ACIT,Cir.-4, Pune V. Pushpam Plaza Pvt. Ltd., Pune

ITA 209/PUN/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56528 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-09-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 04-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIPIN GUJARATHI
• Assessee Lawyers: S PRAVEENA
• Section: 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 209/PN/2010 (ASSTT. YEAR: 2004-05) ASSTT. COMMISSIONER OF INCOME TAX, APPELLANT CIRCLE-4, PUNE ROOM NO. 212, 2 ND FLOOR, PMT COMMERCIAL COMPLEX, SWARGATE, PUNE 411 037 V. PUSHPAM PLAZA PVT LTD. , ... RESPONDENT KRISHNAKUNJ 51, LUULLANAGAR PUNE 30 PAN : NOT AVAILABLE APPELLANT BY : MS. S. PRAVEENA DEPARTMENT BY : SHRI. VIPIN GUJARATHI DATE OF HEARING :13.9.11 DATE OF PRONOUNCEMENT: 08.11.11 ORDER PER I.C. SUDHIR, JM THE REVENUE HAS QUESTIONED THE FIRST APPELLATE ORD ER ON SEVERAL GROUNDS INVOLVING THE ISSUE AS TO WHETHER THE LD CIT(A) HAS ERRED IN UPHOLDING THE PENALTY OF RS. 17,00,000/- LEVIED BY THE A.O U/S. 2 71(1)(C) ON THE GROUND OF CONCEALMENT OF PARTICULARS RELATING TO INTEREST OF RS. 41,21,637/- CLAIMED AS DEDUCTION. 2. IN SUPPORT OF THE GROUND, THE LD. D.R. HAS BASIC ALLY PLACED RELIANCE ON THE PENALTY ORDER WITH THIS SUBMISSION THAT THE LD CIT( A) WHILE UPHOLDING THE PENALTY HAS FAILED TO APPRECIATE THE CONTENTS OF CLAUSE (B) OF EXPLANATION 1 TO SECTION 271(1)(C ) WHICH CASTS THE ONUS OF REBUTTING THE PR ESUMPTION OF CONCEALMENT ON THE ASSESSEE. ITA . NO 209/PN/2010 PUSHPAM PLAZA PVT LTD A.Y. 2004-05 PAGE OF 5 2 3. THE LD. A.R., ON THE OTHER HAND, TRIED TO JUSTIF Y THE FIRST APPELLATE ORDER DELETING THE PENALTY WITH THIS SUBMISSION THAT REQU IREMENT OF EXPLANATION 1(B) TO SECTION 271(1)(C ) WAS FULFILLED. HE PLACED RELIAN CE ON THE FOLLOWING DECISIONS : 1) CIT VS. RELIANCE PETRO PRODUCTS (P) LTD., (2010), 3 22 ITR 158 (SC) 2) SURREL ENTERPRISES (P) LTD., VS. ACIT (2010) 37 SOT 117 (AHD.) 4. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW AND THE DECISIONS CITED ABOVE, WE FIND THAT THE A.O LEVIED PENALTY OF RS. 17,00,000/- U/S. 271(1)(C ) ON THE BASIS THAT IN THE AUDITORS REPORT ENCLOSED WITH THE RETURN OF INCOME, IT WAS MENTIONED THAT THE ASSESSEE HAD DEFAULTED IN RE-PAY MENT OF LOAN OF ORIENTAL BANK OF COMMERCE (OBC) AMOUNTING TO RS.3,06,95,635/- AS ON 31 MARCH 2004 WHEREAS THE DEFAULT IN PAYMENT OF THIS LOAN WAS W.E.F. DECEMBER 2001. IT WAS FURTHER STATED THAT AS PER PROVISION OF SECTION 43B, INTEREST DEBI TED TO PROFIT & LOSS ACCOUNT AND NOT PAID TO THE SCHEDULED BANKS WAS NOT AN ALLOWABL E EXPENDITURE. THE RETURN OF INCOME WAS PROCESSED U/S. 143(1). SUBSEQUENTLY, NO TICE U/S. 148 WAS ISSUED ON THE AFORESAID REASON. THE ASSESSEE IN ITS RETURN OF IN COME FILED IN RESPONSE TO NOTICE ISSUED U/S. 148 DISCLOSED RETURNED LOSS AT RS. 53, 06,420/-. ASSESSMENT U/S. 143(3) R.W.S. 147 WAS COMPLETED DETERMINING THE TOTAL LOSS AT THIS FIGURE OF RS. 53,06,420/-. IN ITS RETURN FILED IN RESPONSE TO NOTICE U/S. 148, THE ASSESSEE IN THE COMPUTATION HAD DISALLOWED THE INTEREST NOT PAID TO THE SCHEDUL ED BANK U/S. 43B OF THE ACT WHICH WAS RS. 41,21,637/- AND THEREBY RETURNED LOSS WAS REDUCED BY THIS AMOUNT. 5. BEFORE THE A.O, IN PENALTY PROCEEDINGS, THE ASSE SSEE TRIED TO EXPLAIN THAT THE MISTAKE WAS THROUGH OVERSIGHT AND NOT INTENTIONAL O R DELIBERATE. THE A.O DID NOT ACCEPT THE EXPLANATION AND OBSERVED THAT THE ASSESS EE HAD DEBITED THE INTEREST EXPENDITURE OF RS. 61,26,768/- BUT THE DETAILS OF T HIS INTEREST EXPENDITURE BEING SHOWN IN SCHEDULE J FORMING PART OF THE ACCOUNTS WAS NOT ENCLOSED WITH THE RETURN OF INCOME. FURTHER, NO BREAK-UP OF PRINCIPLE AND I NTEREST WAS GIVEN IN THE BALANCE ITA . NO 209/PN/2010 PUSHPAM PLAZA PVT LTD A.Y. 2004-05 PAGE OF 5 3 SHEET UNDER THE HEAD SECURED LOANS. THE A.O THUS INFERRED THAT THE ASSESSEE HAD DELIBERATELY CONCEALED THE FACT OF NON-PAYMENT OF I NTEREST TO SCHEDULED BANK. 6. AFTER DETAILED DISCUSSION, THE LD CIT(A) HAS DEL ETED THE PENALTY WITH THE FOLLOWING CONCLUSION IN PARA 3.5 OF HIS ORDER : 3.5 I HAVE CONSIDERED THE FACTS OF THE CASE AND TH E MATERIAL AVAILABLE ON RECORD. IT IS NOTICED THAT IT WAS FROM THE RETURN OF INCOME ORIGINALLY FILED ON 1.11.2204, THAT AS PER THE AUDITORS REPORT POINT N O. 10, THE ASSESSING OFFICER NOTICED THAT THE DEFAULT IN PAYMENT OF LOAN OF OBC AMOUNTING TO RS.3,06,95,635/- WAS MENTIONED BY THE AUDITOR AND A LSO THAT THE DEFAULT WAS W.E.F. DECEMBER, 2001. THE APPELLANT HAS EXPLAINED THE ASSESSING OFFICERS POINT IN THIS REGARD THAT THE AUDITOR HAD MENTIONED ONLY THE TOTAL AMOUNT OF DEFAULT IN REPAYMENT OF LOANS OF OBC BY THE ASSESSE E, WITHOUT MENTIONING THE DEFAULT AMOUNT IN RESPECT OF INTEREST PAYMENT. HOWEVER, IT HAS BEEN EXPLAINED BY THE ASSESSEE THAT IN ACCORDANCE WITH T HE COMPANIES ACT, 1956, IN THE COMPANY AUDIT REPORT ONLY THE AMOUNT AND PER IOD OF DEFAULT IS TO BE REPORTED AND NOT THE BREAK UP OF PRINCIPAL AMOUNT A ND THE INTEREST AMOUNT. IN FACT, IT WAS ON THE BASIS OF THIS STATEMENT ITS ELF THAT ASSESSMENT WAS REOPENED U/S. 147; SINCE DEFAULT PERIOD W.E.F. DECE MBER, 2001 WAS ALSO SPECIFIED. THE ASSESSING OFFICER HAS ALSO STATED T HAT THE SCHEDULE J TO THE P & L A/C WHICH GAVE DETAILS OF THE INTEREST OF RS. 6 1,26,768/- DEBITED TO THE P&L A/C, WAS NOT ENCLOSED WITH THE RETURN. THIS SC HEDULE-J MERELY GAVE THE BREAK UP OF THIS INTEREST AMOUNT OF RS. 61,27,768/- WHICH INCLUDED INTEREST TO OBC RS. 41,21,637/- AND INTEREST ON DEPOSITS RS. 20 ,05,131/-. IT IS, THEREFORE, OBVIOUS THAT SINCE THE REMARK OF THE STATUTORY AUDI TOR WAS ALREADY THERE IN THE ORIGINALLY FILED RETURN; THAT THERE WAS DEFAULT IN REPAYMENT OF LOAN TO OBC AMOUNTING TO RS. 3,06,95,635/- W.E.F. DECEMBER, 200 1, IT WOULD NECESSARILY INCLUDE INTEREST FOR THE DEFAULT PERIOD OF THIS LOA N AS WELL. THEREFORE, IT CANNOT BE INFERRED THAT THE APPELLANT HAD DELIBERAT ELY CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS OF INCOME RELATED TO THE INTEREST ON LOAN TAKEN FROM OBC. IT WAS ALSO E XPLAINED BY THE APPELLANT THAT IT IS A CASE WHEN THERE ARE REPEATEDLY LOSSES INCURRED YEAR AFTER YEAR TILL DATE AND THERE WAS NO BENEFIT IN CLAIMING ENHANCED LOSSES WHICH WERE NOT EXISTING. THE DECISION OF THE DELHI HIGH COURT CIT ED BY THE APPELLANT IN THE CASE OF PHI SEEDS INDIA LTD., 301 ITR 13 WAS RELIE D UPON BY THE APPELLANT TO ITA . NO 209/PN/2010 PUSHPAM PLAZA PVT LTD A.Y. 2004-05 PAGE OF 5 4 SUBSTANTIATE THE PROPOSITION THAT THE PENALTY WAS A TTRACTED ONLY WHEN THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME WI TH AN INTEND TO MISLEAD THE REVENUE. 7. ON PERUSAL OF THE ABOVE FINDING OF THE LD CIT(A) ON THE ISSUE, WE FIND THAT THE LD CIT(A) HAS DELETED THE PENALTY WITH THIS OBS ERVATION THAT REMARK OF THE STATUTORY AUDITOR WAS ALREADY THERE IN THE ORIGINAL LY FILED RETURN THAT THERE WAS DEFAULT IN REPAYMENT OF LOAN TO OBC AMOUNTING TO R S. 3,06,95,635/- W.E.F. DECEMBER 2001. THUS, IT WOULD NECESSARILY INCLUDE INTEREST FOR THE DEFAULT PERIOD FOR THIS LOAN AS WELL. THE LD CIT(A) ACCORDINGLY HE LD THAT IT CANNOT BE INFERRED THAT THE ASSESSEE HAD DELIBERATELY CONCEALED THE PARTICU LARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME RELATED TO THE INT EREST ON LOAN TAKEN FROM OBC. THE LD CIT(A) HAS NOTED FURTHER THAT THE EXPLANATIO N OF THE ASSESSEE THAT IT IS A CASE WHERE THERE ARE REPEATEDLY LOSSES INCURRED YEA R AFTER YEAR TILL DATE AND THERE WAS NO BENEFIT IN CLAIMING ENHANCED LOSSES WHICH WE RE NOT EXISTING. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE LD CIT(A ) HAS RIGHTLY COME TO THE CONCLUSION THAT THERE WAS NO CONCEALMENT OF PARTICU LARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME RELATED TO THE INT EREST ON LOAN TAKEN FROM OBC TO ATTRACT PENAL ACTION U/S. 271(1)(C ) ON THE ADDITIO N MADE IN THIS REGARD. WE, THEREFORE, DO NOT FIND INFIRMITY IN THE FIRST APPEL LATE ORDER WHEREBY THE LD CIT(A) HAS DELETED PENALTY IN QUESTION. THE SAME IS UPHELD. THE GROUND INVOLVING THE ISSUE ARE THUS REJECTED. 8. CONSEQUENTLY, APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 8TH N OVEMBER 2011. SD/- SD/- ( D. KARUNAKARA RAO ) ACCOUNTANT MEMBER (I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 8TH NOVEMBER, 2011 ITA . NO 209/PN/2010 PUSHPAM PLAZA PVT LTD A.Y. 2004-05 PAGE OF 5 5 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT -II, PUNE 4. THE CIT(A)-II, PUNE 5. THE D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE