - LEVIED BY THE DY. CIT - 1(2)(2) U/S 271 (1) (C) OF THE INCOME TAX ACT, 1961. YOUR APPELLANT SUBMITS ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE PENALTY U/S 271 (1) (C) OF THE ACT IS NOT WARR ANTED AND OUGHT TO BE CANCELLED. 2. THE CIT (A) ERRED NOT APPRECIATING THE FACT THAT ONLY THE NATIONAL AMOUNT OF INTEREST ON INTEREST FREE LOAN GIVEN BY THE APPELLANT HAS BEEN DISALLOWED AND THAT THERE IS NO CASE FOR CONCEALMENT OF INCOME AND/OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 4. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD DEBITED INTEREST EXP ENSES AMOUNTING TO RS. 3,95,60,663/ - I.E. INTEREST EXPENSES OF RS. 3,32,59,380/ - AGAINST HOUSE PROPERTY INCOME AND RS. 63,01,2825/ - AGAINST INTEREST INCOME. THE ASSESSEE HAD GIVEN INTEREST FREE LOAN TO M/S NATIONAL PLYWOOD INDUSTRIES LTD. AMOUNTING TO RS. 2,50,00,000/ - . THE AO MADE INTEREST DISALLOWANCE AMOUNTING TO RS. 27,15,753/ - AND ADDED THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE. ON THE BASIS OF THE SAID ADDITION, THE AO INITIATED PROCEEDINGS U/S 271 (1) (C) AND LEVIED PENALTY OF RS. 8,39,167/ - FOR FURNISHING INACCURATE PARTICULARS OF ITS INCOME. THE LD. COUNSEL FURTHER SUBMITTED THAT SECTION 271 (1)(C) APPLIES WHERE THE ASSESSEE HAS CONCEALED THE PARTICULARS OF ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME . IN THE PRESENT CASE T HE A O HAS WRONGLY LEVIED THE PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME BECAUSE THE ASSESSEE HAS NEITHER FURNISH ED INACCURATE PARTICULARS OF INCOME N OR SUPPLIED ERRONEOUS DETAILS IN ITS RETURN OF INCOME. SINCE, THE AO HAS NOT GIVEN ANY FINDING THA T THE DETAILS SUPPLIED BY THE ASSESSEE ARE INACCURATE OR INCORRECT OR ERRONEOUS, THE LD. CIT 3 ITA NO. 1398 / MUM/2018 ASSESSMENT YEAR: 2013 - 14 (A) OUGHT TO HAVE DELETED THE PENALTY LEVIED BY THE AO. THE LD. COUNSEL FURTHER POINTED OUT THE IN THE SUBSEQUENT ASSESSMENT YEAR PENALTY PROCEEDINGS WERE NOT INIT IATED AGAINST THE ASSESSEE FOR MAKING IDENTICAL CLAIM. RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 , THE LD. COUNSEL SUBMITTED THAT MERE MAKING OF CLAIM WHICH IS NOT SUSTAINABLE BY ITSELF WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. THE LD. COUNSEL ACCORDINGLY SUBMITTED THAT THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) MAY BE SET ASIDE AND THE PENALTY LEVIED U/S 271 (1) (C) OF THE ACT MAY BE D ELETED. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELYING ON THE FINDINGS OF THE LD. CIT (A) SUBMITTED THAT SINCE AN INCORRECT CLAIM FOR EXPENDITURE WOULD AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME, THE LD. CIT (A) HAS RIGH TLY CONFIRMED THE PENALTY LEVIED BY THE AO. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE MATERIAL ON RECORD IN THE LIGHT OF THE RIVAL CONTENTIONS OF THE PARTIES. THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT (A) HAS WRONGLY CONFIRM ED THE PENALTY LEVIED U/S 271 (1) (C) OF THE ACT BY THE AO. WE NOTICE THAT THE AO HA S MADE ADDITION OF RS. 27,15,753 / - ON THE GROUND THAT THE ASSESSEE HAD GIVEN INTEREST FREE LOAN TO M/S NATIONAL PLYWOOD INDUSTRIES LTD. AS POINTED OUT BY THE LD. COUNSEL, THE AO CAN LEVY PENALTY U/S 271 (1) (C) OF THE ACT FOR CONCEALING THE PARTICULARS OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME. IN THE PRESENT CASE, THE AO HAS IMPOSED PENALTY FOR FU RNISHING INACCURATE PARTICULARS WITHOUT ESTABLISHING T HAT THE ASSES SEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME . FURTHER, AS POINTED OUT BY THE LD. COUNSEL, THE ASSESSEE HAS CLAIMED INTEREST EXPENSES AMOUNTING TO RS. 3,95,60,663/ - . HOWEVER, THE AO MADE DISALLOWANCE AMOUNTING TO RS. 27,15,753/ - FOR THE REASON THAT TH E ASSESSEE HAD ADVANCED INTEREST FREE LOAN TO M/S NATIONAL PLYWOOD INDUSTRIES LTD. T HE LD. CIT (A) HAS MENTIONED IN APPELLATE ORDER THAT THE APPELLANT ADMITTED DURING THE ASSESSMENT PROCEEDINGS THAT IT HAS CHARGED INTEREST @ 13% FROM M/S NATIONAL 4 ITA NO. 1398 / MUM/2018 ASSESSMENT YEAR: 2013 - 14 PLYWOOD I NDUSTRIES LTD. , H OWEVER, THERE IS NO EVIDENCE ON RECORD TO ESTABLISH THAT IN FACT THE ASSESSEE HAD CHARGED INTEREST @ 13% ON THE AMOUNT OF ADVANCE MADE TO M/S NATIONAL PLYWOOD INDUSTRIES LTD. FURTHER AS POINTED OUT BY THE LD. COUNSEL, THE AO HAS NO INITIAT ED PROCEEDINGS U/S 271(1)(C) OF THE ACT FOR IDENTICAL CLAIMED MADE BY THE ASSESSEE DURING THE SUBSEQUENT ASSESSMENT YEAR . ADMITTEDLY, T HE ASSESSEE HAS NOT CHALLENGED THE ADDITION MADE BY THE AO, HOWEVER, ON THE BASIS OF THE SAID FACT IT CANNOT BE CONCLUDED THAT THE ASSESSEE HAS EARNED INTEREST INCOME AMOUNTING TO RS. 27,15,753/ - FROM M/S NATIONAL PLYWOOD INDUSTRIES LTD . IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. ( SUPRA), THE HONBLE SUPREME COURT HAS HELD THAT MERELY BECAUSE THE ASSESSEE HAD C LAIMED THE EXPENDITURE, WHICH WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY UNDER SECTION 271(1)( C ). 7. KEEPING IN VIEW, THE FACTS OF THE CASE AND THE PRINCIPLES OF LAW LAID DOWN BY TH E HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA), WE FIND SUBSTANCE IN THE CONTENTION OF THE LD. COUNSEL THAT CLAIMING OF INTEREST EXPENDITURE BY THE ASSESSEE IN THE PRESENT CASE DOES NOT AMOUNT TO FURNISHING INACCURA TE PARTICULARS OF ITS INCOME. ACCORDINGLY, WE ALLOW THE APPEAL OF THE ASSESSEE AND SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) AND DIRECT THE AO TO DELETE THE PENALTY. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2013 - 2014 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH JUNE , 2019 . SD/ - SD/ - ( SHAMIM YAHYA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI ; DATED: 07 / 0 6 / 201 9 ALINDRA, PS 5 ITA NO. 1398 / MUM/2018 ASSESSMENT YEAR: 2013 - 14 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE C OPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI