M/s Choksi Laboratories Ltd., Indore V. The ACIT, Indore

ITA 341/IND/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 47811 (ITAT-INDORE)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 28-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: P C JAIN
• Section: 143(3); 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.341/IND/2010 A.Y. 2004-05 CHOKSI LABORATORIES LTD. INDORE PAN AABCC2523L APPELLANT VS ACIT-2(1), INDORE RESPONDENT APPELLANT BY : SHRI P.C.JAIN, CA RESPONDENT BY : SMT. APARNA KARAN, SR. DR O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THE ONLY GROUND RAISED BY THE ASSESSEE IN THIS APPE AL RELATES TO THE CONFIRMATION BY THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) OF THE PENALTY OF RS. 35,215/- LEVIED U/S 271(1) OF THE ACT BY THE ASSESSING OFFICER. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON THE FIL E. BRIEF FACTS ARE THAT THE ASSESSEE DECLARED INCOME OF RS.73,56,6 00/- IN ITS RETURN FILED ON 28.2.2005 AND THE ASSESSMENT WAS CO MPLETED AT 2 U/S 143(3) OF THE ACT AT TOTAL INCOME OF RS. 74,54, 763/- ON 17.11.2006. THE ASSESSING OFFICER, WHILE FRAMING TH E ASSESSMENT, FOUND THAT THE ADVANCES WERE SUBJECT MA TTER OF INTEREST DISALLOWANCE IN ASSESSMENT YEAR 1997-98 AS THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE REGARDING D ISPUTE, CONSEQUENTLY, THE INTEREST AT THE RATE OF 12% ON TH E ADVANCES OF RS. 8,18,023/-, WHICH COMES TO RS. 98,163/-, WAS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE COMPANY TREATING THE CORRESPONDING BORROWING HAVING NOT BEE N UTILISED FOR BUSINESS DURING THE COURSE OF ASSESSMENT PROCEE DINGS U/S 143(3) FOR THE IMPUGNED ASSESSMENT YEAR. THE A.O. W AS OF THE VIEW THAT SINCE THE ASSESSEE FURNISHED INACCURATE P ARTICULARS OF ITS INCOME, THEREFORE, PENALTY OF RS.35,215/- WAS L EVIABLE U/S 271(1) OF THE ACT. HE, ACCORDINGLY, LEVIED THE PE NALTY, WHICH WAS AFFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND IS UNDER CHALLENGED BEFORE THE TRIBUN AL. 3. NOW THE QUESTION ARISES AS TO WHETHER THE PENALT Y WAS RIGHTLY CONFIRMED BY THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS) ? THE AMOUNT OF RS.5 LACS WAS CLAIMED TO BE 3 ADVANCED FOR TRAVELLING, MARKETING, PRESS CONFERENC E, ETC. TO SHRI GIRDHARILAL PATHAK, AT THE TIME OF PUBLIC ISSU E, WHICH COULD NOT BE ADJUSTED FOR WANT OF FINAL ACCOUNT FROM HIS SIDE. SIMILARLY THE AMOUNT OF RS. 3,18,023/- WAS GIVEN TO MAGNUM INVESTMENT FOR THE SAME PURPOSE WHICH ALSO COULD NO T BE ADJUSTED FOR WANT OF NECESSARY DETAILS. THE STAND O F THE ASSESSEE IS THAT THE IMPUGNED AMOUNTS ARE OUTSTANDI NG WITH RESPECT TO THE ADVANCES MADE TO THESE PERSONS IN CO NNECTION WITH THE PUBLIC ISSUES. THE LEARNED ASSESSING OFFIC ER DISALLOWED THE IMPUGNED AMOUNT OUT OF INTEREST CLAI MED BY THE ASSESSEE HOLDING THAT THE BORROWED FUNDS UPTO THAT EXTENT COULD NOT BE UTILISED FOR BUSINESS PURPOSES. HOWEV ER, THE FACT REMAINS THAT THE IMPUGNED AMOUNTS WERE DULY DECLARE D IN ITS RETURN BY THE ASSESSEE, THEREFORE, THE ASSESSEE NEI THER FURNISHED INACCURATE PARTICULAR NOR CONCEALED ITS I NCOME, THEREFORE, MERELY DISALLOWANCE BY THE ASSESSING OFF ICER DOES NOT ATTRACT THE RIGORS OF PENALTY U/S 271(1)(C). F OR IMPOSING PENALTY U/S 271(1) EITHER THERE SHOULD BE CONCEALM ENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF S UCH INCOME, 4 WHICH IS NOT A CASE HERE, THEREFORE, NO PENALTY SHO ULD HAVE BEEN IMPOSED BECAUSE DISALLOWANCE OF EXPENSES OR IN TEREST WILL NOT PER SE TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS OF SUCH INCOME. THE ASSESSEE FURTHER GETS SUPPORT FRO M THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PRIVATE LIMITED (CIVIL APPE AL NO. 2463/2010 DATED 17.3.2010) AND THE DECISION FROM TH E HONBLE PUNJAB & HARYANA HIGH COURT IN CIT V. AJAIBSINGH & COMPANY; 253 ITR 630, THEREFORE, THE PENALTY SO IMPOSED BY T HE ASSESSING OFFICER AND CONFIRMED IN THE IMPUGNED ORD ER IS DIRECTED TO BE DELETED. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LEARNED REPRESENTATIVES FROM BOTH THE SIDES AT THE CONCLUSION OF HEARING ON 25 TH MAY, 2011. (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 25.5.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE D/-