NAREN KUWADEKAR, MUMBAI V. ACIT 11(3), MUMBAI

ITA 1472/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84268 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 22-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Assessee Lawyers: D P BADANI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B , MUMBAI BEFORE SHRI D. KARUNAKAR RAO , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 1472/MUM/2013 ASSESSMENT YEAR: 2007 - 08 NAREN KUWADEKAR 1501 WOODSTOCK J.P, RD VERSOVA AND HERI MUMBAI 400 061 PAN:AACPK 3443 M VS. ACIT 11(3) MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI D.P. BADANI REVENUE BY : SHRI AKHILENDRA YADAV DATE OF HEARING : 2 5 . 11 . 2014 DATE OF ORDER : 28 . 1 1 .2014 O R D E R PER AMIT SHUKLA , J M : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST ORDER DATED 31.10.2012 , PASSED BY THE LD.CIT(A) - 7 , MUMBAI , IN RELATION TO THE PENALTY PROCEEDINGS U/S 271(1)(C) FOR THE A.Y. 2007 - 08. 2. ASSESSEE IS MAINLY AGGRIEVED BY LEVY OF PENALTY OF RS.4,56,000/ - ON FOLLOWING DISALLOWANCES : - (I) DISALLOWANCE OF INTEREST OF RS.4,68,823/ - ON ACCOUNT OF DIVERSION OF FUNDS TO THE RELATED PARTIES FREE OF INTEREST ; (II) ADDITION ON ACCOUNT OF F OREIGN TR AVEL OF RS.3,81,358/ - ; (III) DISALLOWANCE OF 20% ON ACCOUNT OF FOREIGN EXCHANGE EXPENSES OF RS.3,95,658/ - ; (IV) DISALLOWANCE ON ACCOUNT OF TELEPHONE AND CAR EXPENSES. ITA NO. 1472/MUM/2013 NAREN KUWADEKAR ASSESSMENT YEAR: 2007 - 08 2 3. FROM THE PERUSAL OF THE ASSESSMENT ORDER, IT IS SEEN THAT ALL THE DISALLOWANC ES HAVE BEEN MADE PURELY ON AD HOC BASIS EITHER @ 10 O R 20%. THE SAID DISALLOWANCES HAVE BEEN ACC E PTED BY THE ASSESSEE IN THE QUANTUM PROCEEDINGS. IN THE PENALTY PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THE DISALLOWANCES HAVE BEEN MADE MAINLY ON THE AD HOC BASIS , WITHOUT ANY ADVERSE EVIDENCE ON RECORD. THEREFORE NO PENALTY SHOULD BE LEVIED. HOWEVER, ASSESSING OFFICER HAS LEVIED THE PENALTY OF RS.4,56,300/ - ON SUCH DISALLOWANCES . THIS HAS BEEN CONFIRMED BY THE LD.CIT(A) ALSO, WITHOUT EVEN CONSIDERING THE DET AIL EXPLANATION BY THE ASSESSEE . 4. AFTER HEARING BOTH THE PARTIES, WE FIND THAT THE ASSESSING OFFICER HAS MADE FOLLOWING DISALLOWANCES , WHICH ARE ON AD HOC BASI S : - 1 ) OUT OF DISALLOWANCE ON INTEREST 2 ) OUT OF BUSINESS PROMOTION EXPENSES 3 ) OUT OF FOREIGN TRAVEL EXPENSES 4 ) OUT FOREIGN EXCHANGE 5 ) OUT OF TELEPHONE EXPENSES 6 ) OUT OF CAR RELATED EXPENSES RS,4,68,823/ - RS.3,29,898/ - RS.3,81.358/ - RS.71,932/ - RS.46,882/ - RS.2,22,108/ - THE AFORESAID DISALLOWANCES HAVE BEEN MADE ON THE GROUND THAT , PERSONAL ELEMENT CANNOT BE RULED OUT. HOWEVER, THERE IS NO SPECIFIC FINDING THAT THE EXPENSES CLAIM ED A R E EITHER NO T GENUINE OR ARE BOGUS. THE DISALLOWANCE OF INTEREST TOO HAS BEEN MADE ON PROPORTIONATE BASIS , ON THE GROUND THAT THE LOAN TAKEN FROM BANK COULD HAVE BEEN UTILIZED FOR THE PURPOSE OF ADVANCE AND NOT WHOLLY FOR THE BUSINESS PURPOSE , WITHOUT POINT ING OUT SPECIFICALLY WHETHER THE LOAN AMOUNT HAS BEEN ITA NO. 1472/MUM/2013 NAREN KUWADEKAR ASSESSMENT YEAR: 2007 - 08 3 DIVERTED FOR ADVANCING LOAN TO THE FAMILY MEMBERS OR NOT . ON THESE FACTS IT CANNOT BE HELD THAT THE ASSESSEE IS GUILTY OF FU RNISHING OF ANY ACCURATE PARTICULAR S OF INCOME OR CONCEALMENT OF INCOME. ACCORDINGLY THE PENALTY LEVIED IS DEL E TED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONO UNCED IN THE OPEN COURT ON 28 TH DAY OF NOVEMB ER , 2014. SD/ - SD/ - ( D.KARUNAKAR RAO ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 28 . 11 .2014 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR B BENCH // TRUE COPY // BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.