ACIT, Chandigarh V. M/s Power Drugs Pvt. Ltd., Chandigarh

ITA 174/CHANDI/2015

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9833 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 12-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Rule of consistency; Proportionate interest; Difference of opinion; Change of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 174/CHD/2015 ASSESSMENT YEAR: 2007-08 THE ACIT, VS M/S POWER DRUGS P.LTD., CIRCLE 3(1), # 2342, SECTOR 23-C, CHANDIGARH. CHANDIGARH. PAN: AABCP7960J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH RESPONDENT BY : SHRI SUNIL KUMAR DATE OF HEARING : 17.06.2015 DATE OF PRONOUNCEMENT : 19.06.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY REVENUE IS AGAINST THE ORDER OF LD. CIT(APPEALS) CHANDIGARH DATED 11.11.2014 FOR ASSESS MENT YEAR 2007-08 CHALLENGING THE CANCELLATION OF PENALT Y UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 2. BRIEFLY THE FACTS AS NOTED IN THE IMPUGNED ORDER ARE THAT THE ASSESSING OFFICER LEVIED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IT WAS FOUND THAT ASSESSEE H AD GIVEN INTEREST FREE ADVANCES TO NUMBER OF PERSONS. THE A SSESSING OFFICER QUESTIONED THE ASSESSEE REGARDING ALLOWABIL ITY OF INTEREST CLAIMED UNDER SECTION 36(1)(III) OF THE AC T AND THE ASSESSEE HAD SUBMITTED THAT THE ADVANCES WERE GIVIN G KEEPING DIVERSIFICATION AND EXPANSION OF BUSINESS I N MIND. 2 THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE RE PLY OF THE ASSESSEE AND DISALLOWED PROPORTIONATE INTEREST UNDE R SECTION 36(1)(III) OF THE ACT, A PART OF WHICH HAS BEEN CONFIRMED BY THE LD. CIT(APPEALS). VIDE SEPARATE O RDER, ASSESSING OFFICER HAS LEVIED PENALTY ON THE SAME DISALLOWANCE OF INTEREST UNDER SECTION 36(1)(III) O F THE ACT OF THE ACT. 3. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE LD. CIT(APPEALS). THE LD. CIT(APPEALS) NOTED THAT THE ADDITION IS MADE AFTER REJECTING THE CONTENTION OF THE ASSES SEE FOR PAYING INTEREST FOR THE PURPOSE OF BUSINESS BUT THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLAN ATION OF THE ASSESSEE AND MADE THE ESTIMATED ADDITION. THE LD. CIT(APPEALS) CONSIDERING THAT IT WAS AN ESTIMATE AD DITION, FOLLOWING THE JUDGEMENT OF THE HON'BLE PUNJAB & HAR YANA HIGH COURT IN THE CASE OF HARIGOPAL SINGH, 258 ITR 85 CANCELLED THE PENALTY AND ALLOWED THE APPEAL OF THE ASSESSEE. 4. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE A GREE WITH SUBMISSION OF THE LD. DR THAT LD. CIT(APPEALS) HAS WRONGLY CONSIDERED IT TO BE A CASE OF ESTIMATED ADD ITION AND CANCELLED THE PENALTY BY FOLLOWING THE DECISION IN THE CASE OF HARIGOPAL SINGH (SUPRA) WHICH IS ON DIFFERENT FA CTS. HOWEVER, THE FACTS AND SUFFICIENT MATERIAL IS AVAIL ABLE ON RECORD TO DECIDE THE DEPARTMENTAL APPEAL ON MERITS. COPY OF THE ASSESSMENT ORDER IS FILED ON RECORD, IN WHICH T HE ASSESSING OFFICER HAS OBSERVED THAT ASSESSEE HAD GI VEN 3 INTEREST FREE LOANS AND ADVANCES TO SIX PERSONS NAM ELY ASHOK ANAND AND RAJ RANI ANAND, AND DATE OF PAYMENT WAS FEBRUARY, 2004. IN THE CASES OF M/S PAMVI TISSUES LTD. AND M/S BANSAL STEEL TUBES, THEY WERE OLD BALANCES AND BROUGHT FORWARD FROM THE EARLIER YEARS. IN CASES OF AMIT G OYAL AND SUMIT GOYAL, THE DATE OF PAYMENTS ARE JANUARY 2007 AND MAY, 2006 WHICH PERTAIN TO THE ASSESSMENT YEAR UNDE R APPEAL. THE ASSESSING OFFICER DISALLOWED THE PART OF INTEREST IN THESE CASES FOR THE PURPOSE OF MAKING T HE ADDITION. THE LD. COUNSEL FOR THE ASSESSEE HAS REFE RRED TO ASSESSMENT ORDER OF THE PRECEDING ASSESSMENT YEAR 2 006-07, COPY OF WHICH IS FILED IN THE PAPER BOOK IN WHICH T HE ASSESSING OFFICER ALSO CONSIDERED THE SAME DISALLOW ANCE OF INTEREST IN RESPECT OF AMOUNTS ADVANCED TO SHRI ASH OK ANAND AND MRS. RAJ RANI ANAND AND THE ASSESSING OFF ICER DISALLOWED THE INTEREST OF RS. 6 LACS UNDER SECTION 36(1)(III) OF THE ACT. 4(I) THE LD. COUNSEL FOR THE ASSESSEE ALSO POINTE D OUT THAT ON THE SIMILAR ADDITIONS, THE ASSESSING OFFICER INI TIATED THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT BUT VIDE ORDER DATED 21.03.2012 (PB-11) THE ASSESSING O FFICER DROPPED THE PENALTY PROCEEDINGS UNDER SECTION 271(1 )(C) OF THE ACT. THE STAND OF THE DEPARTMENT IS, THEREFORE , CLEAR THAT ON THE OLD BALANCES, THE ASSESSING OFFICER DID NOT LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN PRECE DING ASSESSMENT YEAR 2006-07 IN RESPECT OF THE INTEREST FREE ADVANCES GIVEN TO SHRI ASHOK ANAND AND MRS. RAJ RAN I ANAND. THE BALANCES IN THEIR CASES WERE FORWARDED IN THE 4 ASSESSMENT YEAR UNDER APPEAL AS WELL ALONGWITH THE BALANCES BROUGHT FORWARD IN THE CASES OF M/S PAMVI TISSUES LTD. AND M/S BANSAL STEEL TUBES. THEREFORE, ON THE PRINCIPLE OF CONSISTENCY, THE ASSESSING OFFICER SHO ULD NOT HAVE LEVIED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN ASSESSMENT YEAR UNDER APPEAL BECAUSE THE OUTSTANDIN G AMOUNTS WERE OLD BALANCES CARRIED FORWARD FROM THE EARLIER YEARS. AS REGARDS THE INTEREST FREE LOANS AND ADVA NCES GIVEN TO SHRI AMIT GOYAL AND SHRI SUMIT GOYAL IN ASSESSMENT YEAR UNDER APPEAL, THE ASSESSING OFFICER MADE PROPORTIONATE DISALLOWANCE OF INTEREST BECAUSE THE ASSESSEE COULD NOT PROVE THAT THESE ADVANCES WERE GIVEN FOR THE BUSINESS PURPOSES. THUS, ASSESSEE HAD DISCLOSED AL L THE PARTICULARS OF INCOME BEFORE THE ASSESSING OFFICER AT ASSESSMENT STAGE. THE ASSESSEE CLAIMED THE ADVANCE S GIVEN FOR BUSINESS PURPOSES BUT THE OPINION OF THE ASSESS EE WAS NOT ACCEPTABLE TO THE ASSESSING OFFICER AND HAD HEL D THAT THESE ADVANCES WERE GIVEN FOR NON BUSINESS PURPOSES . THEREFORE, IT IS A CASE OF MERE DISALLOWANCE OF INT EREST ON CHANGE OF OPINION AND AS SUCH WOULD NOT WARRANT THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT OF THE A CT. THE ASSESSING OFFICER HAS NOT BROUGHT ANY SUFFICIENT MA TERIAL ON RECORD TO PROVE THAT ASSESSEE HAS CONCEALED THE PAR TICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF IN COME. THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS LTD. 322 ITR 158 HELD AS UNDER : A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT,1961 SUGGESTS THAT IN ORDER TO BE CO VERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULA RS OF 5 THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME . THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MA DE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND T O BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HEL D GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORD ER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIONS, THE PENALTY PRO VISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THA T EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY TH E ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE T HE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LI ABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLI ED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRE CT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORREC T OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY U/S 271(1)(C). A MERE MAKING OF A CLAIM WHI CH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNO T AMOUNT TO FURNISHING INACCURATE PARTICULARS. 5. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE C ASE, WE ARE OF THE VIEW THAT LD. CIT(APPEALS) CORRECTLY CANCELLED THE PENALTY IN THE MATTER. 6. IN THE RESULT, DEPARTMENTAL APPEAL STANDS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JUNE,2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19 TH JUNE,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH