Amrita Marketing Pvt. Ltd., Ahmedabad V. The Income tax Officer,Ward-1(1), Ahmedabad

ITA 1957/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62985 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 09-08-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 15-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K GUPTA
• Assessee Lawyers: S N DIVATIA
• Keywords: Commercial expediency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD C BENCH BEFORE: SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARA T, JUDICIAL MEMBER AMRITA MARKETING PVT. LTD. 108, NEW CLOTH MARKET O/S RAJPUR GATE, AHMEDABAD (APPELLANT) PAN NO. AABCA8504B VS. INCOME TAX OFFICER WARD 1(1) AHMEDABAD (RESPONDENT) REVENUE BY : SRI S.K.GUPTA, SR. D.R. ASSESSEE BY : SRI S.N. DIVATIA DATE OF HEARING : 09-08-2012 DATE OF PRONOUNCEMENT : 05-10-2012 / ORDER PER : KUL BHARAT, JUDICIAL MEMBER:- THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-VI AHMEDABAD D ATED 25-02-2009. THE GROUNDS OF APPEAL OF THE ASSESSEE READS AS UNDE R:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY OF RS . 38,79,835/- LEVIED UNDER SECTION 271(1)(C) OF THE I T ACT, 1961 FOR TH E ALLEGED CONCEALMENT AND / OR FURNISHING OF INACCURATE PARTI CULARS OF INCOME IN I.T.A. NO 1957/AHD/2009 A.Y.:-2001-02 ITA NO. 1957/AHD/2009 A.Y. 2001-02 PAGE NO. AMRITA MARKETING PVT LTD. VS. ITO 2 RESPECT OF LOSS INCURRED IN SHARE & SECURITIES AND INTEREST ON LOANS ADVANCED DURING THE YEAR. 2. THE GRIEVANCE OF THE ASSESSEE IS AGAINST THE CON FIRMATION OF PENALTY BY THE LD. CIT(A). THE FACTS IN BRIEF ARE THAT THE AS SESSMENT U/S 143(3) OF THE INCOME TAX ACT 1961, (HEREINAFTER REFERRED TO AS TH E ACT) WAS FINALIZED DETERMINING THE TOTAL INCOME AT RS. 81,35,309/-. A FTER MAKING ADDITIONS ON ACCOUNT OF LESS ON SECURITIES TRADING AT RS. 80,77, 500/- AND DISALLOWANCE OF INTEREST OF RS. 17,32,449/- THE PENALTY PROCEEDING S U/S 271(1)(C) OF THE ACT WAS ONLY INITIATED. 3. THE ASSESSEE FILED AN APPEAL AGAINST THE ADDITIO NS BEFORE THE LD. CIT(A) WHO CONFIRMED BOTH THE ADDITIONS. SUBSEQUE NTLY, A PENALTY ORDER U/S 271(1)(C) OF THE ACT WAS PASSED THEREBY A MINIM UM PENALTY OF RS. 38,79,835/- WAS LEVIED. THE ASSESSEE CARRIED THE M ATTER BEFORE THE LD. CIT(A) WHO CONFIRMED THE PENALTY. NOW, THE ASSESSE E IS BEFORE THE TRIBUNAL. 4. LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE, S RI S.N.DIVATIA SUBMITTED THAT THE ADDITION MADE ON ACCOUNT OF DISA LLOWANCE OF LOANS OF RS. 80,77,500/- HAS BEEN DELETED BY THE HONBLE ITAT AH MEDABAD IN ITA NO. 774/AHD/2007 VIDE ORDER DATED 20-01-2012. HE SUBMI TTED THAT ANOTHER ADDITION ON ACCOUNT OF DISALLOWANCE OF INTEREST OF RS. 17,32,449/- MADE BY THE ASSESSING OFFICER HAD BEEN CONFIRMED BY THE HON BLE ITAT. HE SUBMITTED THAT ON SUCH DISALLOWANCES PENALTY CANNOT BE IMPOSED. HE SUBMITTED THAT THE ASSESSEE HAD BEEN PAYING INTERES T ON BANK BORROWING OF MORE THAN RS. 75 LACS SINCE FINANCIAL YEAR 1998. H E SUBMITTED THAT THE ASSESSEE HAS ALREADY DISCHARGED ITS ONUS BY SUBMITT ING DETAILS OF M/S OMKAR ITA NO. 1957/AHD/2009 A.Y. 2001-02 PAGE NO. AMRITA MARKETING PVT LTD. VS. ITO 3 FINSTOCK LTD AND ALSO CLARIFIED DUE TO DISPUTE WIT H THE PARTY, ITS ACCOUNT CANNOT BE ADJUSTED THEREBY DISCHARGING THE INITIAL BURDEN BY PREPONDERANCE OF PROBABILITY. HE SUBMITTED THAT MERE DISALLOWANC E OF EXPENDITURE WOULD NOT ATTRACT THE LEVY OF PENALTY. ON THE CONTRARY, LD. D.R. STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE HONBLE CO-ORDINATE BENC H IN ITA NO. 774/AHD/2007 IN ASSESSEES OWN CASE HAS DELETED THE ADDITION OF RS. 80,77,500/-. THEREFORE, THE PENALTY ON THIS AMOUNT IS NOT SURVIVED. SO FAR THE PENALTY ON THE ADDITION MADE ON ACCOUNT OF DISA LLOWANCE ON INTEREST OF RS. 17,32,449/- IS CONCERNED, THE HONBLE CO-ORDINA TE BENCH HAS CONFIRMED THIS ADDITION. THE CONTENTION OF THE LEARNED COUNS EL FOR THE ASSESSEE IS THAT ASSESSMENT PROCEEDINGS AND THE PENALTY PROCEEDINGS ARE TWO DIFFERENT AND DISTINCT PROCEEDINGS. HE SUBMITTED THE PENALTY CAN NOT BE CONFIRMED MERELY ON THE BASIS THAT THE EXPENDITURE AS CLAIMED WAS DI SALLOWED BY THE AUTHORITIES. HE SUBMITTED THAT THE AMOUNT WAS NOT ADVANCED TO M/S OMKAR FINSTOCK LTD. AS LOANS BUT WAS GIVEN FOR TRADING IN SHARES. WE FIND FORCE INTO THE CONTENTION OF LD. COUNSEL FOR THE ASSESSEE THAT THE PENALTY COULD NOT HAVE BEEN IMPOSED MERELY ON THE BASIS THAT THE ADDI TION MADE BY THE ASSESSING OFFICER HAS BEEN CONFIRMED BY THE LD. CIT (A) . IT IS NOT DISPUTED THAT THE ASSESSEE HAS FURNISHED ALL DETAILS RELATIN G TO THE EXPENDITURE MADE ON ACCOUNT OF INTEREST. THE INTEREST EXPENDITURE HAS BEEN DISALLOWED ON THE BASIS THAT THE ASSESSEE HAD DIVERTED THE INTEREST B EARING FUNDS TO THE DIRECTORS AND OTHERS. THE FACTS OF THE CASE SHOWED THAT THERE WAS NO BUSINESS NEED AND EXPEDIENCY IN ADVANCING MONEY TO THE DIRECTORS AND TO M/S OMKAR FINSTOCK LTD TO SUCH HUGE EXTENT. SINCE THE ISSUE WHETHER T HERE WAS ANY BUSINESS ITA NO. 1957/AHD/2009 A.Y. 2001-02 PAGE NO. AMRITA MARKETING PVT LTD. VS. ITO 4 NEED IN ADVANCING TO THE DIRECTORS AND TO M/S OMKAR FINSTOCK LTD IS A DEBATABLE ISSUE. IT IS THE ASSESSEE WHO HAS TO DEC IDE ABOUT THE BUSINESS NEED AND EXPEDIENCY IN THE PARTICULAR CIRCUMSTANCES, AND IT HAS TO DEMONSTRATE THAT THE INTEREST BEARING FUND WAS UTILIZED FOR BUS INESS PURPOSE AND COMMERCIAL EXPEDIENCY. WHETHER THERE WAS A BUSINES S EXPEDIENCY OR NOT IS A DEBATABLE ISSUE. IT HAS BEEN WELL SETTLED NOW TH AT PENALTY CANNOT BE IMPOSED WHERE THE ISSUE IS DEBATABLE. IN THIS VIE W OF THE MATTER, THIS GROUND OF ASSESSEES APPEAL IS ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (A.K. GARODIA) (KUL BHARAT) ACCOUNTANT MEMBER JU DICIAL MEMBER AHMEDABAD : DATED 05/10/2012 A.K. / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / CONCERNED CIT 4. - / CIT (A)-III, BARODA 5. , ! , '# / DR, ITAT, AHMEDABAD 6. $% &' / GUARD FILE. BY ORDER/ , ( / ' ) ! , '# *