FITION FIANANCE & INV. CO. LTD, MUMBAI V. ITO WD 8(1)(4), MUMBAI

ITA 2411/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83711 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2014
• Appeal Filed By: Assessee
• Bench Allotted: F
• Next Hearing Date: 07-07-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 11-04-2012
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO. 2411/MUM/2012 (AY: 2005-06) M/S. FITION FINANCE & INVESTMENT CO. LTD. YOGI SMRUTI, 10 TH ROAD, JVPD SCHEME, JUHU MUMBAI-400 049. ! ! ! ! / VS. ITO WARD -8(1)(4) AAYAKAR BHAVAN SECOND FLOOR, M.K. ROAD MUMBAI-400 020. ( #$ / // / APPELLANT) ( %&#$ / RESPONDENT) #$ ' ( ' ( ' ( ' ( /APPELLANT BY : MS. NEELAM JADHAV %&#$ ' ( ' ( ' ( ' ( /RESPONDENT BY : SHRI JEETENDRA KUMAR ! ' )* / / / / DATE OF HEARING : 18.09.2014 +,- ' )* / DATE OF PRONOUNCEMENT : 18.09.2014 . . . . / / / / O R D E R PER JOGINDER SINGH (JM) : THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 15/2/2012 OF THE LD. FIRST APPELLATE AUTHORIT Y CONFIRMING PENALTY OF RS.3,00,181/- WITHOUT APPRECIATING THE F ACTS. 2. DURING HEARING THE LD. COUNSEL FOR THE ASSESSEE MS.NEELAM JADHAV CONTENDED THAT NEITHER THERE IS CO NCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF ITS INCOME, ITA NO.2411/MUM/2012 FITION FINANCE & INVESTMENT CO. LTD. 2 THEREFORE, NO PENALTY IS LEVIABLE U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961. ON THE OTHER HAND THE LD. DR SHRI JEETEN DRA KUMAR CONTENDED THAT THE ASSESSEE TOOK LOAN FROM UNION BA NK OF INDIA AND GAVE TO ONE MRS. SHAKUNTALA V. JHAMB WITHOUT CHA RGING AN INTEREST THUS, PENALTY WAS RIGHTLY IMPOSED. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF INV ESTMENT AND TRADING, TOOK LOAN AMOUNTING TO RS.1.81 CRORES FROM UNION BANK OF INDIA ON 28/9/2004 AND A SUM OF RS.2.26 CRORES W AS GIVEN TO MRS. SHAKUNTALA V. JHAMB, WITHOUT CHARGING INTEREST. THE LD. AO WAS OF THE VIEW THAT SINCE THE AMOUNT OF LOAN WA S NOT UTILIZED BY THE ASSESSEE FOR BUSINESS PURPOSES AND ALSO WITH OUT CHARGING ANY INTEREST, THEREFORE, HE DISALLOWED INTEREST OF RS.8,20,335/- AS PER SEC.36(1)(III) OF THE ACT. PENALTY PROCEEDINGS U/S.271(1)(C) WERE INITIATED AND FINALLY IMPOSED RS.3,00,181/- VI DE ORDER DATED 6/8/2010. 3.1 THE AGGRIEVED ASSESSEE CHALLENGED THE PENALTY O RDER BEFORE THE LD. CIT(A), WHO VIDE ORDER DATED 15/2/20 12 DISMISSED THE APPEAL OF THE ASSESSEE, CONFIRMING THE PENALTY ORDER. THE ITA NO.2411/MUM/2012 FITION FINANCE & INVESTMENT CO. LTD. 3 ASSESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. UNDER THE AFOREMENTIONED FACTS, NOW QUESTION ARISES WHETHER T HE PENALTY WAS RIGHTLY IMPOSED/CONFIRMED. IF THE TOTALITY OF F ACTS, AVAILABLE ON RECORD, OBSERVATIONS MADE IN THE ASSESSMENT ORDE R, CONCLUSION DRAWN IN THE IMPUGNED ORDER AND THE ASSE RTIONS MADE BY THE LD. RESPECTIVE COUNSELS ARE KEPT IN JUX TAPOSITION, ADMITTEDLY, PENALTY U/S. 271(1)(C) OF THE ACT IS IM POSABLE WHEREIN EITHER THERE IS A CONCEALMENT OF INCOME OR FURNISHI NG OF INACCURATE PARTICULARS OF SUCH INCOME. IF, THE AMOU NT OF LOAN, TAKEN FROM THE BANK, WAS USED FOR NON-BUSINESS PURP OSES, IF ANY, THEN ACTION MAY BE TAKEN UNDER OTHER PROVISION S OF THE ACT, BUT WHETHER PENALTY CAN BE IMPOSED, IF TRUE DECLARA TION HAS BEEN MADE BY THE ASSESSEE, WE ARE OF THE VIEW THAT PENAL TY IS NOT IMPOSABLE BECAUSE THE ASSESSEE DISCLOSED FULL PARTI CULARS OF ITS CLAIM AT THE TIME OF FILING OF RETURN. THE RETURN D ECLARING TOTAL INCOME AT RS.4,82,358/- WAS FILED BY THE ASSESSEE O N 27/10/2005 WHICH WAS ACCOMPANIED WITH COMPUTATION O F TOTAL INCOME, P&L A/C., BALANCE SHEET AND VARIOUS ANNEXUR ES TO B/S AND P&L A/C. AS IS EVIDENT FROM THE ASSESSMENT ORDE R ITSELF. THE ASSESSMENT PROCEEDINGS WERE ATTENDED BY THE ASSESSE E FROM TIME TO TIME AND ALSO FURNISHED VARIOUS DETAILS WHICH WE RE CALLED FOR ITA NO.2411/MUM/2012 FITION FINANCE & INVESTMENT CO. LTD. 4 BY THE AO. IN PARA-3 AT PAGE-2 OF THE ASSESSMENT OR DER THE ASSESSEE VIDE LETTER DATED 12.10.2006, SUBMITTED BE FORE THE AO AS UNDER:- THE ASSESSEE COMPANY HAS LOAN, TAKEN FROM UBI, JUHU, MUMBAI FOR RS.1.81 CRORES ON 28.9.2004. THE SAME CAN BE VERIFIED FROM THE BANK STATEMENT ALREADY ON YOUR RECORD. AGAINST THE SAID LOAN A SUM OF RS.2.26 CRORES WAS GIVEN TO MRS. SHAKUNTALA V. JHAMB. NO INTEREST CHARGED. WE FURTHER WANT TO INFORM YOU THAT THE COMPANY HAD EARLIER TAKEN LOAN FROM MRS. SHAKUNTALA V. JHAMB ON WHICH NO INTEREST WAS PAID. DUE TO THE SAID REASON NO INTEREST WAS CHARGED FROM MRS. SHAKUNTALA V. JHAMB . WE FURTHER NOTE THAT MRS. SHAKUNTALA V. JHAMB DID NO T CHARGE ANY INTEREST FROM THE ASSESSEE COMPANY THE DETAILS OF WHICH ARE SUMMARIZED AS UNDER :- ASSESSMENT YEAR AMOUNT (RS.) 1998-1999 43,88,974 1999-2000 48,88,974 2000-2001 75,19,403 2001-2002 85,19,403 2002-2003 94,93,403 2003-2004 94,93,403 2004-2005 88,42,653 THE CUMULATIVE TOTAL OF THE ABOVE AMOUNTS IS MORE T HAN RS.5.00 CRORE ON WHICH MRS. SHAKUNTALA V. JHAMB HAS NOT CHA RGED ANY INTEREST FROM THE ASSESSEE COMPANY. IT IS ALSO NOTE D FROM THE ASSESSMENT ORDER ITSELF THAT THE COMPUTATION OF INC OME FOR THE ASSESSMENT YEAR 2005-06 WAS FILED BEFORE THE AO WHE REIN MRS. ITA NO.2411/MUM/2012 FITION FINANCE & INVESTMENT CO. LTD. 5 SHAKUNTALA V. JHAMB OFFERED TAXABLE INCOME OF RS.1,30,80,340/-. ALL THESE FACTS WERE DULY AVAILAB LE BEFORE THE AO, THEREFORE, EVEN IF ANY DISALLOWANCE WAS TO BE MADE DOES NOT LEAD TO THE CONCLUSION THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OR CONCEALED ANY INCOME. IN SUCH A SITU ATION THE RATIO LAID DOWN IN THE DECISION FROM HON'BLE APEX COURT IN CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 (SC) WHEREIN IT WAS HELD MERELY BECAUSE ASSESSEE CLAIMED EXPENDITURE, W HICH WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT PENALTY U/S. 271(1)(C), COMES TO THE RESCUE OF THE ASSESSEE. 3.2 FOR ATTRACTING PENALTY U/S. 271(1)(C) OF THE AC T THERE SHOULD BE DEFINITE FINDING BY THE AO QUA SUCH CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS. MERE REVISION OF INCOME TO A HIGHER FIGURE BY THE ASSESSING AUTHORITY DOES NOT AUTOMATI CALLY WARRANT AN INFERENCE OF CONCEALMENT. IDENTICAL VIEW WAS EXP RESSED BY HON'BLE HIGH COURT OF MADRAS IN CIT VS. K.R. CHINNI KRISHNA CHETTY (246 ITR 121). SINCE, ALL THE FACTS OF GIVING INTEREST FREE LOAN WERE VERY MUCH AVAILABLE BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS ITSELF, THEREFORE, THERE IS NO QUESTION OF ITA NO.2411/MUM/2012 FITION FINANCE & INVESTMENT CO. LTD. 6 IMPOSING PENALTY. IT IS NOT THE CASE THAT SOMETHING WAS DETECTED BY THE AO LEADING TO EVASION OF TAXES BY THE ASSESS EE . IN VIEW OF THESE FACT WE ARE OF THE VIEW THAT THE PENALTY WAS WRONGLY IMPOSED BY THE AO AND CONFIRMED BY THE LD. CIT(A). THE LD. AO IS DIRECTED TO DELETE THE PENALTY. 4. FINALLY THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSI ON OF THE HEARING ON 18 TH DAY OF SEPTEMBER, 2014 . . ' +,- /!0 18.09.2014 , ' 8 SD/- SD/- ( SANJAY ARORA ) (JOGINDER SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; /! DATED : 18 TH SEPT. 2014. JV. . ' %)9 :9-) . ' %)9 :9-) . ' %)9 :9-) . ' %)9 :9-)/ COPY OF THE ORDER FORWARDED TO : 1. #$ / THE APPELLANT 2. %&#$ / THE RESPONDENT. 3. ; ( ) / THE CIT, MUMBAI. 4. ; / CIT(A)-13, MUMBAI 5. 9>8 %)! , , / DR, ITAT, MUMBAI 6. 8? @ / GUARD FILE. .! .! .! .! / BY ORDER, &9) %) //TRUE COPY// A AA A/ // /B C B C B C B C (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI.