ACIT, Circle-14(1), Hyderabad, Hyderabad V. Satyanarayana Chava (HUF), Hyderabad, Hyderabad

ITA 234/HYD/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2664 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-01-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 14-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: MD AFZAL
• Keywords: Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 234/HYD/2017 ASSESSMENT YEAR: 2012-13 THE ACIT, CIRCLE-14(1), HYDERABAD VS M/S. SATYANARAYANA CHAVA (HUF), HYDERABAD [PAN: AABHC7111F] (APPELLANT) (RESPONDENT) FOR REVENUE : SMT. SUMAN MALIK, DR FOR ASSESSEE : SHRI MD. AFZAL, AR DATE OF HEARING : 19-01-2018 DATE OF PRONOUNCEMENT : 24-01-2018 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-6, HYDERABAD, DATED 18-11-2016 ON THE ISSUE OF DELETING PENALTY U/S. 271 (1)(C) OF THE INCOME TAX ACT [ACT]. 2. BRIEFLY STATED, ASSESSEE-HUF FILED ITS RETURN OF INC OME DECLARING LOSS OF RS. 44,19,991/-. IN THE COURSE OF SCRUTINY ASSESSMENT, ASSESSING OFFICER (AO) NOTICED THAT ASSESSE E HAS OFFERED INCOME DISTRIBUTED FROM A MUTUAL FUND AXIS VEN TURE CAPITAL TRUST AND ALSO CLAIMED CERTAIN EXPENDITURES AG AINST SUCH INCOME. FURTHER, ASSESSEE ALSO CLAIMED INTEREST AMOUNT OF RS. 70,95,890/- PAID TO MERLIN HOLDINGS PVT. LTD., FROM W HOM HE HAS BORROWED ABOUT RS. 10 CRORES AND INVESTED IN MUTUAL FUND AS WELL AS IN ANOTHER COMPANY LAURUS LABS PVT. LTD. ON BEING QUESTIONED I.T.A. NO. 234/HYD/2017 :- 2 - : IN A STATEMENT RECORDED ON 25-02-2015, ASSESSEE SUBMITTE D THAT HE COULD NOT ESTABLISH ONE TO ONE LINK BETWEEN THE LOAN TAKEN AND ITS USAGE, AS HE HAS ALREADY REPAID THE LOAN AMOUNT. CONSEQUENTLY, AO DISALLOWED THE INTEREST EXPENDITURE CL AIM MADE BY ASSESSEE TO AN EXTENT OF RS. 70,95,890/-. DUE TO AB OVE DISALLOWANCE, THE LOSS CLAIMED HAS BECOME A POSITIVE INCOME AND ASSESSEE PAID THE NECESSARY TAXES WITHOUT FURTHER APPEAL . AO INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) FOR FURN ISHING INACCURATE PARTICULARS. AO LEVIED PENALTY ON THE INTER EST DISALLOWANCE MADE. 3. ASSESSEE CONTENDED THAT IT HAS NOT FURNISHED ANY INA CCURATE PARTICULARS AND ALL THE PARTICULARS OF INCOME AND EXPE NDITURE WERE SUBMITTED TO AO, CONSEQUENTLY, THE PENALTY CANNOT BE LEV IED. HE ALSO TOOK AN ALTERNATE CONTENTION BEFORE THE LD.CIT(A) TH AT ASSESSEE HAS WRONGLY OFFERED THE INCOME OF RS. 31,11,724/- RE CEIVED FROM A MUTUAL FUND WHICH WAS EXEMPT FROM TAXES. WHILE REJECTIN G THE TAXABILITY OR OTHERWISE OF THE INCOME FROM THE FUND AS NOT AN ISSUE FOR DISCUSSION, LD.CIT(A), HOWEVER, CONSIDERED THAT A SSESSEE HAS BONAFIDELY MADE A WRONG CLAIM AND ACCORDINGLY, DELE TED THE PENALTY STATING THAT THE FACTS DO NOT WARRANT IMPOSITION O F PENALTY U/S. 271(1)(C). REVENUE IS AGGRIEVED. 4. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE DO NOT SE E ANY REASON TO INTERFERE WITH THE ORDER OF CIT(A). MAKING A CLAIM AND DISALLOWANCE THEREOF DOES NOT COME WITHIN THE PARAMETER S OF EITHER CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PAR TICULARS. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS LIMITED [322 ITR 158] (SC), HAS DECIDED THE ISSUE AND HELD AS FOLLOWS:- I.T.A. NO. 234/HYD/2017 :- 3 - : (I) S. 271 (1) (C) APPLIES WHERE THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME. THE PRESENT WAS NOT A CASE OF CONCEALMENT OF THE INCOME. AS REGARDS THE FURNISHING OF INACCURATE PARTICULARS , NO INFORMATION GIVEN IN THE RETURN WAS FOUND TO BE INCORRECT OR IN ACCURATE. THE WORDS INACCURATE PARTICULARS MEAN THAT THE DETAIL S SUPPLIED IN THE RETURN ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS . IN THE ABSENCE OF A FINDING BY THE AO THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE, T HERE WOULD BE NO QUESTION OF INVITING PENALTY U/S 271(1)(C). (II) THE ARGUMENT OF THE REVENUE THAT SUBMITTING A N INCORRECT CLAIM FOR EXPENDITURE WOULD AMOUNT TO GIVING INACCURATE P ARTICULARS OF SUCH INCOME IS NOT CORRECT. BY NO STRETCH OF IMAGI NATION CAN THE MAKING OF AN INCORRECT CLAIM IN LAW TANTAMOUNT TO F URNISHING INACCURATE PARTICULARS. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE . IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT AC CEPTED BY THE AO FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY U/S 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATU RE. 4.1. RESPECTFULLY FOLLOWING THE ABOVE, WE ARE OF THE O PINION THAT IT IS A CLAIM MADE BY ASSESSEE WHICH GOT DISALLOWED AS HE COULD NOT ESTABLISH THE NEXUS BETWEEN THE BORROWAL AND EARNING O F INCOME, WHICH IN OUR VIEW DOES NOT ATTRACT ANY PENALTY U/S. 271 (1)(C). THERE IS NO MERIT IN REVENUE GROUNDS, ACCORDINGLY, TH E SAME ARE DISMISSED. 5. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2018 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED 24 TH JANUARY, 2018 TNMM I.T.A. NO. 234/HYD/2017 :- 4 - : COPY TO : 1. THE ACIT, CIRCLE-14(1), HYDERABAD. 2. M/S. SATYANARAYANA CHAVA (HUF), PLOT NO. 303, RO AD NO. 25, JUBILEE HILLS, HYDERABAD. 3. CIT(APPEALS)-6, HYDERABAD 4. PR.CIT-6, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.