Deputy Commissioner of Income-tax, V. Shri Bhagwat Narayn Chaudhari, Jalgaon

ITA 29/PUN/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7141 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 07-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Rectification of order
• Section: 133A; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , ! , '#$ !% , ! & BEFORE SHRI ANIL CHATURVEDI,AM AND SHRI VIKAS AWAST HY,JM #' / ITA NO. 29/PUN/2015 ( )( / ASSESSMENT YEAR : 2005-06 DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-2, JALGAON ....... APPELLANT / V/S. SHRI BHAGWAT NARAYAN CHAUDHARI SWEDBINDU, SHANTI NAGAR, BHUSAWAL, JALGAON PIN-425201 PAN : AALPC0512G / RESPONDENT REVENUE BY : SHRI HITENDRA NINAWE ASSESSEE BY : SHRI NIKHIL PATHAK / DATE OF HEARING : 30.01.2017 / DATE OF PRONOUNCEMENT : 10.02.2017 * / ORDER PER VIKAS AWASTHY, JM THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE O RDER OF COMMISSIONER OF INCOME TAX ( APPEALS)-II, NASHIK DATED 10.1 0.2014 FOR THE ASSESSMENT YEAR 2005-2006 DELETING THE PENALTY LEVIED U/S 271(1) (C) OF THE INCOME TAX ACT,1961 ( HEREINAFTER REFERRED TO AS THE ACT). 2 ITA NO. 29/PUN/2015 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE RE CORD ARE: THE ASSESSEE IS AN INDIVIDUAL AND IS A CIVIL CONTRACTOR. THE ASSE SSEE FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 31.10.2005 DECLARING TOTAL INCOME OF RS.87,94,130/-. A SURVEY ACTION U/S 133A OF THE ACT WAS CARRIED OUT AT THE PREMISES OF ASSESSEE ON 02.03.2005. DURING COURSE OF SURVEY ACTION, ASSESSEE DECLARED ADDITION AL INCOME OF RS.25,08,613/-.DURING COURSE OF ASSESSMENT PROCEEDING, THE ASSESSING OFFICER MADE CERTAIN DISALLOWANCES WHICH INTER ALIA INCLUDES:- I) PAYMENT OF INTEREST RS. 96,21,075/- II) UNDISCLOSED RECEIPTS FROM MACHINERY HIRE AND TRANSPORT ATION CHARGES RS.92,300/- III) INFLATED EXPENDITURE ON MACHINERY HIRE CHARGES AND C ONTRACT PAYMENTS RS.4,08,100/- 3. THE ASSESSEE CHALLENGED THE ADDITIONS IN APPEAL BEFORE COMMISSIONER OF INCOME TAX (APPEAL). THE FIRST APPELLATE AUTH ORITY CONFIRMED THE ABOVE SAID ADDITIONS. THE ASSESSEE ASSAILED T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) BEFORE THE TRIBUNAL. T HE TRIBUNAL VIDE ORDER DATED 06.07.2010 SET ASIDE THE ADDITION S AND RESTORED THE FILE BACK TO THE COMMISSIONER OF INCOME TAX (APPEAL). IN SECOND ROUND, THE COMMISSIONER OF INCOME TAX (APPEALS) GAV E BENEFIT OF TELESCOPING IN RESPECT OF ADDITION MADE ON ACCOUNT OF UN DISCLOSED RECEIPTS FROM MACHINERY HIRE AND TRANSPORTATION CHARGES RS. 92,300/- AND INFLATED EXPENDITURE ON MACHINERY HIRE CHARGES AND CO NTRACT PAYMENT RS. 4,08,100/- AGAINST THE ADDITIONAL INCOME RS. 25 ,08,000/- 3 ITA NO. 29/PUN/2015 OFFERED TO TAX DURING THE COURSE OF SURVEY. IN THE MEANT IME, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDING U/S 271 (1)( C) O F THE ACT. THE ASSESSING OFFICER VIDE ORDER DATED 26.03.2013 LEVIED PEN ALTY OF RS.34,06,889/- U/S 271 (1)(C) OF THE ACT IN RESPECT OF THE A DDITIONS MADE BY THE ASSESSING OFFICER FOR FURNISHING INACCURATE PART ICULARS OF INCOME AND CONCEALMENT OF INCOME. AGGRIEVED BY THE ORDER LEVYING PENALTY U/S 271(1) (C) OF THE ACT, THE ASSESSEE PREFERRED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUG NED ORDER DELETED THE PENALTY IN RESPECT OF ALL THE THREE AD DITIONS. NOW, THE DEPARTMENT IS IN APPEAL ASSAILING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL). 4. SHRI HITENDRA NINAWE REPRESENTING THE DEPARTMENT SUB MITTED THAT ADDITION OF RS.96,21,075/-WAS MADE ON ACCOUNT OF INTER EST EXPENDITURE CLAIMED BY THE ASSESSEE FOR THE EARLIER ASSES SMENT YEAR. THE ASSESSEE HAD TAKEN LOAN FROM SANTOSHI MATA CREDIT C O OPERATIVE SOCIETY, FAIZPUR JANATA CREDIT CO-OPERATIVE SOCIETY AND T API PARISAR CREDIT CO OPERATIVE SOCIETY AND HAD PAID INTEREST OF RS. 96,21,075/- ON THE SAID LOAN. THE INTEREST PAID INCLUDED INTEREST EXPEN DITURE FOR THE PERIOD RELEVANT TO THE ASSESSMENT YEARS 2002-03, 2 003-04, AND 2004-05. ON ENQUIRY, THE ASSESSEE HAD GIVEN A VERY GENE RAL EXPLANATION ALLEGING DISPUTE REGARDING INTEREST RATE WITH TH E CREDIT CO OPERATIVE SOCIETIES. THE ASSESSEE HAD CLAIMED INTEREST PAY MENT OF THE EARLIER ASSESSMENT YEARS, IN THE RETURN OF INCOME FOR ASSE SSMENT YEAR 2005-06. THUS, THE ASSESSEE HAD FURNISHED INACCURATE PA RTICULARS OF INCOME BY CLAIMING INTEREST EXPENDITURE OF THE EARLIER ASSES SMENT 4 ITA NO. 29/PUN/2015 YEARS. THE LD. D.R PRAYED FOR RESTORING THE FINDINGS OF THE ASSESSING OFFICER IN LEVYING THE PENALTY U/S 271(1)(C) OF THE ACT. 5. PER CONTRA, SHRI NIKHIL PATHAK APPEARING ON BEHALF OF THE ASSESSEE STRONGLY DEFENDED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING PENALTY. THE LD. A.R SUBMITTED THAT THER E WAS DISPUTE WITH REGARD TO THE INTEREST RATE WITH CREDIT CO OPERATIVE SOCIETIES. THE DISPUTE WAS RESOLVED IN THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2005-06. THUS, THE INTEREST LIABILITY CRYS TALLIZED DURING THE FINANCIAL YEAR 2004-2005. THE ASSESSEE CLAIMED IN TEREST EXPENDITURE IN THE YEAR OF CRYSTALLIZATION OF THE INTEREST P AYMENT. THE DEPARTMENT HAS NOT DISPUTED THE PAYMENT OF INTEREST. TH E ONLY DISPUTE IS WITH REGARD TO THE YEAR IN WHICH INTEREST EXP ENDITURE HAS TO BE CLAIMED. NO PENALTY IS LEVIABLE WHERE THERE IS DISPUTE