The ITO, Ward-4(4), Ahmedabad V. Maidan Tradefin Pvt. Ltd., Ahmedabad

ITA 322/AHD/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6338 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2002-2003
• Appeal Filed On: 07-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K PATEL
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. N. PAHUJA, AM) ITA NO.322, 323 AND 324/AHD/2011 A. Y.: 2002-03, 2005-06 AND 2006-07 INCOME TAX OFFICER, WARD 4 (4), 1 ST FLOOR, NAVJIVAN TRUST BUILDING, AHMEDABAD VS MAIDEN TRADEFIN PVT. LTD., 508, SHILP, C. G. ROAD, NAVRANGPURA, AHMEDABAD PA NO. AACCM 5019 L (APPELLANT) (RESPONDENT) C. O. NO.72, 73 AND 74/AHD/2011 (IN ITA NO.322, 323 AND 324/AHD/2011 A. Y.: 2002-03, 2005-06 AND 2006-07) MAIDEN TRADEFIN PVT. LTD., 508, SHILP, C. G. ROAD, NAVRANGPURA, AHMEDABAD VS INCOME TAX OFFICER, WARD 4 (4), 1 ST FLOOR, NAVJIVAN TRUST BUILDING, AHMEDABAD PA NO. AACCM 5019 L (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY SHRI A. K. PATEL, DR ASSESSEE BY WRITTEN SUBMISSION O R D E R PER BENCH: ALL THE DEPARTMENTAL APPEALS ARE DIRECTED AGAINST DIFFERENT ORDERS OF THE LEARNED CIT(A)-XX, AHMEDABAD DATED 5 TH NOVEMBER, 2010, FOR ASSESSMENT YEARS 2002-03, 200 5-06 AND 2006-07, CHALLENGING CANCELLATION OF PENALTY LEVIED U/S 271 (1) (C) OF THE IT ACT ON DISALLOWANCE OF INTEREST U/S 14A OF T HE IT ACT. ITA NO.322, 323 AND 324/AHD/2009 C. O. NO. 72, 73 AND 74/AHD/2011 MAIDEN TRADEFIN PVT. LTD. 2 2. WE HAVE HEARD THE LEARNED DR AND PERUSED THE FIN DINGS OF THE AUTHORITIES BELOW. HOWEVER, NONE APPEARED ON BEHALF OF THE ASSESSEE. WRITTEN SUBMISSION IS FORWARDED WHICH IS TAKEN INTO CONSIDERATION. 3. THE CROSS OBJECTIONS ARE FILED MAINLY IN SUPPORT OF THE ORDER OF THE LEARNED CIT(A). THE ASSESSEE ALSO FILED LETTERS STATING THEREIN THAT THE ASSESSEE DOES NOT DESIRE TO PRESS THE CROSS OBJ ECTIONS. THE CROSS OBJECTIONS OF THE ASSESSEE ARE ACCORDINGLY DI SMISSED AS NOT PRESSED AND THE SAME ARE ALSO NOT MAINTAINABLE BECA USE NO SPECIFIC RELIEF IS CLAIMED IN THE SAME. THE CROSS OBJECTIONS OF THE ASSESSEE ARE ACCORDINGLY DISMISSED AS WITHDRAWN. 4. IN THE DEPARTMENTAL APPEALS, THE LEARNED CIT(A) NOTED THAT THE AO HAS LEVIED PENALTY U/S 271 (1) ( C) OF THE IT AC T ON THE GROUND THAT THE ASSESSEE HAD NOT MADE THE DISALLOWANCE U/S 14A OF THE IT ACT IN RESPECT OF INCOME FROM DIVIDEND. VIDE SEPARATE ORDE R PENALTY WAS LEVIED IN RESPECT OF DISALLOWANCE MADE U/S 14A OF T HE IT ACT. THE LEARNED CIT(A) RELIED UPON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PROTROPRODUCTS PVT. LTD. 323 ITR 158 FOR CANCELING THE PENALTY AND ALSO NOTED THAT A LL THE PRIMARY FACTS HAVE BEEN DISCLOSED IN THE RETURN OF INCOME AND IN THE CASE OF THE ASSESSEE ALSO DISALLOWANCE IS MADE ON INTEREST U/S 14A OF THE IT ACT, THEREFORE, PENALTY IS NOT LEVIABLE. THE LEARNED CIT (A) ACCORDINGLY CANCELLED THE PENALTY IN ALL THE THREE ASSESSMENT Y EARS. ITA NO.322, 323 AND 324/AHD/2009 C. O. NO. 72, 73 AND 74/AHD/2011 MAIDEN TRADEFIN PVT. LTD. 3 5. THE LEARNED DR RELIED UPON THE ORDER OF THE AO A ND SUBMITTED THAT ONCE INTEREST IS DISALLOWED AND ADDITION IS MA DE, IT WOULD ATTRACT PENALTY U/S 271 (1) (C) OF THE IT ACT AND SUBMITTED THAT BURDEN IS UPON THE ASSESSEE TO PROVE THAT IT IS NOT A CASE OF CONC EALMENT OF INCOME AND RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF B. A. BALASUBRAMANIAM & BROTHERS 236 ITR 97 7 AND ALSO RELIED UPON THE DECISION IN THE CASE OF DHARMENDRA TEXTILES & PROCESSORS LTD., 306 ITR 277, IN WHICH IT WAS HELD THAT NO MENS ERA IS REQUIRED FOR LEVY OF PENALTY BEING IT A CIVIL LI ABILITY. THE ASSESSEE IN THE WRITTEN SUBMISSION EXPLAINED THAT THE DISALLOWA NCE WAS MADE U/S 14A OF THE IT ACT IN RESPECT OF INTEREST AND IT IS STATED THAT ALL THE DETAILS OF EXPENSES AND DETAILS OF EXEMPT INCOME WE RE PLACED ON RECORD. SINCE, COMPLETE DETAILS WERE FURNISHED BEFO RE THE AO; THEREFORE, IT WAS NEITHER A CASE OF CONCEALMENT OF INCOME NOR A CASE OF FURNISHING OF ANY INACCURATE PARTICULARS OF INCO ME. IT IS STATED THAT MERELY BECAUSE REQUIREMENT OF SECTION 14A OF THE IT ACT WERE NOT FULFILLED, PENALTY IS NOT LEVIABLE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND DO NOT FIND ANY JUSTIFICATION TO INTERFERE IN THE ORDER OF THE LEAR NED CIT(A) IN CANCELING THE PENALTY. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD., 323 ITR 158 CONSI DERED THE ISSUE OF DISALLOWANCE OF INTEREST WITH THE AID OF SECTION 14A OF THE IT ACT AND HELD AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1) (C) OF THE INCOME-TAX ACT, 1961, SUGGEST THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF ITA NO.322, 323 AND 324/AHD/2009 C. O. NO. 72, 73 AND 74/AHD/2011 MAIDEN TRADEFIN PVT. LTD. 4 PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY , THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1) (C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HEL D GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORD ER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, T HE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETA ILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EX ACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS . WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORREC T OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1) ( C ). A MERE MAKING O F A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, W ILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. DECISION OF THE GUJARAT HIG H COURT AFFIRMED. 7. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT O F THE ABOVE DECISION, WE DO NOT FIND ANY JUSTIFICATION TO INTER FERE WITH THE ORDER OF THE LEARNED CIT(A) CANCELING THE PENALTY. THE ISSUE IS SQUARELY COVERED BY THE ABOVE JUDGMENT OF THE HONBLE SUPREM E COURT. AS SUCH, DEPARTMENTAL APPEALS ARE DISMISSED. ITA NO.322, 323 AND 324/AHD/2009 C. O. NO. 72, 73 AND 74/AHD/2011 MAIDEN TRADEFIN PVT. LTD. 5 8. IN THE RESULT, THE DEPARTMENTAL APPEALS ARE DISM ISSED AND THE CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED AS W ITHDRAWN. ORDER PRONOUNCED IN THE OPEN COURT ON 24-06-2011 SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 24-06-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD