The ITO, Ward-1(1)(2), Ahmedabad V. Anil Tradecom Ltd., Ahmedabad

ITA 3624/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6031 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 28-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revenue expenditure; Capital expenditure
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE ITO, WARD - 1(1)(2), AHMEDABAD (APPELLANT) VS ANIL TRADECOM LTD. 201, ANIKET, C.G. ROAD, NAVRANGPUR, AHMEDABAD - 380009 PAN: AAECA7864M (RESPONDENT) REVENUE BY : S H RI RAJDEEP SINGH , SR. D . R. ASSESSEE BY: NONE DATE OF HEARING : 08 - 01 - 2 018 DATE OF PRONOUNCEMENT : 13 - 02 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEA L FOR A.Y. 2009 - 10 , ARIS ES FROM ORDER OF THE CIT(A) - 3 , AHM EDABAD DATED 27 - 10 - 2015 , IN PROCEEDINGS UNDER SECTION 271(1 ) (C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF CASE AND IN LAW, THE CIT(A) WAS RIGHT IN DELETI NG THE PENALTY LEVIED U/S. 271(1 )(C) OF THE ACT ATRS. 15,33,776/ - ' ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER TO THE EXTENT MENTIONED ABOVE SINCE THE ASSESSEE HAS FAILED TO DISCLOSE HIS TRUE INCOME/BOOK PROFIT. 3. THE ASSESSE HAS FILED RETURN OF INCOME ON 29 TH SEPTEMBER, 2009 DECLARING INCOME OF RS. 4,89,000/ - . DURING THE COURSE OF ASSESSMENT PROCEED INGS T HE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS CLAIMED DEDUCTION I T A NO . 3624 / A HD/20 15 A SSESSMENT YEAR 200 9 - 10 I.T.A NO. 3624 /AHD/20 15 A.Y. 2009 - 10 PAGE NO ITO VS. ANIL TRADECOM LTD. 2 OF INTEREST EXPENSES TO THE AMOUNT OF RS. 99 ,10, 140/ - ON SCRUTINY, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS GIVEN LOANS AND ADVANCES TO THE TUNE OF RS.22,99,92,249 OUT OF WHIC H INTEREST FREE LOAN AND ADV ANCES TO THE AMOUNT OF RS. 3 , 76 , 03 , 591/ - HAS BEEN PROVIDED TO SEVEN PARTIES. THE ASSESSING OFFICER WAS OF THE VIEW THAT BORROWING OF FUND BY THE ASSESSEE TO THE EXTE NT OF ABOVE MENTIONED RS. 3 , 76 , 03 , 5 91/ - WAS NOT FOR THE PURP OSE OF BUSINESS AS IT HA D BEEN DIVERTED TOWARDS INTEREST FREE LOAN AND ADVANCES . THE ASSESSING OFFICER OBSERVED THAT NON - BUSINESS INVESTMENT IS NOT ADMISSIBLE FOR DEDUCTION U/S. 36(I)(III) OF THE ACT, THEREFORE, HE HAS DISALLOWED INTEREST @ 12% ON THE AFORESAID INTEREST FREE ADVANCES TO THE AMOUNT OF RS . 45 , 12 , 430. THE ASSESSING OFFICER HAS ALSO INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREAFTER, HE HAS IMPOSED PENALTY OF RS. 15 , 33 , 776/ - FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 4. AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER: - 4. DECISION I HAVE GONE THROUGH THE FACTS MENTIONED IN THE PENALTY ORDER AND THE SUBMISSION OF THE APPELLANT . THE ISSUE RAISED IN GROUND NO. 2 IS RELATING TO DISALLOWANCE OF INT EREST PAYMENT U/S. 36(1)(III) OF RS.45,12,430/ - . WHILE DECIDING QUANTUM APPEAL, THE CIT (A) - 1, AHMEDABAD VIDE APPELLATE ORDER DATED 21.09.2 015 HAS RESTRICTED THE DISALLOWANCE ONLY TO RS.43,176/ - . 4.1 IN MY OPINION, THE APPELLANT HAD GIVEN ALL THE PARTICULARS REGARDING THE CLAIM IN THE RETURN OF INCOME. IT WAS A MERE BONAFIDE CLAIM CONSIDERED TO BE ADMISSIBLE. THE ASSESSING OFFICER DID NOT ALLOW THE CLAIM. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER DOES NOT MAKE THE CASE FIT FOR IMPOSITION OF PENALTY. HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ELECTROLUX KELVENATOR LTD. [2014] 44 TAXMANN.COM 369 (DELHI) HAS HELD THAT 'AN ISSU E OF ALLOWANCE OF NON - COMPLETE FEE AS REVENUE EXPENDITURE OR CAPITAL EXPENDITURE WAS DEBATABLE, DISALLOWANCE OF ASSESSEE'S CLAIM WOULD NOT BE A GROUND TO IMPOSE PENALTY UNDER SECTION 271(1)(C).' THE APPELLANT DID NOT FURNISH ANY INACCURATE PARTICULARS OR MISREPRESENTED ANY FACT IN RETURN OF INCOME. THE CLAIM WAS MADE BY GIVING ALL THE FACTS. THEREFORE, THERE IS NO FURNISHING OF INACCURATE PARTICULARS ON THE PART OF THE APPELLANT AND IN THE CIRCUMSTANCES THE DECISION OF HONOURABLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD REPORTED IN 322 ITR 158 IS CLEARLY APPLICABLE. ACCORDING TO THE DECISION, WHERE THERE IS NO FINDING THAT ANY DETAILS WERE SUPPLIED BY THE APPELLANT IN ITS RETURN OF INCOME FOUND TO BE INCORRECT OR 0 ERRONEOUS OR FALSE TH ERE WAS NO QUESTION OF INVOKING THE PENALTY UNDER SECTION 271(1)(C). MERE MAKING OF CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE APPELLANT. I.T.A NO. 3624 /AHD/20 15 A.Y. 2009 - 10 PAGE NO ITO VS. ANIL TRADECOM LTD. 3 IN ONE OF THE CASES THE JURIS DICTIONAL ITAT HAS GIVEN DETAILED REASONING TO CONFIRM THE DELETION OF PENALTY U/S.271(1)(C), I.E. IN THE CASE OF NIN FINANCE & CREDIT CAPITAL PVT.... VS ASSESSEE ON 28 SEPT., 2012, ITAT, AHMEDABAD OBSERVED AS UNDER: - WE HAVE HEARD BOTH SIDES. WE HAVE PERU SED THE ORDERS OF THE AUTHORITIES BELOW. AS FAR AS THE QUESTION OF LEVY OF PENALTY IN RESPECT OF AN ADDITION PERTAINING TO THE 'SHARE APPLICATION MONEY' IS CONCERNED, WE HAVE BEEN INFORMED THAT THE ASSESSEE HAS FLOATED THE SHARES IN MUFFASSIL AREAS TO PROM OTE THE AGENCY OF THE TRACTOR, HENCE 'SHARE APPLICATION MONEY' FROM THE AGRICULTURIST HAVE BEEN INVITED. IN PARA 7.5, THE RESPECTED CO - ORDINATE BENCH IN THE ORDER CITED SUPRA DATED 28.2.2012 HAS MADE AN OBSERVATION THAT THE AO IN HIS REMAND REPORT HAD STAT ED THAT CERTAIN DETAILS WERE FURNISHED BY THE ASSESSEE ALTHOUGH AFTER THE COMPLETION OF THE ASSESSMENT PROCEEDINGS. BUT IT HAS ALSO BEEN NOTED IN PARA 7.6 THAT DURING THE COURSE OF HEARING BEFORE THE BENCH, THE ASSESSEE HAS FURNISHED THE CONFIRMATION LETTE RS FROM THOSE PERSONS AND ON THAT BASIS IT WAS NOTED - THAT MAJORITY OF THEM WERE FOUND TO BE AGRICULTURIST. THE ASSESSEE HAS PLACED RELIANCE ON LOVELY EXPORTS PVT. LTD. 216 CTR 195 (SC). IT HAS ALSO BEEN OBSERVED THAT THE AGRICULTURIST HAVE PRODUCED ITA NOS . 1528&1529/AHD/2006(BY ASSESSEE) AND ITA NOS. 1603&1604/AHD/2006 (BY REVENUE) AYS - 94 - 95,96 - 97,93 - 94 & 94 - 95 RESPECTIVELY RATION - CARDS AND ELECTION IDENTITY - CARDS BUT HAVE NOT PRODUCED THE DETAILS OF THE LAND HOLDING AND THE AGRICULTURE OPERATION CARRIE D ON BY THEM. AT ONE PLACE WHILE CONCLUDING THE ISSUE, RESPECTED TRIBUNAL HAS HELD THAT CONSIDERING THE PREPONDERANCE OF PROBABILITY AND EVIDENCE AVAILABLE ON RECORD, IT WAS CLEAR THAT WHOLE SET OF TRANSACTION WAS NOT AN ALLOWABLE CLAIM. WE ARE OF THE VIEW THAT THE SAID OBSERVATION OF THE TRIBUNAL HAD REVOLVED AROUND THE PREPONDERANCE OF PROBABILITY AND, THEREFORE, MERELY ON THAT BASIS THE CONFIRMATION OF LEVY OF PENALTY WAS NOT JUSTIFIABLE. THE FIRST APPELLATE AUTHORITY HAS EXAMINED THE RELEVANT ASPECT OF THE CASE AND THEREUPON DECIDED THIS ISSUE IN ASSESSEE'S FAVOUR. BEFORE US, A DECISION OF ITAT CALCUTTA BENCH, VIZ. EAGLE INTERNATIONAL LTD. 57 ITD 512 (CAT.) HAS BEEN CITED, WHEREIN THE PROVISIONS OF SECTION 271(1)(C) R.W.EXPLANATION - 1 (B) HAS BEEN DISCUSS ED AND THEN IT WAS HELD THAT THE ADDITION WAS BEING MADE U/S.68 IN RESPECT OF SHARE MONEY WAS NOT SUFFICIENT F OR LEVY OF PENALTY BECAUSE THE AO HAS NOT TAKEN ANY STEP TO ISSUE SUMMONS U/S.131 OR TO OBTAIN DUE 1 INFORMATION U/S. 133(6) OF IT ACT BUT LEVIED THE PENALTY WITHOUT HAVING REGARD TO THE BONA FIDE OF THE ASSESSEE. THE TRIBUNAL HAS THEREFORE HELD THAT THE PENALTY WAS NOT SUSTAINABLE. FEW MORE DECISIONS HAVE ALSO BEEN CITED FROM THE SIDE OF THE ASSESSEE. HOWEVER KEEPING BREVITY IN MIND, WE DO NOT CON SIDER IT NECESSARY TO DISCUSS THEM ELABORATELY. HOWEVER, WE MAY LIKE TO ADD THAT IF ASSESSEE GIVES AN EXPLANATION WHICH IS ALTHOUGH UNPROVED BUT SIMULTANEOUSLY NOT DISPROVED, HOWEVER, CIRCUMSTANCES ALSO DO NOT LEAD TO A POSITIVE INFERENCE THAT THE EXPLANAT ION OF THE ASSESSEE WAS FALSE, THEN THE EXPLANATION ANNEXED TO SECTION 271(1)(C) DO NOT HELP THE DEPARTMENT TO LEVY THE PENALTY, BECAUSE NO MATERIAL IS BROUGHT ON RECORD TO ITA NOS.1528&1529/AHD/2006(BY ASSESSEE) AND ITA A/OS. 1603&1604/AHD/2006 (BY REVENU E) A YS - 94 - 95,96 - 9 7,93 - 94 & 94 - 95 RESPECTIVELY DEMONSTRATE THAT THE EXPLANATION OFFERED WAS BOGUS OR FALSE ALTHOUGH NOT ACCEPTED. THEREFORE, BECAUSE OF THIS REASON THE PENALTY PROCEEDING CAN BE SAID TO BE DISTINGUISHABLE FROM THE QUANTUM PROCEEDINGS. B Y PLACING RELIANCE ON NATIONAL TEXTILES 249 ITR 125 (GUJ.), WHEREIN IT WAS HELD THAT IN ORDER TO JUSTIFY THE LEVY OF PENALTY THERE MUST BE SAME CIRCUMSTANCES LEADING TO A REASONABLE CONCLUSION THAT THE AMOUNT DOES REPRESENT ASSESSEE'S CONCEALED INCOME AND THAT IT IS NOT ENOUGH THAT THE AMOUNT HAS BEEN ASSESSED AS INCOME AND FURTHER THAT THE CIRCUMSTANCES MUST SHOW THAT THERE WAS ANIMUS CONCEALMENT COUPLED I.T.A NO. 3624 /AHD/20 15 A.Y. 2009 - 10 PAGE NO ITO VS. ANIL TRADECOM LTD. 4 WITH FURNISHING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE; THEREFORE WE HEREBY HOLD THAT TH E ID.CIT(A) HAS RIGHTLY DELETED THE PENALTY. THE RATIO OF CASES (SUPRA) DOES INDICATE A CASE FOR THE APPELLANT . THE APPELLANT ALSO RELIED ON RELEVANT CASE LAWS SUPPORTING THE CLAIM IN QUESTION. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY INDEPEN DENT EVIDENCES COLLECTED THROUGH ENQUIRY DURING ASSESSMENT PROCEEDINGS. THE CLAIM OF APPELLANT WAS ALREADY EXISTING ON THE DAY RETURN OF INCOME FILED WITH THE DEPARTMENT. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES AND RELYING ON THE RATIO LAID DOWN BY JURISDICTIONAL IT AT AND HON'BLE GUJARAT HIGH COURT, THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/S.271(1)(C) OF IT ACT, 1961 IS HEREBY DELETED AND GROUND OF APPEAL NO.2 IS ALLOWED. 4.2 GROUND NO.1 IS RAISING OBJECTION TO THE LEGALITY OF THE PENAL TY ORDER. I FIND THAT THE PROPER PROCEDURE HAS BEEN ADOPTED BY THE A.O. WHO HAS VALID JURISDICTION, THEREFORE, THE PENALTY ORDER CAN NOT BE CALLED ILLEGAL AB - INITI O. IN VIEW OF THIS, GROUND NO.1 IS DISMISSED. 5. IN THE RESULT, THE GROUND OF APPEAL IS PARTLY ALLOWED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE OBSERVE THAT ASSESSEE HAS FURNISHED ALL THE PARTICULARS OF AFORESAID LOAN/ADVANCES ALONG WITH COMPONENTS OF INTEREST AS ELABORATED IN DETAIL IN THE FINDI NGS OF THE LD.CIT(A). AFTER CONSIDERING THE FACTS AND THE FINDINGS OF THE LD.CIT(A) WE OBSERVE THAT LD. CIT(A) IS JUSTIFIED IN DELETING THE PENALTY AFTER PLACI NG RELIANCE ON THE JUDICIAL PRONOUNCEMENTS IN T H E CASE OF RELIANCE PETRO - PRODUCTS PVT. LTD. 322 ITR 158. WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE , THEREFORE , THE SAME IS DISMISSED . 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 13 - 02 - 201 8 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 13 /02 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. I.T.A NO. 3624 /AHD/20 15 A.Y. 2009 - 10 PAGE NO ITO VS. ANIL TRADECOM LTD. 5 BY ORDER/ , / ,