SHRI AJIT LALWANI, MUMBAI V. ACIT-22(1), MUMBAI

ITA 3158/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6061 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 14-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MICHAEL JERALD
• Keywords: Principle of natural justice; Proportionate interest; Difference of opinion; Change of opinion; TDS
• Section: 271(1)(c); 143(3)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI R.C. SHARMA (AM) & SHRI PAWAN SINGH (J M) I.T.A. NO. 3158/MUM/2018 (ASSESSMENT YEAR 2011-12 ) SHRI AJIT LALWANI 413, NAV VYPAR BHAWAN 49, P. DMELLO ROAD CARNAC BUNDER MASJID BUNDER MUMBAI-400 009. PAN : AAQPL8325F VS . ACIT - 22(1) 322, PIRAMAL CHAMBERS LALBAUG PAREL MUMBAI-400 012. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY SHR I MICHAEL JERALD DATE OF HEARING 28. 0 1 . 20 20 DATE OF PRONOUNCEMENT 28 . 0 1 . 20 20 O R D E R PER SHRI PAWAN SINGH (AM) :- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LEARNED CIT(A)-34, MUMBAI DATED 1.2.2018 WHICH ARISES FROM PENALTY LEVIED U/S. 271(1)(C) OF THE I.T. ACT DATED 30.9.2014 FOR A.Y. 2011-12. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APP ELLATE ORDER PASSED BY THE LD. CIT(A) IS ILLEGAL BEING AGAINST THE PRINCIP LES OF NATURAL JUSTICE AND AGAINST THE PROVISIONS OF INCOME TAX ACT, 961. 2. THE LD. CIT(A) HAS GROSSLY ERRED ON FACTS AS WELL A S IN LAW IN CONFIRMING THE PENALTY U/S. 271(L)(C) IN RESPECT OF DISALLOWAN CE OF RS. 67,8297- U/S 36(1)(III) AND RS. 1,00,0007- ON ACCOUNT OF ADDITIO N U/S. 41(1) OF THE IT ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT FOR A.Y. 2011-12 WAS COMPLETED U/S. 143(3) ON 28.3.2014 DETERMINING TOTA L INCOME AT RS. 85,86,940/-. THE ASSESSING OFFICER WHILE PASSING AS SESSMENT ORDER MADE ADDITION ON ACCOUNT OF INTEREST EXPENSES DISALLOWAN CE U/S. 36(1)(III) OF RS. SHRI AJIT LALWANI 2 67,829/- AND DISALLOWANCE U/S. 41(1) OF RS. 1,00,00 0/-. THE ASSESSING OFFICER WHILE PASSING ASSESSMENT ORDER INITIATED PENALTY U/ S. 271(1)(C) OF THE ACT. FACTS LEADING TO THE ADDITIONS ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSING OFFICER NOTED THAT THE ASSESS EE HAS PAID INTEREST OF RS. 59,08,205/-, OUT OF WHICH INTEREST PAID TO OTHER TH AN BANK IS RS. 2,97,790/-. THE ASSESSEE HAS ALSO GIVEN LOANS AND ADVANCES OF R S. 5.83 CRORE TO VARIOUS PARTIES. THE ASSESSEE WAS ASKED TO EXPLAIN NATURE O F LOAN AND TO EXPLAIN WHETHER FUNDS GIVEN TO VARIOUS PARTIES ARE FROM INT EREST BEARING FUNDS OR NOT AND SHOW-CAUSE NOTICE AS TO WHY PROPORTIONATE INTER EST U/S. 36(1)(III) SHOULD NOT BE DISALLOWED AS THE ASSESSEE HAS TAKEN LOAN AN D PAID INTEREST AS REFLECTED IN PROFIT AND LOSS ACCOUNT. THE ASSESSEE FURNISHED DETAILED WORKING ALONGWITH ITS REPLY DATED 11.2.2014. FROM REPLY FURNISHED BY THE ASSESSEE AND WORKING OF ADVANCES GIVEN TO VARIOUS PARTIES AS UNDER : LOANS & ADVANCES AMOUNT REMARKS GARIMA LALWANI 200,000 RELATIVE OF THE PROPRIETOR MR. AJIT LALWANI SACHIN KATARIYA 113,300 MR. SACHIN KATARIYA, IS CHIEF ACCOUNTANT OF THE FIRM. THIS IS STAFF ADVANCE AJIT LALWANI HUF 765,000 MR. AJIT LALWANI IS THE SOLE PROPRIETOR OF THE ASSESSEE FIRM AND ALSO IS THE KARTA OF HUF. CAPITAL ENTERPRISE 1 ,060,779 PENDING FOR SETTLEMENT DHANLAKSHMI SOLVEX LTD. 20.200.000 ADVANCE FOR PURCHASE OF PROPERTY THE MATTER IS PENDING BEFORE JABALPURE HIGH COURT. MAHAVEER SETHIYA 1 .600.000 THE AMOUNT WAS PAID AS ADVANCE FOR SUPPL Y BUT THE PARTY BACKED OUT. THIS WAS OUTSTANDING FROM LAST YEAR IN THE CURRENT YEAR ONE CHEQUE WAS ISSUED BY THE PARTY BUT SAME WAS BOUNCED & HENCE AMOUNT IS PENDING TO BE RECEIVED THE ASSESSEE IS CONTEMPLATING TO TAKE LEGAL ACTION AGAINST THE PARTY. NEMINATH DEVELOPERS 44,76,329 THIS IS ADVANCE AGAINST MATERIAL ON WHICH WE HAVE CHARGED INTEREST & TDS ON THE SAME IS DEDUCTED BY THE PARTY MATERIAL IS NOT SUPPLIED BY THE PARTY AS PER COMMITMENT. NIJAMUDDIN KIKA BHAI KAPADIA 150.000 ADVANCE WAS GIVEN FOR SUPPLY OF MATERIAL BUT DUE TO NON SUPPLY OF MATERIAL AMOUNT WAS RETURNED BACK PARTY OUT OF TOTAL OUTSTANDING RS.1650000/- SHRI AJIT LALWANI 3 NUV INDUSTRIES 197,90,307 THIS IS ADVANCE AGAINST MATERIAL ON WHICH WE HAVE CHARGED INTEREST & TDS ON THE SAME IS DEDUCTED BY THE PARTY. MATERIAL IS NOT SUPPLIED BY THE PARTY AS PER COMMITMENT. RAJENDRA GOYAL 101,000. PENDING FOR SETTLEMENT SILVER LAKE HOUSING & PROPERTY DEVELOPERS PVT. LTD. 3,315,845 INITIALLY THIS AMOUNT WAS GIVEN TO PURCHASE PROPERTY BUT SUBSEQUENTLY PROPERTY WAS REGISTERED IN A COMPANY WHICH FULLY OWNED BY THE ASSESSEE. VIJAY VERMA (STRELING STRUPTH) 6,606,938 ADVANCE FOR PURCHASE OF PROPERTY. TOTAL 583,79,498 4. THE ASSESSING OFFICER FURTHER CONFRONTED TO THE ASSESSEE THAT CERTAIN LOANS WERE GIVEN TO THE PARTIES OTHER THAN BUSINESS PURPOSES. THE ASSESSEE FILED ITS REPLY WHICH WAS NOT ACCEPTED BY THE ASSES SING OFFICER. THE ASSESSING OFFICER DISALLOWED PROPORTIONATE INTEREST DISALLOWA NCE OF RS. 67,829/- U/S. 36(1)(III). 5. SECOND ADDITION OF CESSATION OF LIABILITY U/S. 4 1(1) OF THE ACT. DURING THE ASSESSMENT THE ASSESSEE WAS ASKED TO FURNISH ALL TH E DETAILS OF THE PARTIES. THE ASSESSING OFFICER RECORDED THE ASSESSEE FAILED TO F URNISH COMPLETE ADDRESS OF THE PARTIES. THE ASSESSING OFFICER HELD THAT THE AM OUNT OUTSTANDING FOR MORE THAN THREE YEARS AND ADDED BACK TO THE INCOME OF TH E ASSESSEE. 6. ON BOTH THE ADDITIONS/DISALLOWANCE THE ASSES SING OFFICER INITIATED PENALTY U/S. 271(1)(C) OF THE ACT FOR FURNISHING IN ACCURATE PARTICULARS VIDE NOTICE DATED 28.3.2014. IN RESPONSE TO THE SHOW CAU SE NOTICE, THE ASSESSEE FILED ITS REPLY DATED 22.4.2014. IN REPLY THE ASSES SEE STATED THAT MERE DISALLOWANCE IN THE ASSESSMENT ORDER DOES NOT AUTOM ATICALLY LEAD TO THE CONCLUSION THE ASSESSEE HAS CONCEAL INCOME OR FURNI SHED INACCURATE PARTICULARS OF INCOME. THE ASSESSEE HAS FURNISHED T RUE AND CORRECT FIGURES OF INCOME MERELY BECAUSE CERTAIN DISALLOWANCES WERE MA DE IN ASSESSMENT, WHICH WERE NOT CONTESTED IN APPEAL, LOOKING TO THE NATURE OF ADDITION AND THE AMOUNTS WHICH WOULD NOT AUTOMATICALLY LEAD TO THE C ONCLUSION THAT THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INAC CURATE PARTICULARS THEREOF. REPLY OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSES SING OFFICER. THE ASSESSING SHRI AJIT LALWANI 4 OFFICER LEVIED 100% PENALTY OF TAX SOUGHT TO BE EVA DED ON BOTH ADDITIONS/DISALLOWANCES. 7. ON APPEAL BEFORE LEARNED CIT(A), ACTION OF THE A SSESSING OFFICER WAS AFFIRMED. THUS FURTHER AGGRIEVED THE ASSESSEE HAS F ILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 8. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE. PERUSAL OF RECORD REVEALS THAT AUTHORITY LETTER ON BEHALF OF THE ASSESSEE WAS FILED BEFORE THE TRIBUNAL, WHICH IS ON RECORD. AS N ONE APPEARED ON BEHALF OF THE ASSESSEE, THEREFORE, WE LEFT NO OPTION EXCEPT TO DE CIDE THE APPEAL AFTER HEARING LEARNED DEPARTMENTAL REPRESENTATIVE OF THE REVENUE AND MATERIAL AVAILABLE ON RECORD. LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORT ED THE ORDERS OF THE AUTHORITIES BELOW. LEARNED DEPARTMENTAL REPRESENTAT IVE FURTHER SUBMITS THAT THE ASSESSEE HAS NOT CONTESTED THE ADDITION MADE IN THE QUANTUM ASSESSMENT, KNOWING IT FULLY WELL THAT HE HAS NO MERITS IN HIS FAVOUR. LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITS WHILE AFFIRMING PENA LTY ORDER LEARNED CIT(A) HAS PASSED DETAILED ORDER. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED DE PARTMENTAL REPRESENTATIVE FOR THE REVENUE AND CAREFULLY GONE T HROUGH THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE THAT WHILE P ASSING ASSESSMENT ORDER THE ASSESSING OFFICER MADE DISALLOWANCE U/S. 36(1)(III) OF THE ACT OF RS. 67,829/- AND DISALLOWANCE U/S. 41(1) OF RS. 1 LAKH. FROM THE ORDERS OF THE AUTHORITIES BELOW WE HAVE NOTED THAT THE ASSESSEE HAS NOT CONTE STED BOTH THE DISALLOWANCES BEFORE THE HIGHER AUTHORITIES/FORUMS. FOREMOST AND SHORT QUESTION FOR OUR CONSIDERATION IS TO WHETHER THE AS SESSEE HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS THEREOF. PERUSAL OF THE PENALTY ORDER REVEALS THAT DURING THE ASSESSMEN T THE ASSESSEE SUBMITTED THAT THEY HAVE PAID DIFFERENT LOANS TO OTHER THE RE LATIVES OF THE ASSESSEE, CHIEF ACCOUNTANT OF THE FIRM OR SOME AMOUNT WAS PAID DURI NG THE BUSINESS ACTIVITIES SHRI AJIT LALWANI 5 AND ADVANCES FOR PURCHASE OF PROPERTY IN JABALPUR. THE ASSESSING OFFICER NOT ACCEPTED THE EXPLANATION FURNISHED BY THE ASSESSEE AND ALLOWED PROPORTIONATE INTEREST DISALLOWANCE. IN OUR CONSIDERED VIEW THERE IS NO CONCEALMENT OF PARTICULARS OR FURNISHING INACCURATE PARTICULARS, I NTEREST DISALLOWANCE WAS MERELY A CHANGE OF OPINION. FURTHER ON SECOND ADDIT ION/DISALLOWANCE ON ACCOUNT OF CESSATION OF LIABILITY. THE ASSESSEE DIS CLOSED DETAIL OF CREDITOR I.E. M/S. SANGHI ORGANISE PATH. THE ASSESSING OFFICER MA DE ADDITION BY TAKING VIEW THAT AMOUNT WAS PENDING FOR MORE THAN THREE YE ARS OR THAT COMPLETE ADDRESS OF THE CREDITOR WAS NOT FURNISHED. IN OUR V IEW THIS ADDITION IS ALSO BASED ON THE CHANGE OF OPINION AND NOT RESULT OF AN Y INQUIRY OR INVESTIGATION CONDUCTED INDEPENDENTLY BY THE ASSESSING OFFICER. H ON'BLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS (322 ITR 12 8) HAS HELD THAT WHERE THERE IS NO FINDING IN THE ASSESSMENT ORDER THAT AN Y DETAILS SUPPLIED BY THE ASSESSEE IN THE RETURN WAS FIND TO BE INCORRECT OR ERRONEOUS OR FALSE. IN SUCH A CASE THERE WOULD BE NO QUESTION OF INVITING PENALTY U/S. 271(1)(C) OF THE ACT. MERE MAKING OF CLAIM, WHICH IS NOT SUSTAINABLE IN L AW, BY ITSELF WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGA RDING INCOME. AS NOTED ABOVE NONE OF THE PARTICULARS ON THOSE ISSUES THE A SSESSING OFFICER MADE DISALLOWANCE WERE RESULT OF ANY CONCEALMENT OR FURN ISHING INACCURATE PARTICULARS RATHER ALL PARTICULARS ON THE BASIS OF WHICH THE ASSESSING OFFICER MADE DISALLOWANCES WERE PART OF RECORD/RETURN OF IN COME BEFORE THE ASSESSING OFFICER. IN OUR VIEW THIS CASE IS NOT FIT FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. HENCE WE DIRECT THE ASSESSING OFFICER TO DELET E ENTIRE PENALTY ON BOTH THE DISALLOWANCES. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER HAS BEEN PRONOUNCED IN THE COURT ON 28 .01 .2020. SD/- SD/- (R.C. SHARMA) (PAWAN SINGH) JUDICIAL MEMBER ACCOUNTANT MEM BER MUMBAI; DATED : 28 /01/2020 SHRI AJIT LALWANI 6 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI