M/s Pioneer Pesticides Pvt. Ltd., Chandigarh V. DCIT, C-1(1), Chandigarh

ITA 1553/CHANDI/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4934 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 10-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Business expenditure; Proportionate interest; Wrong claim
• Section: 37(1); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO. 1553/CHD/2017 ASSESSMENT YEAR : 2013-14 M/S PIONEER PESTICIDES PVT. LTD., VS. THE DCIT, SCO 82-83, SECTOR 8-C, CIRCLE 1(1), CHANDIGARH CHANDIGARH PAN NO. AAACP8511G (APPELLANT) (RESPONDENT) APPELLANT BY : SH. TEJ MOHAN SINGH, ADV OCATE RESPONDENT BY : SH. MANJIT SINGH, SR.DR DATE OF HEARING : 07.06.2018 DATE OF PRONOUNCEMENT: 07.06.2018 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE CAPTIONED APPEAL HAS BEEN PREFERRED BY THE ASSE SSEE AGAINST THE ORDER DATED 29.09.2017 OF THE COMMISSIONER OF I NCOME TAX(APPEALS)-1, CHANDIGARH [HEREINAFTER REFERRED TO AS CIT(A)] AGITATING THE CONFIRMATION OF PENALTY LEVIED U/S 27 1(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT ASS ESSEE HAD GIVEN INTEREST FREE LOANS TO VARIOUS PERSONS WITHOUT BUSI NESS PURPOSES AND HAD CLAIMED EXPENDITURE OF RS. 3.80 CRORES DURI NG THE YEAR BUT THE ASSESSEE DID NOT FILE THE REPLY ON THE ISSU E AS TO FROM WHAT ITA NO. 1553/CHD/2017- M/S PIONEER PESTICIDES PVT. LTD, CHANDIGARH 2 SOURCE AMOUNT HAD BEEN PAID TO ABOVE PARTIES AND WH AT BUSINESS PURPOSES HAD BEEN SERVED WITH THE ADVANCED LOAN. TH E ASSESSEE COULD NOT EXPLAIN ANY BUSINESS EXPEDIENCY FOR MAKIN G INTEREST FREE ADVANCES OUT OF INTEREST BEARING FUNDS. THE LD . ASSESSING OFFICER, THEREFORE, MADE INTEREST DISALLOWANCE @ 10 .30% (ON AVERAGE COST OF DEBTS) AMOUNTING TO RS. 1,34,215/- INVOKING THE PROVISIONS OF SECTION 36(1)(III) OF THE ACT. PENA LTY PROCEEDINGS WERE INITIATED U/S 271(1)(C) OF THE ACT FOR CONCEAL ING THE PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. DURING THE PENALTY PROCEEDINGS, THE ASSESSING OFF ICER ISSUED SHOW CAUSE NOTICE DATED 17.9.2015 STATING AS TO WHY THE PENALTY BE IMPOSED U/S 271(1)(C) OF THE ACT. HOWEVER, ASSES SEE FAILED TO EXPLAIN ANYTHING IN THIS REGARD BUT STATED IN ITS R EPLY THAT THE AMOUNT WAS ADVANCED OUT OF INTEREST FREE LOANS RAIS ED BY HIM. HOWEVER, THE ASSESSING OFFICER REJECTED THE ABOVE C ONTENTION OF THE ASSESSEE WHILE RELYING UPON THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. ABHISHEK INDUSTRIES LTD. 286 ITR 1 (P&H). THE ASSESSING OFF ICER FURTHER OBSERVED THAT AS PER THE POLICY OF THE DEPARTMENT, ONLY A SMALL NUMBER OF RETURNS ARE TAKEN FOR SCRUTINY AND THAT O THERWISE RETURNS ARE ACCEPTED WITHOUT ANY FURTHER VERIFICATI ON FROM BOOKS OF ACCOUNT. THAT IN THE FACTS AND CIRCUMSTANCES, IT WAS EVIDENT THAT THE ASSESSEE HAD TAKEN A CHANCE TO FILE WRONG PARTICULARS FULLY KNOWING THE POLICY OF THE DEPARTMENT REGARDING SCRU TINY ASSESSMENT. THAT HAD THE CASE NOT BEEN SELECTED FO R SCRUTINY, THE ITA NO. 1553/CHD/2017- M/S PIONEER PESTICIDES PVT. LTD, CHANDIGARH 3 ASSESSEE WOULD HAVE CLAIMED THE DEDUCTION OF INTERE ST EXPENDITURE ON THE AMOUNT ADVANCED FOR NON-BUSINESS PURPOSES. H E, THEREFORE, RELYING UPON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ZOOM COMMUNICATIONS P. LTD [2010] 327 ITR 510 (DEL) AND ALSO OF THE DECISION OF THE HON'BLE S UPREME COURT IN THE CASE UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS 306 ITR 227 AND ANOTHER DECISION OF HON'BLE APEX C OURT IN THE CASE OF GUJRAG INDUSTRIES LTD. VS. CTO 293 ITR 584 CONCLUD ED THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICU LARS OF INCOME AND, THEREFORE, WAS LIABLE FOR PENALTY U/S 271(1)( C) OF THE ACT. 3. BEING AGGRIEVED BY THE ABOVE ORDER OF THE ASSES SING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). BE FORE THE LD. CIT(A), THE ASSESSEE MADE FOLLOWING SUBMISSIONS:- 1. DISALLOWANCE U/S 36(1)(III) OF THE INCOME-TAX A CT, 1961: DURING THE COURSE OF ASSESSMENT PROCEEDINGS T HE ASSESSING OFFICER HAS DISALLOWED INTEREST U/S 36(1 )(III) OF THE INCOME-TAX ACT, 1961. THE ASSESSEE COMPANY H AD RAISED LOANS FROM VARIOUS PERSONS ON WHICH NO INTER EST WAS PAID. IT HAD ADVANCED LOAN TO CERTAIN PARTIES O N WHICH NO INTEREST WAS CHARGED. THE AMOUNT WAS ADVANCED OUT OF INTEREST FREE LOAN RAISED AND OUT O F THE RESERVE AND SURPLUS. DISALLOWANCE OF PROPORTIONATE INTEREST DOES NOT TANTAMOUNT TO FURNISHING OF ANY INACCURATE PARTICULARS OF INCOME. HOWEVER, THE LD. CIT(A) CONCLUDED AS UNDER:- PENALTY LEVIED ON DISALLOWANCE MADE U/S 36(I)(III ) OF THE ACT, IT IS NOTICED THAT THE APPELLANT HAS NEITH ER BROUGHT ON RECORD WHAT INTEREST FREE RESOURCES WERE ITA NO. 1553/CHD/2017- M/S PIONEER PESTICIDES PVT. LTD, CHANDIGARH 4 AVAILABLE WITH IT FOR MAKING INTEREST FREE ADVANCE, NOR THE APPELLANT HAS EXPLAINED ANY BUSINESS PURPOSE O F THE ADVANCE MADE. SINCE THE APPELLANT HAS FAILED TO SUBSTANTIATE ITS CLAIM, PENALTY LEVIED ON THIS ACCO UNT IS CONFIRMED. 4. THE ASSESSEE, THUS, HAS COME IN APPEAL BEFORE U S. THE LD. COUNSEL FOR THE ASSESSEE, SHRI TEJ MOHAN SINGH HAS SUBMITTED THAT WHILE MAKING DISALLOWANCE U/S 36(1)(III) OF THE ACT , THE ASSESSING OFFICER HAS RELIED UPON THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. ABHISHE K INDUSTRIES LTD. (SUPRA), WHEREIN, THE HON'BLE HIGH COURT HA S OBSERVED AS UNDER:- ONCE IT IS BORNE OUT FROM THE RECORD THAT THE ASSES SEE HAD BORROWED CERTAIN FUNDS ON WHICH LIABILITY TO PA Y TAX IS BEING INCURRED AND ON THE OTHER HAND, CERTAIN AMOUNTS HAD BEEN ADVANCED TO SISTER CONCERNS OR OTH ERS WITHOUT CARRYING ANY INTEREST AND WITHOUT ANY BUSIN ESS PURPOSE, THE INTEREST TO THE EXTENT THE ADVANCE HAD BEEN MADE WITHOUT CARRYING ANY INTEREST IS TO BE DISALLO WED UNDER SECTION 36(1)(III) OF THE ACT. SUCH BORROWING S TO THAT EXTENT CANNOT POSSIBLY BE HELD FOR THE PURPOSE OF BUSINESS BUT FOR SUPPLEMENTING THE CASH DIVERTED WITHOUT DERIVING ANY BENEFIT OUT OF IT. ACCORDINGLY , THE ASSESSEE WILL NOT BE ENTITLED TO CLAIM DEDUCTION OF THE INTEREST ON THE BORROWINGS TO THE EXTENT THOSE ARE DIVERTED TO SISTER CONCERNS OR OTHER PERSONS WITHOU T INTEREST. 