M/s Spectrum Inns and Motels Pvt. Ltd., Chandigarh V. ITO, W-5(2), Chandigarh

ITA 254/CHANDI/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4916 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-10-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 08-03-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: RANCHIT GOYAL
• Keywords: Business expenditure; Proportionate interest
• Section: 271(1)(c)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B CHANDIGARH , !' #$ % & ' ($ , )* BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO. 254/CHD/2019 / ASSESSMENT YEAR : 2014-15 M/S SPECTRUM INSS AND MOTELS PVT.LTD., SCO 154-154, SECTOR 43B, CHANDIGARH THE ITO, WARD 5(2), CHANDIGARH ./PAN NO: AAOCS6433L / APPELLANT /RESPONDENT ! /ASSESSEE BY : SHRI RANCHIT GOYAL, CA ' ! / REVENUE BY : SHRI MANJIT SINGH, CIT DR # $ % /DATE OF HEARING : 30.10.2019 &'() % / DATE OF PRONOUNCEMENT : 30.10.2019 )+/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 26.12.2018 OF THE COMMISSIONER OF INC OME TAX (APPEALS)- 2, CHANDIGARH [HEREINAFTER REFERRED TO AS CIT(A) ] 2. THE ASSESSEE IN THIS APPEAL HAS AGITATED THE IMP OSITION OF PENALTY U/S 271 (1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). ITA NO. 254/CHD/2019- M/S SPECTRUM INNS AND MOTELS PVT LTD, CHANDIGARH 2 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE FIRM HAD ADVANCED INTEREST FREE LOAN WORTH RS. 1,38,47,6 42/- TO SMT. SUMAN LATA, WHEREAS, THE ASSESSEE HAD CLAIMED A SUM OF RS. 63,21,153/- UNDER THE HEAD FINANCE CHARGES INCLUD ING INTEREST TO BANKS AND OTHER. THE ASSESSING OFFICER OBSERVED THA T ON THE ONE HAND THE ASSESSEE HAD CLAIMED HEAVY INTEREST EXPEND ITURE BUT AT THE SAME TIME IT HAD ADVANCED INTEREST FREE LOANS TO ON E SMT. SUMAN LATA WITHOUT ANY BUSINESS EXIGENCY. THE ASSESSEE FAILED TO EXPLAIN THE PURPOSE OF LOAN GIVEN TO SMT. SUMAN LATA. THE ASSE SSING OFFICER, THEREFORE, DISALLOWED PROPORTIONATE INTEREST EXPEND ITURE INVOKING THE PROVISIONS OF SECTION 36(1)(III) OF THE INCOME TAX ACT AND ADDED THE AMOUNT OF DISALLOWANCE INTO THE INCOME OF THE ASSES SEE. THE ASSESSING OFFICER ALSO SEPARATELY INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND IMPOSED THE IMPUGNED PENAL TY OF RS. 3,51,873/-. 4, THE ASSESSEE UNSUCCESSFULLY CONTESTED THE MATTER BEFORE THE LD. CIT(A). 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEES CASE IS COVERED BY THE DECISION OF T HE HON'BLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETR O PRODUCTS LTD [2013] 322 ITR 158 AND HAS SUBMITTED THAT THE ASSES SEE HAS NEITHER ITA NO. 254/CHD/2019- M/S SPECTRUM INNS AND MOTELS PVT LTD, CHANDIGARH 3 FURNISHED ANY INACCURATE PARTICULARS OF INCOME NOR HAS CONCEALED ITS INCOME. 6. ON THE OTHER HAND, THE LD. DR HAS RELIED UPON T HE FINDINGS OF THE LOWER AUTHORITIES. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES AND GONE THROUGH THE RECORD. A PERUSAL OF THE ASSESSMENT ORDER, PENALTY ORDER AS WELL AS T HE IMPUGNED ORDER OF THE LD. CIT(A) REVEAL THAT THE ASSESSEE NOWHERE HAS STATED THE PURPOSE OF ADVANCING THE INTEREST FREE LOAN TO ONE SMT. SUMAN LATA AND THERE IS NO PLEADING ON THE PART OF THE ASSESSE E THAT IT HAD NOT USED INTEREST BEARING FUNDS TO MAKE THE INTEREST FR EE ADVANCES TO SMT. SUMAN LATA. UNDER THE CIRCUMSTANCES, THE ASSESSING OFFICER MADE THE IMPUGNED DISALLOWANCE U/S 36(I)(III) OF THE ACT . NO DOUBT EVERY DISALLOWANCE DOES NOT IPSO FACTO GIVE RISE TO LEVY OF PENALTY U/S 271 (1)(C) OF THE ACT, HOWEVER, AT THE SAME TIME, IF IT IS ESTABLISHED THAT THE ASSESSEE HAS FILED INACCURATE PARTICULARS OF IT S INCOME WHICH INCLUDED A CERTAIN CLAIM OF EXPENDITURE WHICH OTHER WISE IS NOT GENUINE OR IS NOT RELATABLE TO THE BUSINESS ACTIVIT Y OF THE ASSESSEE AND THE ASSESSEE DOES NOT OFFER ANY EXPLANATION FOR THE SAME, THE ASSESSING OFFICER CAN RIGHTLY INVOKE THE PROVISIONS OF SECTION 271 (1)(C) OF THE ACT. FROM THE PERUSAL OF THE FACTS O F THE CASE, IT REVEALS THAT THE ASSESSEE NOWHERE HAS OFFERED ANY EXPLANATI ON FOR ADVANCING ITA NO. 254/CHD/2019- M/S SPECTRUM INNS AND MOTELS PVT LTD, CHANDIGARH 4 THE LOAN FOR NON-BUSINESS PURPOSES FROM THE INTERES T BEARING FUNDS AND FOR CLAIMING INTEREST EXPENDITURE ON SUCH FUNDS AS BUSINESS EXPENDITURE. THE CASE LAW CITED BY THE ASSESSEE IS NOT APPLICABLE TO THE FACTS OF THE CASE AS WE DO NOT DEEM THE CLAIM O F THE ASSESSEE AS A BONAFIDE CLAIM. WE, THEREFORE, DO NOT FIND ANY MERI T IN THIS APPEAL OF THE ASSESSEE AND THE SAME IS ACCORDINGLY DISMISSED. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.10.2019. SD/- SD/- ( % & ' ($ / ANNAPURNA GUPTA) )* / ACCOUNTANT MEMBER ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 30.10.2019 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR