SHRI OMPRAKASH KHANDELWAL, Indore V. THE ACIT 1(2), Indore

ITA 335/IND/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5698 (ITAT-INDORE)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 20-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S GAUTAM
• Assessee Lawyers: C P RAWKA
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO. 335/IND/2015 A.Y. : 2007-08. SHRI OM PRAKASH KHANDELWAL, ACIT, 1(2), INDORE VS. INDORE APPELLANT RESPONDENT PAN NO. ACSPK9694E APPELLANTS BY : SHRI C.P.RAWKA, C. A. RESPONDENT BY : SHRI G.S. GAUTAM, DR O R D E R PER D.T.GARASIA, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-I, INDORE, DATED 27.01.2015 FOR THE ASSES SMENT YEAR 2007-08. DATE OF HEARING : 30 . 12 .201 5 DATE OF PRONOUNCEMENT : 29 .02 .2016 SHRI OM PRAKASH KHANDELWAL, INDORE VS. ACIT,1(2), I NDORE I.T.A.NO. 335/IND/2015 A.Y. 2007-08. 2 2 2. THE SHORT FACTS OF THE CASE ARE AS UNDER :- 3. THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 30.07.2007, DECLARING TOTAL INCOME OF RS. 95,000/- AND THE TOTAL INCOME WAS ASSESSED AT RS. 10,06,130/-. DURIN G THE ASSESSMENT PROCEEDINGS, THE PENALTY WAS INITIATED U /S 271(1)(C) ON THE GROUND THAT THE ASSESSEE HAS OWN C APITAL OF RS. 11,27,445/- AS PER BALANCE SHEET, BUT THERE IS INVESTMENT OF RS. 2,20,78,615/- IN THE PARTNERSHIP FIRM M/S. S WATANTRA BUILDERS AND IN SHARES RS. 22,33,970/-. IN SUCH SIT UATION RULE 8D READ WITH SECTION 14A WILL APPLY AND THE AO HAS MADE THE DISALLOWANCE U/S 14A READ WITH RULE 8D AT RS. 16,17,570/- AND IT WAS ADDED TO THE INCOME. 4. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) HAS DISMISSED THE APPEAL. 5. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT RU LE 8D IS APPLICABLE FROM ASSESSMENT YEAR 2008-09, AS S UCH THE VERY BASIS OF THE LEVY OF PENALTY IS AGAINST THE LE GAL PROVISIONS. AS REGARDS INACCURATE PARTICULARS OF INCOME, THE AS SESSEE HAS FURNISHED FULL AND COMPLETE DETAILS OF INVESTMENTS, INTEREST SHRI OM PRAKASH KHANDELWAL, INDORE VS. ACIT,1(2), I NDORE I.T.A.NO. 335/IND/2015 A.Y. 2007-08. 3 3 PAYMENTS AND SO ALSO THE CAPITAL CONTRIBUTED WITH M /S. SWATANTRA BUILDERS AND IT WAS CLARIFIED THAT NO INT EREST WAS RECEIVED FROM THE FIRM M/S. SWATANTRA BUILDERS AS D UE TO THE REASON THAT CONSTRUCTION UNDERTOOK FOR THE PROPERTY AT NEW PALASIA, INDORE, WENT ON TO THE COURT CASES AND THI S MATTER WAS TRAVELLED UP TO APEX COURT. NONE OF THE AUTHORI TY HAS DISBELIEVED OR DOUBTED THE GENUINENESS OF THE INTER EST PAYMENT. THEREFORE, IT IS NOT A CASE OF CONCEALMENT OF INCOME OR INACCURATE PARTICULARS OF INCOME. THEREFORE, THE APPEAL MAY BE ALLOWED. 6. THE LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIE S BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE FIND THAT IN THIS CASE THE AO HAS LE VI ED THE PENALTY ON THE GROUND THAT THE ASSESSEE HAS MADE AN INVESTMENT OF RS. 2,20,78,615/- IN THE PARTNERSHIP FIRM M/S. SWATANTRA BUILDERS AND IN SHARES OF RS. 22,33,970/- . THE ASSESSEE HAD ONLY CAPITAL OF RS. 11,27,445/-. THERE FORE, THE AO HAS WORKED OUT THE DISALLOWANCE OF INTEREST PAYM ENT AND SHRI OM PRAKASH KHANDELWAL, INDORE VS. ACIT,1(2), I NDORE I.T.A.NO. 335/IND/2015 A.Y. 2007-08. 4 4 TOTAL AMOUNT OF RS. 16,17,570/- WAS DISALLOWED BY T HE ASSESSING OFFICER. AS PER THE DECISION OF HON'BLE S UPREME COURT. THE MATTER CARRIED TO THE LD. CIT(A). THE MA TTER TRAVELLED UP TO THE I.T.A.T., INDORE BENCH, INDORE AND THE TRIBUNAL HAS RESTRICTED THE DISALLOWANCE U/S 14A TO THE TUNE OF RS. 11,03,172/-. WE FIND THAT THE AO MADE THE DI SALLOWANCE U/S 14A, WHICH BECOMES FINAL, BUT RULE 8-D WAS NOT APPLICABLE TO THE ASSESSMENT YEAR 2007-08, BECAUSE RULE 8-D WAS APPLICABLE FROM THE ASSESSMENT YEAR 2008-09. MO REOVER, WE FIND THAT IN THIS CASE THE DISALLOWANCE U/S 14A WAS DEBATABLE AS THE DISALLOWANCE WAS MADE ON THE BASIS OF CALCULATION MADE BY THE ASSESSING OFFICER. IT IS TH E CASE OF THE ASSESSEE THAT THROUGH OUT THE ASSESSEE HAS CONTRIBU TED THE CAPITAL WITH M/S. SWATANTRA BUILDERS AND NO INTERES T WAS RECEIVED FROM SWATANTRA BUILDERS. THEREFORE, THE AS SESSEE HAS NOT SHOWN ANY INTEREST FROM M/S. SWATANTRA BUILDERS . MOREOVER, THE ASSESSEE HAS NOT FILED ANY INACCURATE PARTICULARS OF INCOME. THE ASSESSEE HAS SUBMITTED F ULL AND COMPLETE DETAILS OF INVESTMENT, INTEREST PAYMENT AN D ALSO SHRI OM PRAKASH KHANDELWAL, INDORE VS. ACIT,1(2), I NDORE I.T.A.NO. 335/IND/2015 A.Y. 2007-08. 5 5 CAPITAL CONTRIBUTED WITH M/S. SWATANTRA BUILDERS. T HEREFORE, AS PER THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD- (2010) 32 2 ITR 158, WHEREIN IT IS HELD THAT WHEN THERE IS A DIFFERENCE IN REPORTED AND ASSESSED INCOME, THE BURDEN IS ON THE ASSESSEE TO SHOW THE DIFFERENCE AND WHEN THE INITIAL ONUS PLACED BY THE EXPLANATION HAS BEEN DISCHARGED BY THE ASSESSEE, TH E ONUS SHIFTS TO REVENUE TO SHOW THAT THE AMOUNT IN QUESTI ON CONSTITUTED THE INCOME OF THE ASSESSEE AND NOT OTHE RWISE. THE COURT FURTHER HELD THAT ONCE THE ONUS CAST UPON THE ASSESSEE HAS BEEN DISCHARGED BY GIVING COGENT AND RELIABLE E XPLANATION, THE ONUS SHIFTS DOES NOT DISCHARGE THE ONUS, NO PEN ALTY CAN BE LEVIED. IN THE RELIANCE PETRO, HON'BLE SUPREME COUR T HAS HELD THAT IF THE ASSESSEE GIVES A PLAUSIBLE EXPLANATION THEN NO PENALTY CAN BE LEVIED. IN THIS CASE, THE ASSESSEE H AS FURNISHED ALL THE PARTICULARS ABOUT THE INTEREST INCOME IN HI S PROFIT AND LOSS ACCOUNT. THEREFORE, WE ARE OF THE VIEW THAT TH E AO AND CIT(A) ARE NOT JUSTIFIED IN IMPOSING PENALTY. HENCE , WE DELETE THE PENALTY. SHRI OM PRAKASH KHANDELWAL, INDORE VS. ACIT,1(2), I NDORE I.T.A.NO. 335/IND/2015 A.Y. 2007-08. 6 6 8. IN THE CASE OF RELIANCE PETRO (SUPRA), THE HON'BLE SUPREME COURT HAS HELD AS UNDER :- 'WE ARE NOT CONCERNED IN THE PRESENT CASE WITH THE MENS REA. HOWEVER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A MATTER OF FACT, THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS. IN WEBSTER'S DICTIONARY, THE WORD 'INA CCURATE' HAS BEEN DEFINED AS: 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRAN SCRIPT.' WE HAVE ALREADY SEEN THE MEANING OF THE WORD 'PARTI CULARS' IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORD S IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORREC T, NOT ACCORDING TO TRUTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO FINDING THAT ANY DET AILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCO RRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 2 71(L)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTA INABLE IN SHRI OM PRAKASH KHANDELWAL, INDORE VS. ACIT,1(2), I NDORE I.T.A.NO. 335/IND/2015 A.Y. 2007-08. 7 7 LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACC URATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SU CH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS.' 9. WE, RESPECTFULLY, FOLLOWING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO (SUPRA) , CANCEL THE PENALTY 10. IN THE RESULT, THE APPEAL IS ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 29 TH FEBRUARY, 2016. SD/- (B.C.MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 29 TH FEBRUARY, 2016. CPU*