5. THE LD. COUNSEL HAS SUBMITTED THAT THE RATIO OF THE DECISION IN THE CASE OF ABHISHEK INDUSTRIES LTD (SUPRA) HAS BEEN REVERSED ITA NO. 1553/CHD/2017- M/S PIONEER PESTICIDES PVT. LTD, CHANDIGARH 5 BY THE SUBSEQUENT DECISIONS OF THE HON'BLE HIGH COU RTS AND FURTHER THAT WHERE THE DISALLOWANCE HAS BEEN MADE U /S 36(1)(III) OF THE ACT WHILE RELYING UPON THE DECISION IN THE C ASE OF ABHISHEK INDUSTRIES (SUPRA), THE PENALTY U/S 271(1)(C) WAS N OT HELD TO BE JUSTIFIED. THE LD. COUNSEL HAS FURTHER SUBMITTED TH AT EVEN WHERE THE DISALLOWANCE IS ON A DEBATABLE ISSUE, PENALTY C ANNOT BE IMPOSED U/S 271(1)(C) OF THE ACT. 6. THE LD. COUNSEL HAS FURTHER RELIED UPON THE FOL LOWING DECISIONS: 1. M/S KEOING SOLUTIONS LTD VS. DCIT ITA NO. 1554/CHANDI/2017 2. CIT V TRIDENT INFOTECH CORPN LTD. - 216 TAXMAN 58 (P&H) 3. PR. CIT V RANA SUGAR LTD 812 TAXMAN.COM 77 (P&H) 4. ACIT V TORGQE PHARMACEUTICALS (P) LTD 173 TTJ 96 (CHANDIGARH-TRIB) 7. ON THE OTHER HAND, LD. DR HAS RELIED ON THE FIN DINGS OF THE LOWER AUTHORITIES. 8. WE HAVE GONE THROUGH THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES AND HAVE CONSIDERED THE RIVAL SUBMISSIO NS OF THE LD. REPRESENTATIVES OF THE PARTIES. WE HAVE ALSO GONE T HROUGH THE CASE LAWS CITED BY THE ASSESSEE. THE LD. COUNSEL SU BMITTED THAT IN THE IDENTICAL FACTS AND CIRCUMSTANCES, IN THE CASE OF M/S KOEING SOLUTIONS LTD. (SUPRA), THE TRIBUNAL HAS DELETED TH E PENALTY. HE HAS FURTHER SUBMITTED THAT IN THAT CASE THE LOWER A UTHORITIES HAVE LEVIED THE PENALTY WHILE RELYING UPON THE DECISION OF THE HON'BLE ITA NO. 1553/CHD/2017- M/S PIONEER PESTICIDES PVT. LTD, CHANDIGARH 6 PUNJAB & HARYANA HIGH COURT IN THE CASE OF ABHISHEK INDUSTRIES LTD. (SUPRA) 8.1. THE NEXT DECISION RELIED UPON BY THE LD. COUNS EL IN THE CASE OF CIT VS. TIDENT INFOTECH CROPN LTD (SUPRA), WH EREIN, IT HAS BEEN HELD THAT WHERE THE ASSESSEE HAD FURNISHED ITS RETURN PRIOR TO THE JUDGEMENT OF THE HON'BLE HIGH COURT IN THE CAS E OF ABHISHEK INDUSTRIES LTD (SUPRA), AND THE ASSESSING OFFICER HAD MADE DISALLOWANCE WHILE RELYING UPON THE DECISION IN TH E CASE OF ABNHISHEK INDUSTRIES LTD (SUPRA), AND IT DID NOT ESTABLISH THAT THE ASSESSEE HAD EITHER CONCEALED ITS INCOME OR FU RNISHED INACCURATE PARTICULARS OF INCOME, THE LEVY OF PENAL TY WAS NOT ATTRACTED. 8.2. IN THE CASE OF PR. CIT VS. RANA SUGAR LTD(S UPRA), THE HON'BLE HIGH COURT HELD THAT WHERE THE ASSESSEE HAD AGREED FOR DISALLOWANCE OF PROPORTIONATE INTEREST RELATING TO CAPITAL WORK-IN PROGRESS U/S 36(1)(III) OF THE ACT AS DETAILS OF F UNDS UTILIZED FOR INDIVIDUAL PROJECTS WERE NOT RECONCILABLE, THE ASS ESSEE COULD NOT BE HELD LIABLE FOR EITHER CONCEALING PARTICULARS O F INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME FOR LEVYING PENALTY U/S 271(1)(C) OF THE ACT. 8.3. IN THE CASE OF ACIT V TORQUE PHARMACEUTICALS (P) LTD.(SUPRA) , THE COORDINATE BENCH OF THE TRIBUNAL HAS UPHELD THE FINDINGS OF THE CIT(A) THAT SINCE THERE WAS A MERE PROPORTIONATE DISALLOWANCE OF INTEREST ON ESTIMATION BASIS, THAT WAS NOT A CASE ITA NO. 1553/CHD/2017- M/S PIONEER PESTICIDES PVT. LTD, CHANDIGARH 7 OF EITHER CONCEALMENT OF PARTICULARS OF INCOME OR F URNISHING OF INACCURATE PARTICULARS OF INCOME. 9. WE FIND THAT THE AFORESAID CASE LAWS RELIED UP B Y THE LD. COUNSEL FOR THE ASSESSEE DO NOT FIT IN THE FACTS AN D CIRCUMSTANCES OF THE CASE OF THE ASSESSEE. SO FAR AS THE RELIANCE ON THE CASE OF M/.S KOEING SOLUTIONS LTD VS. DCIT (SUPRA) IS CO NCERNED, THE TRIBUNAL WHILE DELETING THE PENALTY HAS OBSERVED T HAT THE ASSESSING OFFICER HAD MADE THE DISALLOWANCE FOLLOWI NG THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ABHISHEK INDUSTRIES LTD (SUPRA). HOWEVER, THE PROP OSITION LAID DOWN BY THE HON'BLE HIGH COURT IN THE CASE OF ABHI SHEK INDUSTRIES LTD (SUPRA) STOOD REVERSED IN ITS SUBSEQ UENT DECISION IN THE CASE OF BRIGHT ENTERPRISES LTD VS. CIT (2016 ) 381 ITR 107 AND CIT VS. KAPSONS ASSOCIATES. 381 ITR 203, WHE REIN, IT HAS BEEN HELD THAT WHERE MIXED FUNDS BOTH INTEREST BEA RING AND INTEREST FREE, WERE AVAILABLE WITH THE ASSESSEE AND THE INTEREST FREE FUNDS WERE SUFFICIENT TO MAKE THE INTEREST FRE E ADVANCES MADE BY THE ASSESSEE, THE PRESUMPTION WAS THAT THE SAID ADVANCES HAD BEEN MADE OUT OF INTEREST FREE FUNDS AND CONSEQUENT LY NO DISALLOWANCE OF INTEREST U/S 36(1)(III) OF THE ACT WAS WARRANTED. THE TRIBUNAL FURTHER RELIED UPON THE DECISION OF T HE HON'BLE HIGH COURT IN THE CASE OF CIT VS. TRIDENT INFOTECH CORP ORATION LTD (SUPRA), WHEREIN, IT HAS BEEN HELD BY THE HON'BLE HIGH COURT THAT WHERE ADDITIONS WERE MADE ON ACCOUNT OF DECISION OF THE HON'BLE HIGH COURT IN THE CASE OF ABHISHEK INDUSTRIES LTD ( SUPRA) AND IT ITA NO. 1553/CHD/2017- M/S PIONEER PESTICIDES PVT. LTD, CHANDIGARH 8 WAS NOT ESTABLISHED THAT THE ASSESSEE HAD EITHER CO NCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E, IT COULD NOT BE SAID TO BE A CASE OF CONCEALMENT OF INCOME. 9.1 THERE IS NO DISPUTE AS TO THE PROPOSITION OF LA W LAID DOWN BY THE TRIBUNAL IN THE CASE OF M/S KOEING SOLUTIONS L TD VS. DCIT(SUPRA) AS PER THE PROPOSITION LAID DOWN BY T HE HON'BLE HIGH COURT IN THE CASE OF CIT VS. ABHISHK INDUSTRI ES LTD., (SUPRA) WHERE THE ASSESSEE HAS BOTH INTEREST FREE A ND INTEREST BEARING FUNDS AVAILABLE WITH IT AND THE INTEREST FR EE ADVANCES HAVE BEEN MADE OUT OF THE MIXED FUNDS, THE DISALLOWANCE U/S 36(1)(III) IS ATTRACTED ON ACCOUNT OF PROPORTIONATE USE OF INT EREST BEARING FUNDS FOR INTEREST FREE ADVANCES. HOWEVER, IN THE S UBSEQUENT DECISIONS, IN THE CASE OF KAPSONS ASSOCIATES (SUP RA) AND BRIGHT ENTERPRISES PVT LTD. (SUPRA), THE DISALLOWANCE U /S 36(1)(III) OF THE ACT WAS HELD TO BE NOT JUSTIFIED ON THE PROPOS ITION THAT WHERE THE ASSESSEE ON THE DATE OF INVESTMENT HAD ITS OWN FUNDS / INTEREST FREE FUNDS SUFFICIENT TO MEET THE INVESTME NT MADE / INTEREST FREE ADVANCES GIVEN, THEN THE PRESUMPTION WOULD BE THAT THE ASSESSEE HAS USED HIS OWN FUNDS / INTEREST FREE FUNDS FOR THE SAID INVESTMENT / ADVANCES. HOWEVER, THE MOOT POIN T IS THAT THE ISSUE BECOMES DEBATABLE ONLY IF THE ASSESSEE HAS HI S OWN FUNDS / INTEREST FREE FUNDS IN ITS KITTY AS ON THE DATE OF ADVANCEMENT INTEREST FREE ADVANCES. IF THE ASSESSEE DID NOT HAV E INTEREST FREE FUNDS AVAILABLE WITH IT, NEITHER THERE WILL BE ANY QUESTION OF MIXED FUNDS NOR THERE CAN BE ANY SUCH PRESUMPTION A RRIVED AT ABOUT ADVANCEMENT OUT OF OWN FUNDS. IN THE CASE IN HAND, DURING ITA NO. 1553/CHD/2017- M/S PIONEER PESTICIDES PVT. LTD, CHANDIGARH 9 QUANTUM ASSESSMENT PROCEEDINGS, DESPITE SPECIFICALL Y REQUIRED BY THE ASSESSING OFFICER TO EXPLAIN, THE ASSESSEE NEI THER FILED ANY REPLY NOR ANY EXPLANATION OR EVIDENCE TO SHOW THAT AS ON THE DATE OF MAKING INTEREST FREE ADVANCES, THE ASSESSEE WAS POSSESSED OF HIS OWN / NON-INTEREST BEARING FUNDS. FURTHER, LD. CIT(A) HAS ALSO MADE CATEGORICAL OBSERVATION IN PARA 3.3 OF HI S ORDER THAT ASSESSEE HAS NEITHER BROUGHT ON RECORD WHAT INTERE ST FREE RESOURCES WERE AVAILABLE WITH IT FOR MAKING INTERES T FREE ADVANCE NOR THE APPELLANT HAS EXPLAINED ANY BUSINESS PURPO SE OF THE ADVANCE MADE. 10. DURING THE COURSE OF HEARING, WE HAVE AGAIN ASK ED THE LD. COUNSEL FOR THE ASSESSEE TO SHOW US FROM THE RECORD , IF THE ASSESSEE HAD ANY INTEREST FREE FUNDS AVAILABLE WITH IT FOR MAKING INVESTMENT, BUT THE ARGUMENT OF THE LD. COUNSEL WAS CONCENTRATED ON THE POINT THAT IF THE DISALLOWANCE HAS BEEN MADE BY THE ASSESSING OFFICER WHILE RELYING UPON THE DECISION OF THE HON'BLE HIGH COURT IN THE CASE OF ABHSHIK INDUSTRIES LTD (S UPRA), PENALTY CANNOT BE LEVIED IN RESPECT OF THAT DISALLOWANCE U/ S 271(1)(C) OF THE ACT. WE HAVE SPECIFICALLY INVITED ATTENTION OF THE LD. COUNSEL TO THE FACTS OF THE CASE AND BROUGHT TO HIS KNOWLED GE THAT THERE WAS NO EVIDENCE FURNISHED BY THE ASSESSEE EVEN OF T HE MIXED FUNDS AVAILABLE WITH IT. EVEN IF THE DECISION OF TH E HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ABHISHEK I NDUSTRIES (SUPRA) IS NOT APPLIED OR CONSIDERED, AND DECISION S OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF BRIGHT ENTERPRISES PVT ITA NO. 1553/CHD/2017- M/S PIONEER PESTICIDES PVT. LTD, CHANDIGARH 10 LTD VS. CIT (SUPRA) AND KAPSONS ASSOCIATES (SUP RA) ARE APPLIED, EVEN THEN THE DISALLOWANCE ON INTEREST IN THIS CASE WAS ATTRACTED. THE ASSESSEE IN THIS CASE HAS CLAIMED HU GE INTEREST EXPENDITURE OF MORE THAN RS. 3.80 CRORES. THE ASSE SSEE DESPITE BEING ASKED FOR, DID NOT SHOW BUSINESS EXIGENCY OR BUSINESS PURPOSES FOR MAKING INTEREST FREE ADVANCES. AS PER THE PROVISIONS OF SECTION 37(1) OF THE INCOME TAX ACT, THE EXPENDI TURE LAID DOWN OR EXPANDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSION IS ALLOWABLE. SO WHEN THE ASSESSEE, ON T HE ONE HAND HAS CLAIMED INTEREST EXPENDITURE IN RELATION TO ITS BUSINESS ACTIVITY BUT AT THE SAME TIME COULD NOT SHOW THAT T HE SAID EXPENDITURE WAS INCURRED FOR BUSINESS PURPOSES, TH EN OBVIOUSLY, IT WAS A WRONG & FALSE CLAIM OF THE EXPENDITURE. HE NCE, THE PROVISIONS OF SECTION 36(1)(III) ARE SQUARELY APPLI CABLE. SO FAR AS THE RELIANCE ON THE CASE LAWS BY THE COUNSEL FOR TH E ASSESSEE IS CONCERNED, AS OBSERVED ABOVE, THE SAID CASE LAWS WO ULD BE APPLICABLE IF THE ASSESSEE WOULD BE ABLE TO SHOW TH AT IT HAD THE AVAILABILITY OF OWN FUNDS / INTEREST FREE FUNDS WIT H IT. THE FACTS ON THE FACE OF IT SHOW THAT THE ASSESSEE HAD USED BORR OWED FUNDS FOR NON-BUSINESS PURPOSES, BUT CLAIMED THE INTEREST EXP ENDITURE AS BUSINESS EXPENDITURE. HAD THE CASE OF THE ASSESSEE NOT COME INTO THE SCRUTINY OF THE ASSESSING OFFICER, THE ASSESSEE WOULD HAVE ESCAPED PAYING LESSER TAX THAN THAT IT WAS ACTUALLY REQUIRED TO PAY. THE ASSESSEE IS NOT A LAYMAN BUT IT IS A COMPA NY INCORPORATED UNDER THE COMPANIES ACT AND HAS THE SERVICES AVAILA BLE OF LEGAL AND PROFESSIONALS C.A.S. IT IS ALSO NOT A CASE OF B ONAFIDE MISTAKE ITA NO. 1553/CHD/2017- M/S PIONEER PESTICIDES PVT. LTD, CHANDIGARH 11 OR BONAFIDE CLAIM. EVEN NO DEBATABLE ISSUE IS INVO LVED ON THIS ISSUE. THE DISALLOWANCE APPARENTLY BE ATTRACTED IN THE CASE OF THE ASSESSEE U/S 36(1)(III) OF THE ACT. 11. NOW COMING TO THE OTHER CASE LAWS RELIED UPON B Y THE LD. COUNSEL, WE FIND THAT THE AFORESAID CASE LAWS ARE E ITHER RELATED TO THE MIXED FUNDS THEORY APPLYING PRESUMPTION OF USE OF OWN FUNDS OR DISALLOWANCE NOT WARRANTING PENALTY IN THE FACTS AND CIRCUMSTANCES OF THOSE CASES. HOWEVER, IN THE CASE IN HAND, THE ASSESSEE, IN OUR VIEW, HAS FURNISHED INACCURATE PAR TICULARS OF INCOME BY WAY OF CALMING INTEREST EXPENDITURE, WHIC H OTHERWISE THE ASSESSEE WAS NOT JUSTIFIED TO CLAIM AND PER CHA NCE THE CASE OF THE ASSESSEE WAS CHOSEN FOR SCRUTINY DURING WHICH T HE ASSESSING OFFICER FOUND THAT THE AFORESAID ACT ON THE PART OF THE ASSESSEE IN FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE CIT(A) IN UPHOLDING THE PENALTY SO LEVIED BY THE ASSESSING OFFICER U/S 271 (1)(C) OF THE ACT. THERE IS NO MERIT IN THE APPEAL OF THE ASSESSE E AND THE SAME IS ACCORDINGLY DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HE REBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT SD/- SD/- (B.R.R. KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :07.06.2018 RKK COPY TO: THE APPELLANT THE RESPONDENT THE CIT THE CIT(A) THE DR