Suryshree Blocks Pvt. Ltd, Ahmedabad V. The DCIT Circle-4(1)(1), Ahmedabad

ITA 260/AHD/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 4601 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-10-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 18-04-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Difference of opinion; Bonafide mistake
• Section: 271(1)(c); 143(3); 274

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH Before: Ms. Suchitra Kamble, Judicial Member Suryshree Blocks Pvt. Ltd. 5, Prahladbhai Bidiwala Park, Nr. Jodhpur Char Rasta, Satellite, Ahmedabad PAN: AAPCS8115A (Appellant) Vs The DCIT, Circle-4(1)(1), Room No. B/208 “B” Wing, 2 nd Floor Pratyaksh Kar Bhavan B/h Kamdhenu Complex, Nr. Panjara Pole, Ambawadi, Ahmedabad (Respondent) Assessee by: Shri S.N. Divatia & Shri Samir Vora, ARs. Revenue by: Ms. Saumya Pandey Jain, Sr. D.R. Date of hearing : 09-10-2023 Date of pronouncement : 20-12-2023 आदेश/ORDER This is an appeal filed against the order dated 09-12-2022 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2015-16. 2. The grounds of appeal are as under:- ITA No. 260/Ahd/2023 Assessment Year 2015-16 I.T.A No. 260/Ahd/2023 A.Y. 2015-16 Page No. Suryshree Blocks Pvt. Ltd. vs. DCIT 2 “1. Honourable Commissioner of Income Tax (Appeal) (CIT (A)) erred in not considering the technical defect in penalty notice issued by AO. AO had not stated in notice of penalty under which limb he has levied penalty under section 271(1)(c). Whether he had levied penalty under concealment of income or inaccurate particulars. 2. CIT(A) erred in not considering the fact that no penalty is levied if there is only change of opinion regarding whether certain expenditure is capital expenditure or revenue expenditure. 3. That the appellant craves, leave to add, alter, amend or vary and/or withdraw any or all of the aforesaid grounds of Appeal or at time of hearing of the above appeal.” 3. Return of income was filed on 03-09-2015 declaring total income at Rs. (-) 4,49,55,766/-. The assessment u/s. 143(3) of the Act was completed on 08-12-2017 determining the total income at Rs. (-) 4,34,04,640/-. The Assessing Officer made disallowance u/s. 36(1)(iii) amounting to Rs. 12,68,946/- where the penalty proceedings were initiated u/s. 271(1)(c) for furnishing inaccurate particulars of income. The Assessing Officer issued show cause notice dated 08-12-2017 for which the assessee replied vide letter dated 28-12-2017. After taking cognizance of the said reply, the Assessing Officer levied penalty of Rs. 3,92,100/- u/s. 271(1)(c) of the Act in respect of furnishing inaccurate particulars of income and concealing its income. I.T.A No. 260/Ahd/2023 A.Y. 2015-16 Page No. Suryshree Blocks Pvt. Ltd. vs. DCIT 3 4. Being aggrieved by the penalty order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The ld. A.R. submitted that during the course of assessment proceedings, the interest of Rs. 12,68,946/- on borrowed fund from acquiring assets were worked out by the assessee and the same was taken into cognizance by the Assessing Officer and therefore the assessee cannot be stated as furnishing inaccurate particulars of income or concealment of income or both. The ld. A.R. further submitted that the assessee was under bonafide impression that since the assessee has not capitalized interest expenses the same should not be included. Thus, it is a bonafide error and purely a technical issue and whether an expense should be capitalized or not is merely a difference of opinion. Thus, the ld. A.R. submitted that as per the decision of Hon’ble Apex Court in CIT vs. Reliance Petro-Product Ltd. order dated 23-03-2010. The ld. A.R. further submitted that the assessee was under bonafide belief and the same should not be treated as concealment of income and furnishing inaccurate particulars of income. The ld. A.R. further submitted that the penalty notice u/s. 274 r.w.s. 271 of the Income Tax Act, 1961 has not specified under which limb of section 271(1)(c) of the Act the penalty is being levied. The ld. A.R. relied upon the decision of Hon’ble Supreme Court in case of CIT vs. SSA’s Emerald Meadows 242 taxman.com 180. I.T.A No. 260/Ahd/2023 A.Y. 2015-16 Page No. Suryshree Blocks Pvt. Ltd. vs. DCIT 4 6. The ld. D.R. relied on the decision of Hon’ble Supreme Court in case of Dharmendra Textile 306 ITR 277 (SC) and further submitted that the assessee did not disclose true amount of income voluntarily and therefore the same was rightly coming under the purview of section 271(1)(c) of the Act. 7. Heard both the parties and perused all the relevant materials available on record. There is a delay of 71 days in filing the present appeal for which the assessee has filed condonation of delay application and the reasons stated therein appears to be genuine, hence the delay is condoned. It is pertinent to note that the Hon’ble Supreme Court in case of Reliance Petro-Product Pvt. Ltd. 322 ITR 180 categorically stated that the word inaccurate particulars means that the details supplied in the return are not accurate not exact or correct and not according to truth or erroneous. In the absence of finding by the Assessing Officer that any detail supplied by the assessee in its return were found inaccurate or false cannot attract section 271(1)(c) of the Act. In fact, the assessee at the time of assessment proceedings has given a detailed calculation related to interest of Rs. 12,68,946/- u/s. 36(1)(iii) on borrowed funds for acquiring capital assets and this very same amount was added by the Assessing Officer and thus it cannot be said that the assessee furnished inaccurate particulars of income or concealed particulars of income though the assessee was under bonafide mistake did not state the same in its return of income. The notice also lapses on the part of not specifying the particular of limb of section 271(1)(c) of the Act which was decided I.T.A No. 260/Ahd/2023 A.Y. 2015-16 Page No. Suryshree Blocks Pvt. Ltd. vs. DCIT 5 by the Hon’ble Apex Court in case of CIT vs. SSA’s Emerald Meadows (supra), hence the appeal of the assessee is allowed and the penalty does not survive. 8. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 20-12-2023 Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad : Dated 20/12/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद