The ACIT, Circle-4, Baroda V. M/s. Welspun Projects Ltd.,(Formerly known as MSK Projects (India) Ltd.,), Baroda

ITA 2520/AHD/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3088 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 12-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA M AGRAWAL
• Keywords: Business income; Depreciation; Income from undisclosed sources; Earning of tax free income; Retrospective amendment; Wrong claim; Tax effect
• Section: 143(3); 142(1); 147

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO.2484 AND 2485/AHD/2014 / ASSTT. YEAR: 2000-2001 WELSPUN PROJECTS LTD. (FORMERLY KNOWN AS MSK PROJECTS 707-708, STERLING CENTRE R.C.DUTTA ROAD, BARODA 390 005. PAN : AABCM 4107 C VS. ACIT, CIR.4 BARODA. ITA NO.2518, 2519 AND 2520/AHD/2014 ASSTT.YEAR : 2004-2005 ACIT, CIR.4 BARODA. VS. WELSPUN PROJECTS LTD. (FORMERLY KNOWN AS MSK PROJECTS 707-708, STERLING CENTRE R.C.DUTTA ROAD, BARODA 390 005. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI VARTIK CHOKSHI, AR REVENUE BY : SMT.APARNA M. AGRAWAL, CIT-DR ! / DATE OF HEARING : 14/08/2018 '#$ ! / DATE OF PRONOUNCEMENT: /08/2018 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THESE ARE TWO SETS OF APPEAL; FIRST TWO APPEALS ARE DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST ORDERS OF THE LD.C IT(A)-III, BARODA DATED 9.6.2014 AND 16.6.2014 AND OTHER THREE APPEAL S ARE BY THE REVENUE AGAINST ORDERS OF THE LD.CIT(A) DATED 9.6.2 014, 17.6.2014 AND 11.6.2014 FOR THE RESPECTIVE ASSESSMENT YEARS. ALL THESE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. ITA NO.2484/AHD/2014 AND 4 OTHERS ACIT VS. WELSPUN PROJECTS LTD. 2 2. FIRST WE TAKE UP REVENUES APPEALS. 3. IN ITA NO.2518/AHD/2014 REVENUE HAS CHALLENGED D ELETION OF INTEREST EXPENSES OF RS.42,77,609/- ATTRIBUTABLE TO BOT PROJECTS BY THE LD.CIT(A). ITA NO.2519/AHD/2014 IS QUANTUM APPEAL C HALLENGING ALLOWANCE OF DEDUCTION UNDER SECTION 80IA OF RS.32, 83,582/- BY THE LD.CIT(A) WHICH WAS DENIED BY THE AO, WHILE ITA NO. 2520/AHD/2014 IS FILED TO CHALLENGE DELETION OF PENALTY IMPOSED BY T HE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 4. BEFORE TAKING UP THE ABOVE APPEALS OF THE REVENU E, THE LD.COUNSEL FOR THE ASSESSEE VEHEMENTLY CONTESTED MAINTAINABILI TY OF THE ABOVE THREE APPEALS FILED BY THE REVENUE BEFORE THE TRIBU NAL IN VIEW OF RECENT CBDT CIRCULAR NO.3 OF 2018 WHEREBY THE BOARD HAS IN STRUCTED THE REVENUE NOT TO FILE APPEAL BEFORE THE TRIBUNAL WHER E TAX EFFECT IS BELOW RS.20 LAKHS. THOUGH THE LD.DR DID NOT DISPUTE THIS PRELIMINARY OBJECTION OF THE LD.COUNSEL FOR THE ASSESSEE, LEFT ISSUE TO THE BENCH DECIDE THESE APPEALS IN ACCORDANCE WITH LAW. 5. AFTER HEARING BOTH THE SIDES ON PRELIMINARY ISSU E AND ON PERUSAL OF THE RECORD, WE FIND THAT ON 8.7.2018 THE CBDT HA S ISSUED INSTRUCTIONS BEARING NO. 3 OF 2018 UNDER FILE NO.F.NO.279/MISC.142/2007-ITJ(PT) PROHIBITING ITS S UBORDINATE AUTHORITIES FROM FILING OF APPEAL TO THE TRIBUNAL A GAINST ORDER OF THE CIT(A) WHERE THE TAX EFFECT BY VIRTUE OF THE RELIEF GIVEN BY CIT(A) IS LESS THAN RS.20 LAKHS. THE INSTRUCTIONS HAVE BEEN MADE APPLICABLE WITH RETROSPECTIVE EFFECT, MEANING THEREBY, THESE INSTRU CTIONS ARE APPLICABLE ON PENDING APPEALS ALSO. IN THE PRESENT CASE, IF W E CONSIDER EACH ADDITION CONTESTED BY THE REVENUE, THEN IT WOULD SH OW THAT TAX EFFECT ON EACH APPEAL WOULD FALL BELOW RS.20 LAKHS. THE T AX EFFECT AS PER CBDT CIRCULAR IS TAX ON THE TOTAL INCOME ASSESSED M INUS THE TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BE EN REDUCED BY THE ITA NO.2484/AHD/2014 AND 4 OTHERS ACIT VS. WELSPUN PROJECTS LTD. 3 AMOUNT OF INCOME IN RESPECT OF THE ISSUE AGAINST WH ICH APPEAL IS FILED, WOULD BE LESS THAN RS.20 LAKHS. THEREFORE, THE PRES ENT APPEALS OF THE REVENUE ARE HIT BY THE CBDT CIRCULAR AND HENCE NOT MAINTAINABLE. BESIDES THAT LD.DR HAS NOT POINTED OUT WHETHER THE CASE OF THE REVENUE FALL WITHIN THE AMBIT OF EXCEPTIONS PROVIDED IN THE CIRCULAR OR NOT. THUS, KEEPING IN VIEW THE ABOVE CBDT CIRCULAR AND PROVISI ONS OF SECTION 268A OF THE INCOME TAX ACT, WE ARE OF THE VIEW THAT THE PRESENT APPEALS OF THE REVENUE DESERVE TO BE DISMISSED. THEY ARE ACCOR DINGLY DISMISSED. HOWEVER, IT IS OBSERVED THAT IN CASE ON RE-VERIFICA TION AT THE END OF THE AO IT COMES TO THE NOTICE THAT THE TAX EFFEC T IS MORE OR REVENUES CASE FALLS WITHIN THE AMBIT OF EXCEPTIONS PROVIDED IN THE CIRCULAR, THEN THE DEPARTMENT WILL BE AT LIBERTY TO APPROACH THE T RIBUNAL FOR RECALL OF THIS ORDER. SUCH APPLICATION SHOULD BE FILED WITHI N THE TIME PERIOD PRESCRIBED IN THE ACT. IN VIEW OF THE ABOVE, THE A PPEALS OF THE REVENUE ARE DISMISSED DUE TO LOW TAX EFFECT. 6. NOW WE TAKE APPEAL OF THE ASSESSEE IN THE ASSESS MENT YEAR 2000-01 I.E. ITA NO.2484/AHD/2014. THIS APPEAL IS DIRECTED BY THE ASSESSEE AGAINST ORDER OF THE LD.CIT(A) DATED 9.6.2 014 PASSED IN THE ASSTT.YEAR 2000-01. 7. IT EMERGES OUT FROM THE RECORD THAT EARLIER ONE ROUND OF LITIGATION TRAVELLED UPTO THE TRIBUNAL AND THE TRIBUNAL HAS DE CIDED THE ISSUE VIDE ORDER DATED 30.9.2011 IN ITA NO.1385/AHD/2006. IN PURSUANCE OF THE TRIBUNALS ORDER FRESH ASSESSMENT ORDER HAS BEEN PA SSED ON 4.1.2013. DISSATISFIED WITH THE VARIOUS ADDITIONS MADE, THE A SSESSEE WENT IN APPEAL BEFORE THE LD.CIT(A) WHO HAS PARTLY CONFIRME D BY THE IMPUGNED ORDER. 8. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS.21,94,475/- OUT OF TOTAL EXPENSES ATTRIBUTABLE TO ITA NO.2484/AHD/2014 AND 4 OTHERS ACIT VS. WELSPUN PROJECTS LTD. 4 ELIGIBLE UNDERTAKING AT RS.42,77,609/-. THE LD.COU NSEL FOR THE ASSESSEE DID NOT PRESS THIS GROUND OF APPEAL, HENCE, IT IS R EJECTED. 9. GROUND NO.4: IN THIS GROUND OF APPEAL, GRIEVANC E OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CALCULATING THE INTEREST EXPENSES AT RS.8,44,577/-. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT A DISALLOWANCE OF RS.26,83,618/- WAS MADE ON THE GROUND THAT THE ASSESSEE HAS USED INTEREST BEARING FUND FOR EARNING TAX FREE INCOME. ON APPEAL, THE ASSESSEE SUBMITTED CAL CULATION BEFORE THE LD.CIT(A), WHICH HAS BEEN ACCEPTED BY THE CIT(A). BUT WHILE QUANTIFYING THE AMOUNT, THE LD.CIT(A) HAS CONFIRMED DISALLOWANCE OF RS.8,44,577/-. IN FACT THIS DISALLOWANCE SHOULD BE RS.84,577/-. 10. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD. THERE IS NO DISPUTE WITH REGAR D TO THE FACT THAT INTEREST EXPENDITURE INCURRED FOR EARNING OF TAX FR EE INCOME DESERVES TO BE DISALLOWED. THE ASSESSEE HAS SUBMITTED THE DETA ILS AND QUANTIFIED THE INTEREST EXPENDITURE WHICH HAS BEEN REPRODUCED BY THE LD.CIT(A) AT PAGE NO.24 OF THE IMPUGNED ORDER. SUCH DETAILS REA D AS UNDER: THIS INVESTMENT IS MADE FROM THE INTERNAL ACCRUALS , WHICH CONSISTS OF INTEREST FREE FUNDS. THEREFORE, NO DISALLOWANCE SHA LL BE MADE ON THE SAID INVESTMENT. THE ALLEGED DISALLOWANCE MADE BY THE LD . AO IS WRONG AND NEEDS TO BE DELETED. PARTICULARS DATE OF TRANSFER AMOUNT REMARKS AVAILABLE BALANCE AS ON DATE NO.OFDAYS UPTO 31.03,2000 INTERE ST 16.25 % BORROWING 01.04.1999 46000 CORP. BANK 5/97 OPENING BALANCE OD 365 7475 INCOME 16.08.1999 982500 CORP. BANK 5/97 TRF. FROM BOTA/C 1799 3067102 INCOME 24.11.1999 7500000 CORP. BANK 5/97 TRF. FROM BOTA/C 1799 7500000 ITA NO.2484/AHD/2014 AND 4 OTHERS ACIT VS. WELSPUN PROJECTS LTD. 5 BORROWING 24.11.1999 1342500 TRF. FROM IDBI BANK 1342500 129 77102 9871000 TOTAL 84577 THE ABOVE CHART CLEARLY SHOWS THAT OUT OF THE TOTAL INVESTMENTS OF RS.98,71,000/- RNADE DURING THE YEAR UNDER CONSIDERATION, INVESTME NT TO THE TUNE OF RS.84,82,500/- (9,82,500 + 75,00,000) WAS BROUGHT O UT OF THE BUSINESS INCOME OF THE APPELLANT AS TRANSFER FROM BOT ACCOUNT. FURTHER , THE REMAINING INVESTMENT OF RS. 13,88,500/-(46,000 + 13,42,500) IS MADE FROM TH E BORROWINGS. APPLYING THE RATE OF 16.25% ON THE AMOUNT UTILIZED FROM THE BORROWED FUNDS, IRRESPECTIVE OF THE FACT THAT THE APPELLANT HAVE AB UNDANT INTEREST FREE FUNDS, A INTEREST COME AT RS. 84,577/-. THUS THE DISALLOWANC E OF INTEREST MAY BE RESTRICTED TO RS. 84,577/-. 11. THE LD.CIT(A), IN PRINCIPLE, CONCURRED WITH THE ASSESSEE AND CONFIRMED THE DISALLOWANCE COMPUTED BY IT AND MADE DISALLOWANCE OF RS.8,44,577/- INSTEAD OF RS.84,577/- WORKED OUT BY THE ASSESSEE. THE FINDING OF THE LD.CIT(A) ON THIS ISSUE READS AS UND ER: 4.4 SO FAR AS GROUND NO. 5 81 6 IS CONCERNED, AGAI N THE APPELLANT VIDE SUBMISSION DATED 09/11/2012 HAD FILE D BEFORE THE AO THE COMPLETE DETAILS OF THE INVESTMENT MADE FOR THE PURPOSES OF EARNING OF EXEMPT INCOME. AGAIN THE AO HAS NOT E XAMINED THE DETAILS AND HAS MADE THE DISALLOWANCE AS WAS MADE I N THE ORIGINAL ORDER. THE APPELLANT HAS ALSO STATED THAT DUE TO TH E DISALLOWANCE MADE BY THE AO ON ACCOUNT OF INTEREST PAID ON CAPIT AL DIVERTED INTO INFRASTRUCTURE DIVISION AND U/S 14A, THE TOTAL DISALLOWANCE EXCEEDS THE TOTAL IN THE DEBITED BY THE APPELLANT I N THE P/L ACCOUNT. HENCE, THE DISALLOWANCE MADE BY THE AO IN SUMMARY MANNER CANNOT BE HELD TO BE CORRECT. THE APPELLANT HAS PROVIDED FULL DETAILS OF INVESTMENT MADE DURING THE YEAR FOR THE PURPOSES OF EARNING OF TAX FREE EXEMPT INCOME AND HAS ALSO COMP UTED THE INTEREST ATTRIBUTABLE TO THIS. SUCH INTEREST IS RS. 8,44,577/-ONLY. THE APPELLANT HAD PROVIDED FULL DETAILS OF FUNDS US ED FOR INVESTMENT AND ITS SOURCES TO THE AO DURING THE COU RSE OF ASSESSMENT PROCEEDINGS. HENCE, THE AO IS DIRECTED TO RESTRICT THE DISALLOWANCE U/S.14A TO RS.8,44,577/- 12. CONSIDERING THE ABOVE FINDING OF THE LD.CIT(A), WE ARE OF THE VIEW THAT THERE IS NO JUSTIFICATION OR SUPPORTING EVIDEN CE IN FAVOUR OF THE CALCULATION OF RS.8,44,577/-. FROM THE SUBMISSION OF THE ASSESSEE IT ITA NO.2484/AHD/2014 AND 4 OTHERS ACIT VS. WELSPUN PROJECTS LTD. 6 REVEALS THAT IT WAS A SUM OF RS.84,577/- WHICH HAS BEEN IN PRINCIPLE ACCEPTED BY THE CIT(A). THEREFORE, WE ALLOW THIS G ROUND OF APPEAL PARTLY AND CONFIRM ADDITION TO THE EXTENT OF RS.84, 577/-. APPEAL OF THE ASSESSEE IS ACCORDINGLY PARTLY ALLOWED. 13. NOW WE TAKE UP THE ITA NO.2485/AHD/2014. 14. THIS APPEAL IS DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE LD.CIT(A) DATED 16.6.2014 PASSED FOR T HE ASSTT.YEAR 2000- 01. GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A ) HAS ERRED IN CONFIRMING THE PENALTY OF RS.26,81,000/- UNDER SECT ION 271(1)(C) OF THE ACT. 15. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H AS FILED ITS RETURN OF INCOME ON 20.11.2000 DECLARING TOTAL INCOME AT RS.3 6,70,730/-. THE ASSESSMENT WAS REOPENED BY ISSUANCE OF NOTICE UNDER SECTION 143(2) AND ULTIMATELY AN ASSESSMENT ORDER WAS FRAMED UNDER SECTION 147 R.W. SECTION 143(3) ON 28.3.2005 WHEREBY INCOME OF THE A SSESSEE WAS DETERMINED AT RS.1,11,33,930/-. THE LD.AO HAS MADE ADDITION/DISALLOWANCE ON SEVEN COUNTS. HE INITIATE D PENALTY PROCEEDINGS BY ISSUANCE OF NOTICE UNDER SECTION 274 ON 28.3.2005 WITH REGARD TO TWO ADDITIONS VIZ. INTEREST EXPENSES ATTR IBUTABLE TO BOT PROJECTS CLAIMED IN REGULAR BUSINESS OF RS.42,77,60 9/- AND INTEREST EXPENDITURE RELATING TO TAX FREE INCOME AMOUNTING T O RS.26,83,618/-. QUA THESE TWO ADDITIONS PENALTY PROCEEDINGS INITIATED AND ULTIMATELY PENALTY OF RS.24,14,500/- WAS IMPOSED UPON THE ASSE SSEE VIDE ORDER DATED 28.3.2007. THIS ORDER OF THE AO HAS BEEN UPH ELD BY THE CIT(A) VIDE ORDER DATED 23.2.2009. ACCORDING TO THE LD.CO UNSEL FOR THE ASSESSEE NO FURTHER APPEAL WAS FILED. 16. IN THE QUANTUM PROCEEDINGS, THE APPEAL WAS FILE D BY THE ASSESSEE AND ASSESSMENT WAS SET ASIDE. HE AGAIN INITIATED P ENALTY PROCEEDINGS AND IMPOSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT VIDE ORDER ITA NO.2484/AHD/2014 AND 4 OTHERS ACIT VS. WELSPUN PROJECTS LTD. 7 DATED 24.7.2013. THIS TIME HE HAS IMPOSED PENALTY AT RS.26,81,000/- ON ADDITION OF RS.69,61,227/- I.E. RS.42,77,609/- P LUS RS.26,83,680/-. 17. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. A PERUSAL OF PENAL TY ORDER DATED 24.7.2013 IMPUGNED IN THE PRESENT APPEAL WOULD REVE AL THAT THE AO WAS AWARE ABOUT THE IMPOSITION OF PENALTY AMOUNTING TO RS.24,14,500/- VIDE ORDER DATED 28.3.2007. HE TOOK COGNIZANCE OF THIS ASPECT ON PAGE NO.5 OF THE IMPUGNED ORDER. THE AO THEREAFTER REJE CTED CONTENTIONS OF THE ASSESSEE THAT SINCE THE AMOUNTS WHICH HAVE BEEN ADDED TO THE INCOME OF THE ASSESSEE HAVE ALREADY BEEN CONSIDERED FOR VISITING THE ASSESSEE WITH PENALTY, AND THEREFORE, AGAIN NO PENA LTY SHOULD BE IMPOSED. THE RELEVANT PART OF THE PENALTY ORDER RE ADS AS UNDER: ALL THE ADDITIONS WERE UPHELD BY CIT(A). THE ASSES SEE CARRIED THE ISSUES BEFORE ITAT. IN THE MEAN TIME, THE PENALTY U/S 271(1) (C) WAS IM POSED AT RS. 24,14,500 VIDE AN ORDER DATED 28.03.2007 BY THE DOT, CEN. CIR. 1(2), AHEMDABAD AFTER SEEKING APPROVAL FR OM ADDL. CIT. III. 1.1. THE HON. ITAT VIDE THEIR ORDER ITA NO, 1385/AH D/2006 DATED 30,09.2011 SET ASIDE ISSUES BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION BY GIVING OPPORTUNIT Y OF THE ASSESSEE. ACCORDINGLY, THE ACIT, CIR.4, BARODA ISSU ED THE NOTICE U/S 142(1) ON 31.08,2012 AND ON 03,10,2012 FOR GOIN G AHEAD IN THE ISSUES SET ASIDE BY ITAT. AFTER GIVEN AN OPPORT UNITY OF BEING HEARD, THE ASSESSMENT U/S 143(3) R.W.S. 254 OF THE ACT WAS DECIDED ON 04.01.2013, THE ASSESSING OFFICER IN THE RE ASSESSMENT ORDER OBSERVED THAT THE ASSESSES COULD N OT JUSTIFY ITS CLAIM AGAIN ON THE SECOND ROUND. THE ASSESSING OFFI CER MADE THE SIMILAR ADDITIONS ON BOTH THE ABOVE ISSUES AND INIT IATED PENALTY PROCEEDINGS U/S 271(1)(C). NOTICE U/S 274 R.W.S. 2 71(I)(C) OF THE ACT WAS ISSUED ON 04.01.2013 & WAS SERVED UPON THE ASSESSEE. AGAIN ON 16.07.2013 A NOTICE U/S 271(1) (C) WAS ISS UED UPON THE ASSESSEE BY MY PREDECESSOR. ON 19.07.20 J.3, THE UN DERSIGNED ISSUED NOTICE U/S 271(L)(C) R.W.S 129 OF THE ACT. O PPORTUNITY OF BEING HEARD WAS OFFERED. IN RESPONSE, THE ASSESSEE FURNISHED THE ITA NO.2484/AHD/2014 AND 4 OTHERS ACIT VS. WELSPUN PROJECTS LTD. 8 SUBMISSION ON 22.07.2013 SIGNED BY AUTHORIZED SIGNA TORY WHICH SCANNED & PASTED AS UNDER: **** **** 1.2. FROM THE ABOVE SUBMISSION IT CAN BE GLEANED TH AT NO CONTENTION HAS BEEN PUT FORWARD BY THE ASSESSES IN RESPECT OF THE LEVY OF PENALTY. IT HAS BEEN ARGUED THAT THE PENALT Y WAS IMPOSED EARLIER AND THE SAME CANNOT BE IMPOSED AGAIN. THE C ONTENTION HAS NO FORCE AS THE TWO PREDOMINANT ISSUES DISCUSSE D ABOVE AND FEW OTHER ISSUES OF EXPENSES LIKE EXPENSES ON STAFF WELFARE, CONVEYANCE, TELEPHONE, DEPRECIATION, PUJA AND DIWAL I ETC WERE RESTORED BACK TO THE FILE OF ASSESSING OFFICER. THE REFORE, THE PRESENT PROCEEDING OF PENALTY IS RELEVANT. FROM THE ABOVE, IT IS CRYSTAL CLEAR THAT THE' ASSCS SCC HAS CONCEALED INCOME BY WAY OF FURNISHING INACCURATE PARTICULARS OF INCOME. IN FACT THE ASSESSES NEW THAT HUGE INTEREST BEARING FU NDS IN THE INFRASTRUCTURE DIVISION IS NOT ALLOWABLE EVEN THEN, IT CLAIMED THE SAME JUST LO AVOID THE TAX LIABILITY AND THEREFORE, PENALTY U/S 27L(L)(C) IS LIABLE ON A WRONG CLAIM OF INTEREST BE ARING FUNDS OF INFRASTRUCTURE DIVISION IN THE NORMAL DIVISION OF T 42,77,609. THE BALANCE-SHEET SHOWS CLEAR INVESTMENT IN LONG TE RM SHARES OF RS.1.65 CRORES. THUS, IT IS VERY CLEAR THAT FINANCE CHARGE & INTEREST EXPENSES ON THE BORROWED FUNDS OF RS.1.65 CRORES INVESTED IN SHARES ARC NOT ALLOWABLE FROM THE BUSIN ESS HEAD. ACCORDINGLY, INTEREST @ 16.25% WHICH IS AVERAGE BOR ROWING RATE OF THE ASSESSEE, RS.26,83,618 IS DISALLOWED U/S 36( 1 )(III). AS THE ASSESSES HAS WRONGLY CLAIMED THE TAXABLE INCOME AS EXEMPT INCOME BY WAY OF FURNISHING INACCURATE PARTICULARS OF INCOME / CONCEALMENT, THE PENALTY U/S 271(L)(C) OF THE ACT-I S LEVIABLE IN THE CASE OF THE ASSESSEE. 1.3. THEREFORE, IN VIEW OF THE ABOVE DISCUSSION AND LEGAL POSITION, I AM SATISFIED THAT THE ASSESSEE FURNISHED INACCURA TE PARTICULARS OF ITS INCOME LEADING TO CONCEALING THE PARTICULARS OF INCOME AND HENCE, IT IS LIABLE FOR THE PENALTY U/S 271(1) (C) OF THE ACT. THE PENALTY IS THUS IMPOSABLE ON THE ADDITION OF RS.42, 77,609 OUT OF INTEREST COST CAPITALISATION AND OUT OF INTEREST, R ELATING TO EARNING OF EXEMPT INCOME ON RS.26,83,618. IT IS ADDED THAT WITH THE DELETION OF THE WORD 'DEL IBERATE' FROM THE PROVISIONS OF SECTION 271(I)(C) OF THE ACT AND THE INTRODUCTION OF EXPLANATION THERETO AND ALSO HAVING REGARD TO THE P RINCIPLE LAID ITA NO.2484/AHD/2014 AND 4 OTHERS ACIT VS. WELSPUN PROJECTS LTD. 9 DOWN BY THE APEX COURT IN THE CASE OF DHARMENDRA TE XTILE PROCESSORS & ORS [2008 306 JTR 277 (SC)] THE PENALT Y PROCEEDINGS ARE NO LONGER QUASI CRIMINAL PROCEEDING S AND HENCE, THE PRESENCE OF MENS REA IS NOT REQUIRED TO BE ESTA BLISHED. PROM THE FACTS OF THE CASE AND THE SUBMISSION MADE BY THE ASSESSEE, IT IS VERY CLEAR THAT THE ASSESSEE HAS DE LIBERATELY CONCEALED THE PARTICULARS OF UNACCOUNTED INCOME AND IS GUILTY OF THE CONTUMACIOUS CONDUCT THE ASSESSEE HAS FAILED TO GIVE ANY JUSTIFICATION OR ACCEPTABLE EXPLANATION FOR CHARGIN G OF CONCEALMENT IN THE CIRCUMSTANCE, I HEREBY LEVY PENALTY OF RS.26 ,81,000 [BEING 100% OF THE TAI: SOUGHT TO BE EVADED ON THE AMOUNT OF RS.69,61,227 (RS.42,77,609 + RS.26,83,618/-)AS MINI MUM PENALTY AS AGAINST THE MAXIMUM RS.80,43,000 FOR FUR NISHING INACCURATE PARTICULARS OF ITS INCOME LEADING TO CON CEALING THE PARTICULARS OF INCOME. 1.4. THIS ORDER IS PASSED WITH THE PRIOR APPROVAL O F THE ADDL. C.J.T, RANGE -4 BARODA AS REQUIRED BY THE PROVISION S OF SECTION 274 (2)(B) OF THE ACT UNDER HIS APPROVAL DATED 24.0 7.2013 CONVEYED UNDER HIS NO. BRD / ADDLCIT / R.4 / PENALT Y APPROVAL/2013-14. 18. IT IS PERTINENT TO OBSERVE THAT IN THIS YEAR, T HE LD.AO CONSIDERED TWO AMOUNTS FOR CALCULATING PENALTY UNDER SUB-CLAUS E (III) OF SECTION 271(1)(C). THESE AMOUNTS ARE DISALLOWANCE OF INTER EST AMOUNTING TO RS.42,77,609/- OUT OF CAPITALIZATION AND DISALLOWAN CE OF INTEREST RELATING TO EARNING OF EXEMPT INCOME AT RS.26,83,618/-. IN EARLIER PART OF THIS ORDER, WE HAVE CONSIDERED QUANTUM APPEAL OF THE ASS ESSEE, WHEREIN WE HAVE UPHELD INTEREST EXPENSES OF RS.21,94,475/- OUT OF RS.42,77,609/- AND RS.84,577/- OUT OF RS.26,83,618. IT WILL SUGGE ST THAT QUANTUM ON WHICH IT COULD BE ALLEGED THAT TAXES EVADED HAS BEE N REDUCED SUBSTANTIALLY. IF WE GO BY THE LOGIC OF THE AO IN THE IMPUGNED ORDER, THEN PENALTY WOULD REDUCE SUBSTANTIALLY WHEREAS THE ASSESSEE HAS ALREADY ACCEPTED PENALTY AMOUNT OF RS.24,14,500/- B Y NOT CHALLENGING THE ORDER OF THE LD.CIT(A) IN PENALTY APPEAL LEVIED IN THE FIRST ROUND. CONSIDERING THE STAND OF THE ASSESSEE THAT IT HAS A CCEPTED PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT, WE ARE OF THE VIEW THAT ITA NO.2484/AHD/2014 AND 4 OTHERS ACIT VS. WELSPUN PROJECTS LTD. 10 THERE SHOULD NOT BE ANY SECOND PENALTY ON THE SAME ADDITION. WE ALLOW THIS APPEAL OF THE ASSESSEE AND DELETE PENALTY OF R S.26,81,000/- COMPUTED BY THE AO IN THE IMPUGNED ORDER. 19. IN THE RESULT, APPEALS OF REVENUE ARE DISMISSED , WHEREAS QUANTUM APPEAL OF THE ASSESSEE IN ITA NO.2484/AHD/2 014 IS PARTLY ALLOWED AND PENALTY APPEAL OF THE ASSESSEE IN ITA N O.2485/AHD/2014 IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 28 TH AUGUST, 2018 AT AHMEDABAD. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER