Cyber Towers, Hyderabad V. ACIT, Cir-6(1), Hyderabad

ITA 364/HYD/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3320 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 09-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: RAVI SESHAGIRI RAO
• Keywords: Wrong claim; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.363/HYD/2011 : ASSESSMENT YEAR 2004-0 5 ITA NO.364/HYD/2011 : ASSESSMENT YEAR 2005-0 6 M/S. CYBER TOWERS, HYDERABAD (PAN AADFC 8686 M) VS ASST. C OMMISSIONER OF INCOME-TAX, CIRCLE 6(1), WARANGAL (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAVI SESHAGIRI RA O RESPONDENT BY : SHRI V.SRINIVAS O R D E R PER G.C.GUPTA, VICE PRESIDENT: THESE TWO APPEALS BY THE ASSESSEE FOR THE ASSESSM ENT YEARS 2004-05 AND 2005-06 ARE DIRECTED AGAINST ORDERS OF THE COMM ISSIONER OF INCOME-TAX (APPEALS). SINCE IDENTICAL ISSUE IS INVOLVED IN THE SE TWO APPEALS PREFERRED BY THE ASSESSEE, THESE ARE BEING DISPOSED OFF WITH THIS CO NSOLIDATED ORDER. 2. IDENTICAL ISSUE INVOLVED IN BOTH THESE APPEAL S PREFERRED BY THE ASSESSEE IS REGARDING VALIDITY OF THE PENALTY IMPOS ED UNDER S.271(1)(C) OF THE INCOME-TAX ACT, 1961. 3. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THA T IT IS A CASE OF DISALLOWANCE OF INTEREST IN THE COMPUTATION OF INC OME OF THE ASSESSEE, ON WHICH NO PENALTY UNDER S.271(1)(C) IS LEVIABLE IN ACCORDA NCE WITH LAW. HE SUBMITTED THAT ALL THE MATERIAL FACTS WERE DISCLOSED BY THE A SSESSEE IN THE RETURNS OF INCOME FILED. HE SUBMITTED THAT IT IS NOT THE CASE OF THE REVENUE THAT IT HAS DETECTED ITA NO.363-3 64/HYD/2011 M/S.CYBER TOWERS, HYDERABAD 2 CERTAIN MATERIAL FROM SOME SOURCES, OTHER THAN RETU RN OF INCOME FILED BY THE ASSESSEE, AND THEREFORE, IT IS NOT A CASE OF CONCEA LMENT OF INCOME OR FILING OF INACCURATE PARTICULARS OF INCOME. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS OPP OSED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE . HE RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). HE SUBMITTED THAT APPLICATION OF MONEY WAS FOR NON-BUSINESS PURPOSES AND STILL THE ASSESSEE MA DE A WRONG CLAIM OF DEDUCTION OF INTEREST AND THAT IN THE FACTS OF THE CASE IT CO ULD NOT BE SAID THAT THE ASSESSEE WAS NOT AWARE OF THE FACT OF APPLICATION OF MONEY F OR NON-BUSINESS PURPOSES BY THE ASSESSEE. HE REFERRED TO THE RELEVANT PARAS OF THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) IN SUPPORT OF THE CASE OF T HE REVENUE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT IT IS A CASE OF DISALLOWANCE OF DEDUCTION CLAIMED BY THE ASSESSEE. ALL THE MATERIAL FACTS RELATING TO ITS ASSESSMENT WERE DISCLOSED BY THE ASSESSEE IN ITS RETURN OF INCOME FILED. THE FACT OF WITHDRAWALS MADE WAS DISCLOSED IN THE PARTNERS CAPITAL ACCOUNT AND THIS FACT HAS BEEN RECORDED BY THE CIT(A) IN HIS AP PELLATE ORDER. WE DO NOT FIND ANY MATERIAL BROUGHT ON RECORD ON BEHALF OF THE REV ENUE TO SHOW THAT THE DISALLOWANCE OF INTEREST IN THIS CASE COULD NOT BE EQUATED WITH THE NORMAL DISALLOWANCE MADE IN THE COURSE OF ASSESSMENT PROC EEDINGS OUT OF THE EXPENSES CLAIMED BY THE ASSESSEE. THERE MAY OR MAY NOT BE GO OD REASONS FOR THE DISALLOWANCE OF INTEREST CLAIMED BY THE ASSESSEE, B UT IT COULD NOT BE INFERRED IN THE FACTS OF THE CASE THAT THE ASSESSEE HAS FILED I NACCURATE PARTICULARS OF ITS INCOME BY CLAIMING CERTAIN DEDUCTION OF INTEREST IN ITS COMPUTATION OF INCOME. IT IS A CASE OF HONEST DIFFERENCE OF OPINION BETWEEN T HE ASSESSEE AND THE REVENUE RELATING TO ALLOWANCE OF CERTAIN EXPENSES CLAIMED BY THE ASSESSEE. THE EXPLANATION OF THE ASSESSEE COULD NOT BE SAID TO BE WITHOUT ANY BASIS OR FOUNDATION. IN THESE FACTS OF THE CASE, WE HOLD TH AT IT IS NOT A FIT CASE FOR LEVY OF ITA NO.363-3 64/HYD/2011 M/S.CYBER TOWERS, HYDERABAD 3 PENALTY UNDER S.271(1)(C) OF THE ACT, WHICH IS ACCO RDINGLY CANCELLED AND THE GROUNDS OF APPEAL OF THE ASSESSEE FOR BOTH THE ASSE SSMENT YEARS ARE ALLOWED. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 20-5-2011 SD/- SD/- (CHANDRA POOJARI) (G.C. GUPTA) A CCOUNTANT MEMBER V ICE PRESIDENT DATED 20 TH MAY, 2011 COPY FORWARDED TO: 1. M/S. CYBER TOWERS (HYDERABAD) C/O. SHRI S.RAMA RAO , D.NO.102, SHIRYA'S ELEGANCE, NO.3-6-643, STREET NO.9,HIMAYAT NAGAR, HYDERABAD 500029 2. ASST. C OMMISSIONER OF INCOME - TAX, CIRCLE 6(1), HYDERABAD 3. CIT (A) - IV , HYDERABAD . 4. COMMISSIONER OF INCOME - TAX - III , HYDERABAD 5. THE D.R., ITAT, HYDERABAD. B.V.S.