DCIT, New Delhi V. M/s. Sameer Manchanda, New Delhi

ITA 3501/DEL/2012

• Counselvise Citation: 350120114 RSA 2012
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 03-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AROOP KR SINHA
• Keywords: Wrong claim
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI S.V.MEHROTRA, ACCOUNTANT MEMBER AND SHRI KULBHARAT, JUDICIAL MEMBER I.T.A .NO.- 3501/DEL/2012 (ASSESSMENT YEAR-2006-07) DCIT VS. SAMEER MANCHANDA, CIRCLE 11(1),ROOM NO.-312, A-89, NIZAMUDDIN EAST, C.R.BUILDING, NEW DELHI. NEW DELHI PAN-AARPM0062H (A PPELLANT) (RESPONDENT ) APPELLANT BY: SH. AROOP KR SINHA, SR. DR RESPONDENT BY: ADJOURNMENT APPLICATION REJECTED. APPEAL HEARD ON-04.09.2012 ORDER PRONOUNCED ON-14.09.2012 ORDER PER KULBHARAT, JM THE PRESENT APPEAL OF THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 02.02.2012 OF LD. CIT(A)-XXVII, NEW DELHI. 2. THE REVENUE HAS SOLITARY GROUNDS THAT READS AS U NDER :- (A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 3,9 7,870/- IMPOSED U/S 271(1)(C) OF THE I.T.ACT. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND A NY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 3. THE FACTS OF THE CASE THAT THE ASSESSEE HAD DISC LOSED INTEREST RECEIPT ON SAVING BANK ACCOUNT, FDS AND ON BONDS OF NATIONAL H OUSING BANK AT RS. 32,92,285/-. AGAINST THIS INTEREST INCOME, THE APPELLANT HAD CLAIMED I.T.A .NO.- 3501/DEL/2012 2 DEDUCTION OF INTEREST EXPENDITURE AMOUNTING TO RS. 24,30,198/-. THIS CLAIM HAD BEEN MADE ON THE BASIS OF A CERTIFICATE ISSUED BY BIRLA GLOBAL FINANCE LTD. TO THE EFFECT THAT INTEREST OF RS. 24,30,197/- HAD BEEN DEBITED TO THE ASSESSEES ACCOUNT DURING THE FY 2005-06. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, REQUISITE INFORMATION REGARDING THE DE POSIT & WITHDRAWAL MADE IN THE BANK ACCOUNT HAD BEEN ANALYZED AND OUT OF TO TAL INTEREST CLAIMED AT RS. 24,30,198/-, RS. 11,82,027/- RELATED TO THOSE L OANS WHICH HAVE BEEN UTILIZED FOR PERSONAL EXPENSES LIKE PAYMENT OF INSU RANCE PREMIUM, HOUSEHOLD EXPENSES, INVESTMENT IN ASSETS FOR EARNIN G DIVIDEND INCOME WHICH WAS NOT INCLUDIBLE IN THE TOTAL TAXABLE INCOME AND WAS THUS HIT BY THE PROVISIONS OF SECTION 14A OF THE ACT. ACCORDINGLY, AN ADDITION OF RS. 11,82,027/- WAS MADE TO THE ASSESSEES INCOME T O WHICH HE AGREED. A PENALTY PROCEEDINGS U/S 271(1)(C) WERE INITIATED SE PARATELY. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE VIDE HIS LETTER DATED 24.04.2009, INTER ALIA, STATED THAT DURING THE ASSESSMENT PROCEEDINGS , HE HAD AGREED TO THE ADDITION TO BUY PEACE OF MIND AND TO AVOID LITIGATI ON ON THE CONDITION THAT NO PENALTY WOULD BE LEVIED U/S 271(1)(C). 4. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANA TION OF THE ASSESSEE AND IMPOSED A PENALTY OF RS. 3,97,817/- AGAINST THI S. THE ASSESSEE CARRIED MATTER BEFORE THE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSION OF THE I.T.A .NO.- 3501/DEL/2012 3 ASSESSEE AND VARIOUS JUDICIAL PRONOUNCEMENTS DELETE D THE PENALTY. NOW THE REVENUE IS BEFORE US BY WAY OF THE PRESENT APPEAL. 5. AN APPLICATION FOR ADJOURNMENT OF CASE WAS FILE D BY THE LD. COUNSEL FOR THE ASSESSEE SEEKING ADJOURNMENT ON THE GROUND THAT LD. COUNSEL HAS TO GO TO OUT OF STATION TO ATTEND A SEMINAR AS A GUEST FACULTY. IT IS ALSO SUBMITTED IN APPLICATION THAT PENALTY HAS BEEN IMPO SED ON THE DISALLOWANCE OF INTEREST EXPENDITURE U/S 14A AND SAME IS COVERED IN FAVOUR OF THE ASSESSEE BY JUDICIAL PRONOUNCEMENTS AND RELIANCE IS PLACED O N DECISION OF THE HON'BLE SUPREME COURT RENDERED IN THE CASE OF RELIANCE PETR O PRODUCTS PVT. LTD. 322 ITR 158. THE REQUEST FOR ADJOURNMENT IS REJECTED A ND THE MATTER IS TAKEN UP FOR HEARING IN THE ABSENCE OF LD. AR FOR THE ASSESS EE. LD. DR SUBMITTED THAT THE ORDER PASSED BY THE LD. CIT(A) IS NOT JUST IFIED IN VIEW OF THE FACT THAT THE ASSESSEE HAD AGREED TO THE ADDITION OF RS. 11,82,027/- REPRESENTING THE EXCESS INTEREST CLAIM ONLY WHEN HE WAS CORNERED IN THIS REGARD. IT WAS NOT A CASE IN WHICH THE ASSESSEE HAD DISCLOSED EXCE SS INTEREST CLAIM SUO MOTTO. FROM THE AFORESAID CONDUCT OF THE ASSESSEE, IT IS EVIDENT THAT HE FURNISHED INACCURATE PARTICULARS OF INCOME BY MAKIN G BOGUS CLAIM. 6. WE HAVE HEARD THE LD. DR PERUSED THE MATERIAL AV AILABLE ON RECORD. IT IS A SETTLED PRINCIPLE OF LAW THAT THE PENALTY P ROCEEDING IS DIFFERENT AND DISTINCT FROM THE ASSESSMENT PROCEEDINGS. WE FIND THAT LD. CIT(A) HAS EXAMINED THE ISSUE IN DETAIL AND HAS RELIED UPON TH E DECISIONS OF THE HONBLE I.T.A .NO.- 3501/DEL/2012 4 CO-ORDINATE BENCH IN THE CASE OF LORD SHIVA CONSTRU CTION CO. PVT. LTD. AND ALSO ON THE DECISION OF HON'BLE SUPREME COURT REND ERED IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS 322 ITR 158. THE ASSESSE E BEFORE LD. CIT(A) HAD SUBMITTED THAT THE COMPLETE DETAILS OF INTEREST S RECEIVED AND INTEREST EXPENDED WERE DISCLOSED COMPREHENSIVELY IN HIS RETU RN OF INCOME AS WELL AS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THUS THERE WAS NEITHER ANY CONCEALMENT NOR FURNISHING OF ANY INACCURATE PARTIC ULARS. IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THE TOTAL AMOUNT OF LOAN FROM M/S BIRLA GLOBAL WAS RS.2.30 CRORE FROM 14.06.2005 TO 19.08.2005 I.E THE PERIOD UNDER CONSIDERATION IN WHICH INVESTMENTS HAVE BEEN ANALYZ ED BY THE ASSESSING OFFICER. IT WAS SUBMITTED THAT THE ACCOUNT OF THE ASSESSEE WAS A COMPOSITE ACCOUNT IN WHICH APART FROM THE LOAN, SALARY AND SA LE PROCEEDS OF SHARES ETC. HAD ALSO BEEN RECEIVED. THE ASSESSEE HAS MADE FIXED DEPOSITS OF MORE THAN RS. 2.00 CRORE DURING THE PERIOD AND HENCE ALMOST C OMPLETE LOAN FROM M/S BIRLA GLOBAL COULD BE, SAID TO BE UTILIZED FOR EARN ING INCOME FROM THE FIXED DEPOSITS. MOREOVER, THE CALCULATION DONE BY THE AS SESSING OFFICER IN THE ASSESSMENT ORDER FOR ARRIVING AT THE FIGURE OF NON -INCOME GENERATING ASSETS, INVESTMENT MADE IN NHB BONDS U/S 54EC OF THE ACT, HAS ALSO BEEN INCLUDED. HE SUBMITTED BEFORE THE LD. CIT(A) THAT THE INTEREST INCOME FROM THE BONDS IS NOT TAX EXEMPT BUT IS TAXABLE AND IN F ACT HAS BEEN INCLUDED IN THE TAXABLE INCOME OF THE ASSESSEE DURING THE ASSES SMENT YEAR 2006-07 AND I.T.A .NO.- 3501/DEL/2012 5 IN SUBSEQUENT YEARS. IT WAS SUBMITTED THAT DISALLO WANCE OF INTERESTS COULD HAVE BEEN CHALLENGED BUT THE ASSESSEE WITH A VIEW T O AVOID LITIGATION AND TO CO-OPERATE WITH THE DEPARTMENT. FIRSTLY, AGREED TO THE ADDITION BEFORE THE AO AND THEN DID NOT FILE ANY APPEAL BEFORE THE LD. CIT(A) IN RESPECT OF DISALLOWANCE, ON THE UNDERSTANDING THAT NO PENALTY WOULD BE IMPOSED IN HIS CASE U/S 271(1)(C). APART FROM THE AFORESAID SUBMI SSION, THE ASSESSEE ALSO MADE SUBMISSIONS THAT IN THE ASSESSMENT ORDER THERE WAS NO PRIMA FACIE SATISFACTION RECORDED BY THE AO. THE ASSESSEE REL IED UPON THE JUDGEMENT OF THE HONBLE HIGH COURT OF DELHI RENDERED IN THE CAS E OF MADHUSHREE GUPTA 317 ITR 207 (DELHI). IT WAS SUBMITTED BEFORE LD. C IT(A) WAS THAT WHEN THERE IS CONDITIONAL SURRENDER, NO PENALTY CAN BE I MPOSED. HE RELIED UPON VARIOUS DECISIONS IN SUPPORT OF THIS CONTENTION. A NOTHER CONTENTION BEFORE LD. CIT(A) THAT THE ASSESSEE WAS HOLDING A COMPOSIT E BANK ACCOUNT. IT WAS CONTENDED BEFORE THE LD. CIT(A) THAT THERE WAS ALSO INTEREST FREE FUND AVAILABLE FOR GIVING ADVANCE AND A RELIANCE WAS PLA CED UPON THE JUDGEMENT IN THE CASE OF RELIANCE UTILITY 313 ITR 340. LD. C IT(A) AFTER CONSIDERING THE SUBMISSIONS DELETED THE PENALTY RELYING ON THE JUDGEMENT OF THE HONBLE APEX COURT IN THE RELIANCE PETRO PRODUCT 322 ITR 15 8 AND ALSO THE DECISION OF THE HONBLE CO-ORDINATE BENCH OF THIS TRIBUNAL I N THE CASE OF SHIVA CONSTRUCTION LIMITED. I.T.A .NO.- 3501/DEL/2012 6 7. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATIONS TO T HE FACTS AND CIRCUMSTANCES AND THE MATERIAL AVAILABLE ON THE REC ORD AFTER CONSIDERING ALL THE ASPECTS OF THE MATTER, WE DO NOT FIND ANY INFIR MITY IN THE ORDER OF LD. CIT(A). SINCE IN THIS CASE, FIRSTLY, THE SURRENDER AS MADE BY THE ASSESSEE WAS CONDITIONAL; SECONDLY THE ASSESSEE HAS DISCLOSE D ALL PARTICULARS OF INCOME. THE FACTUM OF HOLDING A COMPOSITE BANK ACC OUNT WHEREIN THE APART FROM LOAN SALARY SALES PROCEEDS ETC. ARE ALSO DEPOS ITED IS NOT DISPUTED. THE CALCULATION OF AMOUNT OF DISALLOWABLE INTEREST U/S 14A OF THE ACT WAS A DEBATABLE ISSUE BEFORE INTRODUCTION OF RULE 18 W.E. F 01.04.2010. MERELY, MAKING A CLAIM WHICH IS NOT SUSTAINABLE IN THE LAW, DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULAR, AS HAS BEEN HE LD BY THE HONBLE APEX COURT, IN THE CASE OF RELIANCE PETRO PRODUCTS (SUPR A), RESPECTFULLY FOLLOWING RATIO LAID THEREIN, THIS GROUND OF REVENUES APPEAL IS REJECTED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.09.2012. SD/- SD/- (S.V.MEHROTRA) (KULBHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14/09/2012 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI I.T.A .NO.- 3501/DEL/2012 7