Deem Roll Tech Limited, Ahmedabad V. The DCIT, Circle- 1(1)(2), Ahmedabad

ITA 1989/AHD/2018

• Counselvise Citation: [2020] 129 COUNSELVISE.COM (IT) 9875 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 27-02-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 20-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PF JAIN
• Keywords: Wrong claim; Notional interest

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV , VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMB ER ./ I.T.A. NO. 1989/AHD/2018 ( ASSESSMENT YEARS : 2011-12) DEEM ROLL-TECH LIMITED C/3/301-ANUSHRUTI APARTMENT, OPP. NEW YOURK TOWER, NR. JAIN MANDIR, S. G. HIGHWAY, THALTEJ, AHMEDABAD - 380054 / VS. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1(1)(2), 3 RD FLOOR, PRATYAKSHKAR BHAWAN, AMBAWADI, AHMEDABAD ./ ./ PAN/GIR NO. : AABCD9176A ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI P. F. JAIN, A.R. / RESPONDENT BY : SHRI VINOD TANWANI, SR.D.R. DATE OF HEARING 02/03/2020 !'# / DATE OF PRONOUNCEMENT 03/03/2020 / O R D E R PER T. S. KAPOOR - AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LEARNED CIT(A)-1, AHMEDABAD, DATED 08/08/2018 RELAT ING TO ASSESSMENT YEAR 2011-12. ITA NO. 1989/AHD/18 [DEEM ROLL-TECH LIMITED VS. DCIT] A.Y. 2011-12 - 2 - 2. THE ONLY GROUND TAKEN BY THE ASSESSEE IN THIS AP PEAL IS THE ACTION OF LEARNED CIT(A) BY WHICH HE HAS CONFIRMED THE PENALTY WHICH THE AO HAD IMPOSED UNDER S.271(1)(C) OF THE A CT. 3. THE BRIEF FACTS AS PLACED IN THE RECORD ARE THAT DURING ASSESSMENT PROCEEDING, THE AO MADE THREE ADDITIONS AS FOLLOWS: (I) ADDITION ON ACCOUNT OF NEW SHARE CAPITAL RS.35L AKHS; (II) DISALLOWANCE OUT OF INTEREST EXPENSES RS.1,51,697/- ; & (III) DISALLOWANCE OUT OF INTEREST RS.12,020/-. THE AO F URTHER IMPOSED PENALTY OF RS.12,05,630/- @ 300% ON INCOME SOUGHT T O BE EVADED. 4. AGGRIEVED BY THE PENALTY, THE ASSESSEE FILED APP EAL BEFORE THE LEARNED CIT(A) WHO RELIED ON THE TRIBUNALS DEC ISION IN FAVOUR OF THE ASSESSEE IN RESPECT OF SHARE CAPITAL AND THEREFORE THE PENALTY WAS DELETED, HOWEVER, HE CONFIRMED THE PENA LTY ON ACCOUNT OF DISALLOWANCE OUT OF INTEREST EXPENSES. 5. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LEARNED AR, AT THE OUTSET, INVITED OUR ATTEN TION TO THE COPY OF BALANCE SHEET PLACED IN PAPER BOOK PAGE NO. 10 AND SUBMITTED THAT THERE WAS A TOTAL INTEREST FREE FUND S IN THE FORM OF CAPITAL AND RESERVE TO THE EXTENT OF RS.12.85CRORES AND AGAINST WHICH ONLY RS.9 LAKHS WAS ADVANCED AS INTEREST FREE ADVANCES. THEREFORE, IT WAS SUBMITTED THAT THE ASSESSEE HAD S UFFICIENT INTEREST FREE FUNDS OUT OF WHICH IT COULD HAVE GIVE N INTEREST FREE ADVANCES. THE LEARNED AR FURTHER SUBMITTED THAT AL L DETAILS AND PARTICULARS WERE BEFORE THE AO AND FROM THOSE PARTI CULARS ONLY THE AO ARRIVED AT THE CONCLUSION THAT ASSESSEE HAD DIVE RTED INTEREST BEARING FUNDS TO NON INTEREST BEARING FUNDS AND THE REFORE, IT ITA NO. 1989/AHD/18 [DEEM ROLL-TECH LIMITED VS. DCIT] A.Y. 2011-12 - 3 - CANNOT BE SAID THAT IT IS A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF WRONG PARTICULARS OF INCOME. THEREFO RE, IT WAS PRAYED THAT THE PENALTY SUSTAINED BY THE LEARNED CI T(A) BE DELETED. 7. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT IT IS A FA CT THAT SUFFICIENT INTEREST FREE FUNDS WERE AVAILABLE WITH THE ASSESSE E AS IS COMING OUT FROM BALANCE SHEET PLACED IN PAPER BOOK PAGE NO .10. THE ASSESSEE HAD HUGE INTEREST FREE FUNDS TO THE TUNE O F RS.12.85CRORES AND AGAINST WHICH MEAGER AMOUNT WAS ADVANCED ON WHICH ASSESSEE HAD NOT CHARGED ANY INTEREST. TH EREFORE, KEEPING IN VIEW THE JUDICIAL PRECEDENTS, THE INTERE ST WAS NOT DISALLOWABLE BUT SINCE THE HONBLE TRIBUNAL HAD SUS TAINED THE DISALLOWANCE THOUGH ON A DIFFERENT REASON, WE DO NO T WANT TO FURTHER GO INTO THIS ASPECT. MOREOVER, WE FIND THAT THE AO HAD WORKED OUT THE DISALLOWANCE ONLY ON THE BASIS OF DO CUMENTS FILED BY THE ASSESSEE IN THE FORM OF BALANCE SHEET AND PR OFIT & LOSS ACCOUNT. IT IS ONLY A CASE OF OPINION ON THE PART OF AO THAT HE HELD THAT ASSESSEE HAD DIVERTED INTEREST BEARING FU NDS TO INTEREST FREE ADVANCES IGNORING THE FACT THAT ASSESSEE HAD H UGE INTEREST FREE RESERVES. THE ASSESSING OFFICER THEREFORE HEL D THAT ASSESSEE HAD MADE WRONG CLAIM AND THEREFORE HE IMPOSED THE P ENALTY WHEREAS THE FACT REMAINS THAT PENALTY WAS IMPOSED B Y CALCULATING NOTIONAL INTEREST ON INTEREST FREE ADVANCES. THE A SSESSEE OF COURSE HAD NOT CONCEALED ANY PARTICULARS OF INCOME. EVEN IF, WE AGREE WITH THE AUTHORITIES BELOW THAT ASSESSEE HAD MADE W RONG CLAIM ITA NO. 1989/AHD/18 [DEEM ROLL-TECH LIMITED VS. DCIT] A.Y. 2011-12 - 4 - EVEN THEN MERE WRONG CLAIM CANNOT TANTAMOUNT TO FUR NISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME AS HELD BY HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. (322 ITR 158) (SC) . IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE HOLD THAT PENALTY SUSTAINED BY LE ARNED CIT(A) IS NOT AS PER LAW. THEREFORE, WE DELETE THE SAME. IN THE VIEW OF THE ABOVE, THE APPEAL FILED BY THE ASSESSEE IS ALLO WED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. SD/- SD/- (RAJPAL YADAV) (T. S. KAPOOR) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD: DATED 03/03/2020 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT 03/03/2020