GULSHAN HARESH BAKHTIANI, MUMBAI V. ACIT 21(1), MUMBAI

ITA 3413/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8764 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 16-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Wrong claim
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI . . , , BEFORE SHRI C.N. PRASAD , JM AND SHRI RAJESH KUMAR , AM ITA NO. 3413 / MUM/ 20 1 6 ( / ASSESSMENT YEAR: 20 09 - 10 ) GULSHAN HARESH BAKHTIANI , C/O SHRI SURESH N OTWANI ADVOCATE, 305, 3 RD FLOOR, ADAMJI BUILDING, 413, KATHA BAZAR, MUMBAI - 400009 / VS. ASSTT.COMMISSIONER OF INCOME TAX , 21(2), (OLD), ASSTT.COMM ISSIONER OF INCOME TAX, 26(1), ROOM NO.701, C - 11, 7 TH FLOOR, PRATYAKSHAKAR BHAVAN, BANDRA - KURLA COMPLEX, BANDRA (E), MUMBAI - 400051 ./ PAN : ACUPB4663J ( / APPELLANT) : ( / RESPONDENT ) / ASSESSEE B Y : SHRI SURESH N OTWANI /RESPONDENT BY : MS. ANUPAMA SINGH / DATE OF HEARING : 4 .1.2017 / DATE OF PRONOUNCEMENT : 18. 1. 201 7 / O R D E R PER RAJESH KUMAR, A. M: THIS IS AN APPEAL FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 28.3. 201 6 PASSED BY THE LD. CIT(A) - 3 2 , MUMBAI FOR THE ASSESSMENT YEAR 20 09 - 10 . 2 ITA NO. 3413 /M/201 6 2. ONLY ISSUE RAISED IN THE VARIOUS GROUND S OF APPEAL IS AGAINST THE UPHOLDING THE LEVY OF PENALTY OF RS.6,55,900/ - BY THE LD.CIT(A) AS I MPOSED BY THE AO. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 28.2.2011 ASSESSING THE INCOME AT RS.1,74,65,060/ - AFTER MAKING VARIOUS ADDITIONS AS AGAINST THE DECLARED INCOME OF RS.42,64,593/ - . IN THE QUANTUM PROCEEDINGS, THE FAA VIDE ITS ORDER DATED 25.4.2012 DELETED THE MAJORITY OF ADDITIONS AND ONLY ADDITION SUSTAINED WAS ON ACCOUNT OF INTEREST FREE ADVANCES WHICH WAS REDUCED TO RS.5,62,204/ - FROM RS.9,90,877/ - AND DISALLOWANCE OF EXPENSES WHI CH WAS REDUCED FROM RS.13,67,182/ - FROM RS.17,40,882/ - . THE SAID QUANTUM ADDITIONS AS SUSTAINED BY THE FAA WAS NOT CHALLENGED BY THE ASSESSEE BEFORE THE HIGHER FORUM. THE AO ON THE BASIS OF THE PARTIAL CONFIRMATION OF THE ASSESSMENT ORDER BY THE FAA CA ME TO THE CONCLUSION THAT THE ASSESSEES CASE IS COVERED UNDER EXPLANATION 1 TO SECTION 271(1)( C ) OF THE ACT AND HELD THAT THE ASSESSEE HAS COMMITTED DEFAULT WITHIN THE MEANING OF SECTION 271(1)(C ) OF THE ACT OF CONCEALMENT BY FILING INACCURATE PART ICULARS OF INCOME AMOUNTING TO RS.19,29,386/ - AND LEVIED THE PENALTY EQUAL TO 100% OF THE TAX SOUGHT TO BE EVADED AMOUNTING TO RS.6,55,800/ - . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A) WHO ALSO DISMISSED TH E APPEAL OF THE ASSESSEE AFTER CONSIDERING THE 3 ITA NO. 3413 /M/201 6 CONTENTION S AND SUBMISSION BY THE ASSESSEE BEFORE HIM. A GGRIEVED BY THE SAID ORDER OF FAA , THE ASSESSEE IS IN SECOND APPEAL BEFORE THIS TRIBUNAL. 4. THE LD. COUNSEL OF THE ASSESSEE ON THE FIRST ISSUE SUBM ITTED THAT THE ASSESSEE DID NOT CHARGE ANY INTEREST ADVANCES GIVE N OUT OF INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE AND AS A RESULT THE LD CIT(A) SUSTAINED THE ADDITIONS TO THE TUNE OF RS.5,62,204/ - AND ON THE SECOND ISSUE THE LD.COUNSEL SUBMITT ED THAT THE INTEREST EXPENSES OF RS.17,40,782/ - WHICH CLAIMED BY THE APPELLANT FROM THE INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES WHICH WAS REDUCED TO RS.3,73,700/ - ON THE BASIS OF REVISED COMPUTATION OF INCOME FILED BY ASSESSEE BY ACCEPT ING THE INTEREST EXPENSES AS SUCH AFTER INSTEAD OF RS.17,40,782/ - . THE LD.CIT(A) HELD THAT IT WAS ON ACCOUNT OF DOUBLE DISALLOWANCE. THE LD.CIT(A) HELD THAT IT WAS NOT A CASE OF WRONG CLAIM OF INTEREST EXPENSES BUT THE APPELLANT WAS NOT ABLE TO PROVE THE CLAIM WITH COGENT EVIDENCE S AND WAS FORCED TO SURRENDER THE SAME. THE APPELLANT ONLY FILED REVISED COMPUTATION AFTER MISTAKE WAS POINTED OUT BY THE AO AND THEREFORE THE EXPLANATION OF THE ASSESSEE THAT THERE WAS NO CONCEALMENT OF INCOME WAS NOT PROPER AND ACCEP TED AND THE AO AFTER MAKING THE INQUIRIES IN DETAILED WAS ABLE TO DETECT THE WRONG CLAIM OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEE HAS FILED THIS APPEAL BEFORE THIS TRIBUNAL. 5 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTI ONS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF THE LOWER AUTHORITIES ON THE 4 ITA NO. 3413 /M/201 6 ISSUE. WE FIND THAT THE ASSESSEE ADVANCED INTEREST FREE ADVANCES OUT OF FUNDS AVAILABLE WITH HIM AND THE ADDITION BY THE AO ON NOTIONAL BASIS WAS REDUCED FROM RS.9,90,877/ - TO RS.5,62,204/ - BY THE LD FAA AND SIMILARLY WRONG CLAIM OF INTEREST EXPENSES OF RS.17,40,782 UNDER THE HEAD INCOME FROM OTHER SOURCES BY THE ASSESSEE WAS REDUCED BY RS.13,67,182 . A FTER CONSIDERING ALL THE FACTS ON RECORD AND RIVA L CONTENTIONS, WE FIND THAT THE ASSESSEE HAS FULLY DISCLOSED ALL RELEVANT FACTS AND FIGURES QUA INTEREST FREE ADVANCES OUT OF INTEREST BEARING FUNDS AND CLAIM OF INTEREST AND EXPENSES UNDER THE HEAD INCOME FROM OTHER SOURCES AND WAS ACCORDINGLY EXPLAIN ED BEFORE THE REVENUE AUTHORI TIES BELOW. THE AO MADE ADDITION OF RS.27,31,759/ - UNDER BOTH THESE HEAD WHICH WAS REDUCED TO RS.19,29,386/ - . IN OUR OPINION, IT WAS A CASE OF WRONG CLAIM BY THE ASSESSEE IN WHICH THE ASSESSEE HAS FULLY DISCLOSED IN THE R ETURN OF INCOME AND THEREFORE CANNOT BE COVER ED UNDER EXPLANATION 1 TO SECTION 271(1)( C ) OF THE ACT. THE CASE OF THE ASSESSEE FINDS STRONG SUPPORT THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS . RELIANCE PETROPRODUCTS LTD ( SUPREME COURT ). ( 2010) 322 ITR 158 ( SC ) , WHEREIN IT HAS BEEN HELD BY THE HONBLE SUPREME COURT THAT THE CLAIM WHICH MAY BE WRONG OR NOT ACCEPTED OR WAS NOT ACCEPTABLE TO REVENUE BY ITSELF WOULD NOT ATTRACT PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN VIEW OF THE ABOVE PRECEDENT LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCT S LTD (SUPRA), WE FIND THAT THE ASSESSEES CASE STANDS COVERED BY THIS DECISION. THEREFORE, RESPECTFULLY 5 ITA NO. 3413 /M/201 6 FOLLOWING THE SAME, WE ALLOW THE APPEALS OF THE ASSESSEE B Y DIRECTING THE AO TO DELETE THE PENALTY LEVIED U/S 271(1)( C ) OF THE ACT . 6 . IN THE RESULTS , THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18TH JAN, 2017. SD SD ( C.N. PRASAD ) ( RAJESH KUMAR) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 18. 1.2017 SRL,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI