ACIT, Nashik V. Deegesh Hotels P. Ltd., Nashik

ITA 2441/PUN/2012

• Counselvise Citation: 244124514 RSA 2012
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-04-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 11-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Assessee Lawyers: S N DOSHI
• Keywords: Bonafide belief; Additional evidence; Condonation of delay; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.2441/PN/2012 (A.Y: 2003-04) ADDL. CIT, CENTRAL RANGE, NASHIK APPELLANT VS. DEEGESH HOTELS PVT. LTD. DURGESH RESIDENCY, ANANDWALI, GANGAPUR ROAD, NASHIK PAN: AABCD5874D RESPONDENT APPELLANT BY : SHRI B.C. MA LAKAR RESPONDENT BY : SHRI S.N. DOSHI DATE OF HEARING: 21.07.2014 DATE OF ORDER : 30.07.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-I, NASHIK, D ATED 10.09.2012 FOR A.Y. 2003-04 ON THE FOLLOWING GROUND S. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN CONDONING THE DELA Y IN SUBMISSION OF APPEAL, AS THE ASSESSEE WAS REPRESENT ED BY A QUALIFIED CHARTERED ACCOUNTANT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE PEN ALTY LEVIED BY THE ADDL. COMMISSIONER OF INCOME-TAX WITHOUT APPRECIATING THAT THERE IS A DEFAULT UNDER SECTION 269T OF THE ACT SINCE ASSESSEE MADE RE-PAYMENT OF LOAN IN C ASH OF RS 6,10,000/- ON 15.02.2003 AND RS 24,365/- ON 31.03.2003. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN NOT APPRECIATING T HAT THE ASSESSEE HAS NOT PROVED THAT THE PAYMENTS OF THE AB OVE 2 ITA NO.2441 OF 12 DEEGESH HOTELS PVT. LTD. AMOUNTS OF RS. 6,10,000/- AND RS.24,365/- ARE TOWA RDS CONSTRUCTION BUSINESS AND NOT TOWARDS REPAYMENT OF OUTSTANDING LOAN OF RS. 43,91,500/-. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED DELETING THE PENALTY LEVIED BY THE ADDL. COMMISSIONER OF INCOME-TAX BY ADMITTING ADDITIONAL EVIDENCE ON WHICH HIS DECISION IS BASED WITHOUT ALLOWING THE ASSESSING OFFICER AN OPPORTUNITY TO EX AMINE THE SAME THEREBY VIOLATING RULE 46A OF I.T. RULES. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE PEN ALTY LEVIED BY THE ADDL. COMMISSIONER OF INCOME-TAX WITHOUT APPRECIATING THAT THE ASSESSEE HAS MISREPRESENTED T HAT TAX WAS NOT DEDUCTED AT SOURCE ON THE IMPUGNED PAYMENT UNDER THE BONAFIDE BELIEF THAT THE PAYMENT REPRESEN TED CAPITAL EXPENDITURE THEREBY MAKING IT CLEAR THAT TH E PAYMENT REPRESENTS NOTHING BUT REPAYMENT OF LOAN. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN IGNORING THE E VIDENCE ON RECORD IN THE FORM OF INCRIMINATING MATERIALS ON TH E BASIS OF WHICH THE PENALTY UNDER SECTION 27IE WAS LEVIED, TH US RENDERING THE DECISION PERVERSE AND CONTRARY TO THE EVIDENCE ON RECORDS. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY, D ELETE AMEND ANY OF THE GROUNDS, AS PER THE CIRCUMSTANCE S OF THE CASE. 8. THE APPELLANT PRAYS LEAVE TO ADDUCE SUCH FURTHER EVIDENCE TO SUBSTANTIATE ITS CASE AS OCCASION MAY D EMAND. 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGE D IN THE BUSINESS OF RUNNING HOTELS AND CIVIL CONSTRUCTION. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS PAID CAS H OF RS.6,10,000/- ON 15.03.2003 AND RS.24,365/- ON 31.0 3.2003 TO MR. AMIT D. SINGH. THE ASSESSING OFFICER HAS LEVIE D PENALTY OF RS.6,34,365/- U/S. 271E OF THE ACT BY TREATING THE PAYMENTS MADE IN CASH TO AMIT D. SINGH AS LOAN REPAID IN CAS H IN VIOLATION TO PROVISIONS OF SECTION 269T OF THE ACT. 3. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AU THORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE 3 ITA NO.2441 OF 12 DEEGESH HOTELS PVT. LTD. AND HAVING CONSIDERED THE SAME, THE CIT(A) HAS GRAN TED RELIEF TO THE ASSESSEE. THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENUE, INTER ALIA, SUBMITTED THAT THE CIT(A) ERRE D IN DELETING THE PENALTY LEVIED BY THE CONCERNED ASSESSING OF FICER WITHOUT APPRECIATING THAT THERE IS A DEFAULT UNDER SECTION 269T OF THE ACT SINCE ASSESSEE MADE RE-PAYMENT OF LOAN IN CASH OF R S 6,10,000/- ON 15.02.2003 AND RS 24,365/- ON 31.03.2003. THE CI T(A) ERRED IN NOT APPRECIATING THAT THE ASSESSEE HAS NOT ESTAB LISHED THAT THE PAYMENTS OF THE ABOVE AMOUNTS OF RS.6,10,000/- AND RS.24,365/- ARE TOWARDS CONSTRUCTION BUSINESS AND N OT TOWARDS REPAYMENT OF OUTSTANDING LOAN OF RS. 43,91,500/-. THE CIT(A) ERRED IN DELETING THE PENALTY LEVIED BY THE CONCERN ED ASSESSING OFFICER WITHOUT APPRECIATING THAT THE ASSESSEE HAS MISREPRESENTED THAT TAX WAS NOT DEDUCTED AT SOURCE ON THE IMPUGNED PAYMENT UNDER THE BONAFIDE BELIEF THAT THE PAYMENT REPRESENTED CAPITAL EXPENDITURE THEREBY MAKING IT C LEAR THAT THE PAYMENT REPRESENTS NOTHING BUT REPAYMENT OF LOAN. ACCORDINGLY, THE ORDER OF CIT(A) BE SET ASIDE AND THAT OF ASSESS ING OFFICER BE RESTORED. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS ALSO OPPOSED THE CONDONATION OF DELAY BY THE CIT(A) ON T HE GROUND THAT THE ASSESSEE IS BEING REPRESENTED BY A QUALIFI ED CHARTERED ACCOUNTANT, SO THE CONDONATION OF DELAY IS NOT JUST IFIED. ON THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATIVE H AS SUPPORTED THE ORDER OF CIT(A). 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE IMPUGNED PENALTY ORDER U/S .271E OF THE ACT DATED 29.07.2010 ALONG WITH THE NOTICE OF DEMAN D U/S.156 OF THE ACT WERE SERVED ON THE ASSESSEE ON 04.08.2010 A ND THE PRESENT APPEAL WAS FILED ON 03.12.2010. THEREFORE, THE APPEAL WAS LATE BY 90 DAYS. THE ASSESSEE HAS FILED LETTER ALONG WITH FORM NO.35, INTER ALIA, REQUESTED FOR CONDONATION O F DELAY WHICH IS REPRODUCED AS UNDER: 4 ITA NO.2441 OF 12 DEEGESH HOTELS PVT. LTD. 'WITH REFERENCE TO THE ABOVE MENTIONED SUBJECT AND UNDER THE INSTRUCTION OF MY CLIENT, IT IS HUMBLY SUBMITTE D TO YOUR HONOUR THAT, YOUR APPELLANT IS PRIVATE LIMITED COMP ANY, NOT ENGAGED IN ANY ACTIVITY SINCE LAST 2/3 YEARS CONSIS TING OF 2 DIRECTORS. MR. AMIT SINGH ONE OF THE DIRECTORS IS S TAYING IN MUMBAI FOR MOST OF THE TIME. ANOTHER DIRECTOR SMT. RITA SINGH IS AN OLD LADY AND IS NOT KEEPING WELL SINCE LAST 3/4 MONTHS. THE ORDER WAS SERVED AT THE JUPITER HOTEL. YOUR APPELLANT SELDOM VISITS THE HOTEL AND HAS ESPECIALL Y NOT VISITED THE HOTEL SINCE LAST MONTHS ON ACCOUNT OF ILL HEALTH. BOTH OF THE DIRECTORS SELDOM VISIT THE HOTE L. THE EMPLOYEE WHO RECEIVED THE ORDER LEFT THE JOB IMMEDI ATELY AFTER THAT FOR SOME REASON. THE ORDER WAS LYING IN THE DRAWER OF THE ACCOUNTS DEPARTMENT. FURTHER AT THE T IME OF CLEANING OF THE ACCOUNTS DEPARTMENT THE ORDER WAS N OTICED BY THE VETERAN ACCOUNTANT. IMMEDIATELY THE ORDER WA S SENT TO OUR OFFICE FOR NECESSARY ACTION. DUE TO THE ABOV E REASON THERE IS DELAY IS FILING OF APPEAL OF ABOUT 90 DAYS . IN VIEW OF THE ABOVE FACTS, KINDLY CONDONE THE DELAY AND ADMIT THE APPEAL AS THE DELAY IS NOT INTENTIONAL'. 5. THE ABOVE REQUEST OF THE ASSESSEE GIVING THE CIR CUMSTANCES LEADING TO THE DELAY IN FILING THE PRESENT APPEAL W AS EXAMINED BY THE CIT(A) AND HE FOUND THAT THERE WAS NO DELIBERAT E DELAY IN FILING THE APPEAL LATE. HE DID NOT FIND ANYTHING O N RECORD THAT A DELAY IN FILING AN APPEAL IS DELIBERATE OR ON ACCOU NT OF CULPABLE NEGLIGENCE OR ON ACCOUNT OF MALAFIDE. THE CIT(A) W AS SATISFIED THAT THE ASSESSEE HAD SUFFICIENT CAUSE FOR NOT PRES ENTING THE APPEAL WITHIN TIME ON THE GROUNDS OF EQUITY, FAIR P LAY AND JUSTICE, SO THE CIT(A) CONDONED THE DELAY AND THE APPEAL WAS DECIDED ON MERIT. WE ARE NOT INCLINED TO INTERFERE WITH THE F ACTUAL FINDING OF CIT(A) IN CONDONING THE DELAY. WE UPHOLD THE SAME. 6. COMING TO THE MERIT, AS STATED ABOVE, WE FIND TH AT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN TH E BUSINESS OF RUNNING HOTELS AND CIVIL CONSTRUCTION. THE ASSESSE E HAS CLAIMED THAT THE PAYMENT OF CASH TO MR. AMIT D. SINGH AGGRE GATING TO RS.6,34,365/- WAS TOWARDS CIVIL CONSTRUCTION WORK E XECUTED BY HIM AND NOT AS REPAYMENT OF LOAN. ON PERUSAL OF TH E STATEMENT OF COMPUTATION OF MR. AMIT D. SINGH FOR A.Y.2003-04 AND OTHER 5 ITA NO.2441 OF 12 DEEGESH HOTELS PVT. LTD. DETAILS FILED BY THE ASSESSEE, THE CIT(A) NOTICED T HAT INCOME FROM CONTRACT WORK FROM DEEGESH HOTELS PVT. LTD. HAD SHO WN AT RS. 1,62,240/- IN THE RETURN OF INCOME FILED ON EXECUTI ON OF CIVIL WORK WORTH RS.22,34,365/-. THE CIT(A) OBSERVED THAT THE OPENING BALANCE IN THE ACCOUNT OF MR. AMIT D. SINGH WAS RS. 49,91,500/- AND ALSO THE CLOSING BALANCE WAS ALSO THE SAME. DU RING THE YEAR THERE ARE CREDITS OF RS.22,34,365/- ON ACCOUNT OF C IVIL CONSTRUCTION WORK AND ALSO DEBITS OF THE SAME AMOUN T ON ACCOUNT OF PAYMENT TOWARDS CIVIL CONSTRUCTION WORK. IT WAS NOTICED THAT THE RECIPIENT OF THE PAYMENT MR. AMIT D. SINGH HAS CONFIRMED TO HAVE RECEIVED THE CASH PAYMENT TOWARDS CIVIL CONSTRUCTION WORK EXECUTED AND HAS SPECIFICALLY DEN IED TO HAVE RECEIVED THE SAME AS LOAN REPAYMENT. FURTHER, THE ASSESSEE HAS EXPLAINED THAT NO TDS HAS BEEN DEDUCTED BY THE ASSE SSEE ON THE PAYMENTS MADE TO MR. AMIT D. SINGH AS IT WAS UNDER THE BONA FIDE BELIEF THAT NO TAX WAS REQUIRED TO BE DEDUCTED WHERE THE EXPENDITURE IS IN THE NATURE OF CAPITAL EXPENDITURE . IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES, THE CIT(A) OBSERVED THAT THE CASH PAYMENT AGGREGATING TO RS.6,34,365/- WAS MADE TOWAR DS CAPITAL CIVIL CONSTRUCTION WORK AND IS NOT IN THE NATURE OF LOAN REPAYMENT IN VIOLATION OF SECTION 269T OF THE ACT A ND THUS THE PENALTY LEVIED OF RS.6,34,365/- WAS RIGHTED DELETED BY THE CIT(A). THIS REASONED FINDING OF CIT(A) WHEREBY HE HAS DELE TED THE PENALTY LEVIED U/S.271E OF THE ACT, NEEDS NO INTERF ERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 30 TH OF JULY, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 30 TH JULY, 2014 GCVSR 6 ITA NO.2441 OF 12 DEEGESH HOTELS PVT. LTD. COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A)-I, NASHIK 4) THE CIT-I, NASHIK 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE