Shriram EPC Ltd., CHENNAI V. DCIT, CHENNAI

ITA 2261/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96267 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 30-09-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 10-09-2014
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: R SIVARAMAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , ! ' , # $% & [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ] ./ I.T.A.NO.2261/MDS/2014 / ASSESSMENT YEAR : 2005-06 M/S SHIRAM EPC LTD. 18/03, RUKMANI LAKSHMIPATHY ROAD 1 ST FLOOR, R.A BUILDING EGMORE, CHENNAI 600 008 VS. THE DY. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE VI(2) CHENNAI [PAN AAFCS 1410 C] ( '( / APPELLANT) ( )*'( /RESPONDENT) / APPELLANT BY : SHRI R. SIVARAMAN, ADVOCATE /RESPONDENT BY : SHRI P. RADH AKRISHNAN, JCIT / DATE OF HEARING : 30 - 09 - 2015 / DATE OF PRONOUNCEMENT : 16 - 10 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-VI, CHENNA I, DATED 30.7.2014 AND PERTAINS TO ASSESSMENT YEAR 2005-06. 2. SHRI R. SIVARAMAN, LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE ASSESSING OFFICER LEVIED PENALTY U/S 271 (1)(C) OF THE ACT. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE CLAIMED DEDUCTION OF ITA NO.2261/14 :- 2 -: ` 6,040/- BEING THE DONATION AND ` 5 LAKHS TOWARDS FEE PAID TO REGISTRAR OF COMPANIES, AND INTEREST HIRE PURCHASE FINANCE TO THE EXTENT OF ` 49,57,205/-. THE CIT(A) CONFIRMED THE PENALTY LEV IED BY THE ASSESSING OFFICER ON THE GROUND THAT THE EXPLAN ATION OFFERED BY THE ASSESSEE WAS NOT BONAFIDE IN RESPECT OF THE FE E PAID TO ROC AND INTEREST ON HIRE PURCHASE FINANCE. WITH REGARD TO DISALLOWANCE OF ` 6,040/- UNDER THE HEAD DONATION, THE CIT(A) CONFI RMED THE PENALTY ON THE GROUND THAT NO EVIDENCE WAS FURNISHED BY THE ASSESSEE TO PROVE THAT DONATION WAS MADE TO AN INSTITUTION TO W HICH THE CONTRIBUTION MADE QUALIFIES FOR DEDUCTION U/S 80G. REFERRING TO THE INTEREST ON PAYMENT OF HIRE PURCHASE FINANCE, THE L D. COUNSEL SUBMITTED THAT AN AMOUNT OF ` 2,69,71,160/- WAS AGREED TO BE PAID BY M/S SHRIRAM INVESTMENTS LTD TO THE ASSESSEE FOR PU RCHASE OF PLANT AND MACHINERY. OUT OF THIS ` 2,69,71,160/-, A SUM OF ` 1,56,07,885/- WAS RELEASED BY M/S SHRIRAM INVESTMENTS LTD. IN FA CT, THE ASSESSEE UTILIZED THIS AMOUNT OF ` 1,56,07,885/- FOR PURCHASE OF PLANT AND MACHINERY FROM M/S SOUTHERN POWERTECH EQUIPMENTS LT D. A HIRE PURCHASE AGREEMENT WAS ALSO ENTERED INTO BETWEEN M/ S SHRIRAM INVESTMENTS LTD. AND THE ASSESSEE IN RESPECT OF LO AN OF ` 3,19,28,365/- WHICH INCLUDES THE INTEREST CHARGED O N THE ASSESSEE TO THE EXTENT OF ` 49,57,205/- AND THE LOAN AMOUNT RELEASED EARLIER T O THE ITA NO.2261/14 :- 3 -: EXTENT OF ` 1,56,07,885/-. THE ASSESSEE CLAIMED THE INTEREST OF ` 49,57,205/- AS DEDUCTION WHILE COMPUTING THE TOTAL INCOME FOR THE ASSESSMENT YEAR 2005-06. HOWEVER, THE ASSESSEE CO ULD NOT PRODUCE ANY MATERIAL BEFORE THE ASSESSING OFFICER DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THEREFORE, THE INTEREST CLA IMED BY THE ASSESSEE TO THE EXTENT OF ` 49,57,205/- WAS DISALLOWED AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. RE FERRING TO THE HIRE PURCHASE AGREEMENT, THE COPY OF WHICH IS AVAILABLE AT PAGE 42 OF THE PAPER BOOK, THE LD. COUNSEL SUBMITTED THAT COPIES O F THE HIRE PURCHASE AGREEMENT AND THE COPIES OF INVOICES RAISED BY M/S SOUTHERN POWERTECH EQUIPMENTS LTD. COULD NOT BE PRODUCED BEF ORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS. HOWEVER, THESE ARE THE DOCUMENTS AVAILABLE WITH THE ASSESSEE TO ESTABLISH THE PAYMENT OF INTEREST CLAIMED AS DEDUCT ION DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE LD. COUNSEL HAS ALSO POINTED OUT THAT WHEN THE MATTER CAME BEFORE THIS TRIBUNAL ON EARLIER OCCASION, THE LD. MEMBERS OF THE TRIBUNAL POINTED O UT THAT WHY THE ASSESSEE COULD NOT TAKE ANY EFFORTS TO TRACE OUT TH E RECORDS RELATING TO LOAN OBTAINED FROM M/S SHRIRAM INVESTMENTS LTD. AND ACQUISITION OF THE ASSETS. IN VIEW OF THE CLARIFICATION RAISED BY THE TRIBUNAL, THE ASSESSEE SINCERELY TRIED TO TRACE OUT THE RECORDS A ND FIND OUT THE ITA NO.2261/14 :- 4 -: INVOICES AND COPIES OF THE HIRE PURCHASE AGREEMENT. SINCE THESE DOCUMENTS WERE NOT FILED BEFORE THE LOWER AUTHORITI ES, ACCORDING TO THE LD. COUNSEL, IT WAS FILED AS ADDITIONAL EVIDENC E BEFORE THIS TRIBUNAL. ALTERNATIVELY, THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE CLAIMED THE PAYMENT OF INTEREST AS DEDUCTION BY FURNISHING ALL THE DETAILS BEFORE THE ASSESSING OFFICER. THE ASSESSEE HAS FURNISHED ALL THE INFORMATION AND MATERIAL RELATING TO THE INCOME EARNED BY THE ASSESSEE. THEREFORE, THE ASSESSEE HAS NOT FURNISHED ANY INA CCURATE PARTICULARS WITH REGARD TO INCOME EARNED. THE ASSESSEE ALSO H AS NOT SUPPRESSED ANY PART OF THE INCOME. THE CLAIM OF THE ASSESSEE TOWARDS PAYMENT OF INTEREST WAS DISALLOWED SINCE THE INVOICES AND O THER MATERIAL WERE NOT FILED TO SUPPORT THE CLAIM OF LOAN TAKEN BY THE ASSESSEE FROM M/S SHRIRAM INVESTMENTS LTD. SINCE THESE DOCUMENTS ARE AVAILABLE BEFORE THIS TRIBUNAL, ACCORDING TO THE LD. COUNSEL, LEVY O F PENALTY IS NOT JUSTIFIED. 3. REFERRING TO THE DISALLOWANCE OF DONATION OF ` 6,040/- AND FEES PAID TO ROC TO THE EXTENT OF ` 5 LAKHS, THE LD. COUNSEL SUBMITTED THAT THIS ALSO WOULD NOT AMOUNT TO FURNISHING OF IN ACCURATE PARTICULARS OF INCOME. THE ASSESSEE IN FACT PAID THE AMOUNT A ND CLAIMED THE SAME AS DEDUCTION, THEREFORE, THE PROVISIONS OF SEC TION 271(1)(C) OF THE ACT CANNOT BE APPLIED. ITA NO.2261/14 :- 5 -: 4. ON THE CONTRARY, SHRI P. RADHAKRISHNAN, LD. DEPARTM ENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS PRO DUCED THE EVIDENCES IN THE FORM OF INVOICES AND HIRE PURCHASE AGREEMENT BEFORE THIS TRIBUNAL FOR THE FIRST TIME. THE LOWER AUTHOR ITIES HAD NO OCCASION TO EXAMINE THE SAME EITHER IN THE ASSESSMENT PROCEE DINGS OR IN THE PENALTY PROCEEDINGS. THEREFORE, IF THE TRIBUNAL FE ELS THAT THESE DOCUMENTS ARE TO BE CONSIDERED, THE MATTER MAY BE R EMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RE-EXAMINATIO N. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED BY THE LD. COUNSEL, PENALTY U/S 271(1)(C) OF THE ACT WAS LEVIED ON THREE COUNTS. THE FIRST ONE IS DONATION PAID TO THE EXTE NT OF ` 6,040/-. THE PENALTY WAS ALSO LEVIED IN RESPECT OF DISALLOWANCE OF ` 5 LAKHS SAID TO BE PAID TO ROC AND THE CLAIM OF THE ASSESSEE TOWAR DS PAYMENT OF INTEREST ON HIRE PURCHASE FINANCE TO THE EXTENT OF ` 49,57,205/-. THE ASSESSEE FOR THE FIRST TIME FILED ADDITIONAL EVIDEN CE BEFORE THIS TRIBUNAL IN THE FORM OF HIRE PURCHASE AGREEMENT AND INVOICES FOR PURCHASE OF MACHINERY. THESE DETAILS WERE NOT AVAILABLE BEFORE THE LOWER AUTHORITIES. PENALTY PROCEEDINGS ARE SEPARATE AND INDEPENDENT, THEREFORE, THE ASSESSING OFFICER HAS TO RE-APPRECIA TE THE MATERIAL AVAILABLE ON RECORD IN PENALTY PROCEEDINGS. MERE A DDITION MADE IN THE ITA NO.2261/14 :- 6 -: ASSESSMENT PROCEEDINGS CANNOT AUTOMATICALLY LEAD TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. SINCE THE ASSESSEE HAS FILED THE COPIES OF INVOICES FOR PURCHASE OF MACHINERY, THE DETAILS OF LOAN BORROWED FROM M/S SHRIRAM INVESTMENTS LTD. AND COPY OF HIRE PURCH ASE AGREEMENT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE GENUINENESS OF THE DOCUMENTS FILED BY THE ASSESSEE NEEDS TO BE EXAMIN ED BY THE ASSESSING OFFICER AFTER GIVING A REASONABLE OPPORTU NITY TO THE ASSESSEE. THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT THE ASSESSING OFFICER HAS TO EXAMINE THE FACTS ON THE B ASIS OF THE MATERIAL DOCUMENTS FILED BY THE ASSESSEE. THEREFORE, AS RI GHTLY SUBMITTED BY THE LD. DR, THE MATTER NEEDS TO BE RE-EXAMINED BY T HE ASSESSING OFFICER. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHO RITIES ARE SET ASIDE AND THE ISSUE OF LEVY OF PENALTY U/S 271(1)(C) OF THE ACT IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASS ESSING OFFICER SHALL RE-EXAMINE THE ISSUE IN THE LIGHT OF THE MATERIAL DOCUMENTS FILED BY THE ASSESSEE IN THE FORM OF INVOICES, DETAILS OF L OAN AND HIRE PURCHASE AGREEMENT AND DECIDE THE SAME IN ACCORDANCE WITH L AW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ITA NO.2261/14 :- 7 -: ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH OCTOBER, 2015, AT CHENNAI. SD/- SD/- ( ! ' ) (CHANDRA POOJARI) # / ACCOUNTANT MEMBER ( . . . ! ) (N.R.S. GANESAN) / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 16 TH OCTOBER, 2015 RD %&'' ()'*) / COPY TO: ' 1 . / APPELLANT 3. ' +',! / CIT(A) 5. )-.' / / DR 2. / RESPONDENT 4. ' + / CIT 6. .0'1 / GF