WITH REGARD TO YEAR OF CLAIM OF EXPENDITURE. IN SUPPORT OF HIS SUBMISSION, THE LD. A.R PLACED RELIANCE ON THE DECISION OF PUNE BENCH OF THE TRIBUN AL IN ITA NO.313/PN/2014, IN THE CASE OF OM DEVELOPERS V/S. DEPUTY COMMISSIONER OF INCOME TAX FOR ASSESSMENT YEAR 2005-06 DECIDED ON 01.08.2016. THE LD. A.R FURTHER POINTED THAT THE ASSESSING OFFICER HAS PASSED RECTIFICATION ORDER U/S 154 OF THE ACT FOR THE ASS ESSMENT YEARS 2002-03, 2003-04 AND 2004-05 ALLOWING INTEREST IN THE RE SPECTIVE ASSESSMENT YEARS. THE LD. A.R SUBMITTED THAT THE PENALTY LEVIED U/S 271 (1) (C ) OF THE ACT IS ALSO LIABLE TO BE SET ASIDE ON ACCOUNT OF DEFEC TIVE NOTICE ISSUED U/S 274 R.W.S 271(1)( C) OF THE ACT. THE LD. A.R REFER RING TO ASSESSMENT ORDER DATED 28.12.2007 SUBMITTED THAT A PER USAL OF THE ASSESSMENT ORDER WOULD SHOW THAT WHILE RECORDING SATISFAC TION FOR 5 ITA NO. 29/PUN/2015 LEVYING PENALTY U/S 271 (1) (C) OF THE ACT, THE ASSESSING OFFICE R HAS NOT SPECIFIED THE CHARGE, I.E WHETHER THE PENALTY HAS TO BE LEV IED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. THEREAFTER, WHILE ISSUING NOTICE U/S 274 R.W.S 271(1) (C) OF THE ACT, IRRELEVANT CLAUSES HAVE NOT BEEN STRUCK OFF FROM THE NOTICE MAKING THE NOTICE INVALID. EVEN IN THE ORDER LEVYING PENALTY U/S 2 71 (1) (C), THE ASSESSING OFFICER HAS NOT CLEARLY SPECIFIED THE CHARGE FOR W HICH PENALTY IS BEING LEVIED. IN SUPPORT OF HIS SUBMISSION CHALLENGING THE V ALIDITY OF NOTICE ISSUED U/S 274, THE LD. A.R PLACED RELIANCE ON THE DE CISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF KANHAIYALAL D. JAIN V/S. THE ASST. COMMISSIONER OF INCOME TAX IN ITA NOS. 1201 TO 1205/ PN/2014 FOR ASSESSMENT YEARS 2003-04 TO 2007- 2008 D ECIDED ON 30.11.2016. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BE LOW. THE DEPARTMENT IN APPEAL HAS ASSAILED THE ORDER OF COMMISSIONE R OF INCOME TAX (APPEALS) IN DELETING THE PENALTY OF RS.34,06,889 /-LEVIED U/S 271 (1) (C ) OF THE ACT. THE PENALTY HAS BEEN LEVIED IN R ESPECT OF ADDITIONS MADE DURING ASSESSMENT PROCEEDINGS ON ACCOUN T OF PAYMENT OF INTEREST RS.96,21,075/-,UNDISCLOSED RECEIPTS FROM MACHINER Y HIRE & TRANSPORTATION CHARGES RS.92,300/-AND INFLATED EXPENDITURE ON MACHINERY HIRE CHARGES AND CONTRACT PAYMENT RS. 4,08,100/-. IT IS AN UNDISPUTED FACT THAT ASSESSEE HAD PAID INTERES T EXPENDITURE TO THE TUNE OF RS.96,21,075/-. THE ONLY DISPUT E IS WITH REGARD TO YEAR IN WHICH ASSESSEE SHOULD HAVE CLAIMED INTE REST EXPENDITURE. AFTER THE INTEREST EXPENDITURE WAS DISALLOWED BY THE 6 ITA NO. 29/PUN/2015 ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS ON THE GR OUND THAT THE INTEREST LIABILITY CLAIMED BY THE ASSESSEE PERTAINS TO T HE EARLIER ASSESSMENT YEARS, THE ASSESSEE FILED APPLICATION U/S 154 OF THE ACT FOR ALLOWING INTEREST EXPENDITURE IN THE ASSESSMENT YEARS 200 2-03, 2003- 04, 2004-05. THE ASSESSING OFFICER VIDE SEPARATE ORDERS O F EVEN DATE I.E 23.03.2009 ALLOWED INTEREST EXPENDITURE IN THE RESPECTIVE ASSESSMENT YEARS. THE DETAILS OF INTEREST EXPENDITURE ALLOW ED BY THE ASSESSING OFFICER IS AS UNDER:- ASSESSMENT YEAR INCOME RETURNED AND ASSESSED INTEREST RELATED EXPENDITURE REVISED INCOME AFTER ALLOWING INTEREST 2002-03 2,372,360/- 110,927/- 2,261,433/- 2003-04 35,88,700/- 35,27,525/- 61,175/- 2004-05 35,12,860/- 59,82,623/- (-) 24,18,363/- A PERUSAL OF THE DOCUMENTS ON RECORD CLEARLY INDICATE THAT THERE WAS NO DISALLOWANCE OF INTEREST. THE ONLY DISPUTE WAS WITH REGARD TO THE YEAR IN WHICH THE ASSESSEE SHOULD HAVE CLAIMED INTERE ST EXPENDITURE. IT IS A WELL SETTLED LAW THAT WHERE THERE IS A DISPUTE WITH REGARD TO YEAR OF CLAIMING EXPENDITURE, PENALTY CANNOT BE LEVIED WHERE THE ASSESSEE HAS CLAIMED EXPENDITURE IN INACCURATE ASSESSMENT Y EAR. 7. WE FIND THAT THE COMMISSIONER OF INCOME TAX (APPEALS) WH ILE DELETING PENALTY, HAS PLACED RELIANCE ON VARIOUS CASES LAWS ON THIS ISSUE AND HAS THEREAFTER DELETED THE PENALTY. WE CONCUR WITH THE VIEW OF COMMISSIONER OF INCOME TAX (APPEALS) AND DO NOT FIND ANY MERIT IN THE APPEAL OF THE DEPARTMENT. AS FAR AS THE OTHER TWO A DDITIONS ARE CONCERNED I.E ADDITION OF RS. 92,300/- ON ACCOUNT OF UNDISCLO SED INCOME FROM MACHINERY HIRE AND TRANSPORTATION AND ADDITION OF 7 ITA NO. 29/PUN/2015 RS. 4,08,100/- ON ACCOUNT OF INFLATED EXPENDITURE, THE PENALT Y CANNOT BE LEVIED AS THE ASSESSING OFFICER IN PURSUANCE TO THE ORD ER OF COMMISSIONER OF INCOME TAX (APPEALS), HAS DELETED THE ADDIT ION BY GIVING BENEFIT OF TELESCOPING. 8. WE ARE NOT DEALING WITH THE ARGUMENT OF THE LD. A.R OF THE ASSESSEE RAISING TECHNICAL OBJECTION ON VALIDITY OF NOTICE IS SUED U/S 274, AS THE ASSESSEE HAS SUCCEEDED ON MERITS. 9. IN THE RESULT, THE IMPUGNED ORDER IS UPHELD AND THE A PPEAL OF DEPARTMENT IS DISMISSED BEING DEVOID OF MERIT. ORDER PRONOUNCED ON FRIDAY, THE 10TH DAY OF FEBRUARY, 2017. SD/- SD/- ( /ANIL CHATURVEDI) ( $ !% /VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; !' / DATED : 10 TH FEBRUARY, 2017. SB *+,-$.$) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE COMMISSIONER OF INCOME TAX (APPEALS)-II, NASHIK 4. THE COMMISSIONER OF INCOME TAX-II, NASHIK. #$ %&' () , * () , + +,- , / DR, ITAT, B BENCH, PUNE. 6. './01 / GUARD FILE. // TRUE COPY// *2 / BY ORDER, /ASSISTANT REGISTRAR * () , / ITAT, PUNE 8 ITA NO. 29/PUN/2015