Hetal Saree Centre, Baroda V. The ACIT.,Circle-5, Baroda

ITA 375/AHD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60356 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 09-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: URVASHI SHODHAN
• Keywords: Wrong claim

Judgement Text

, , , , D, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ %& %& %& %& , , , , &' ( & &' ( & &' ( & &' ( & ' ' ' ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND TEJ RAM MEENA, ACCOUNTANT MEMBER) ITA NO.375/AHD/2012 [ASSTT.YEAR : 2005-2006] HETAL SAREE CENTRE SHAMAL BECHAR NI POLE M.G. ROAD, MANDVI BARODA 390 001. /VS. ACIT, CIR.5 BARODA. ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) .% / 0 &/ ASSESSEE BY : MS.URVASHI SHODHAN ( / 0 &/ REVENUE BY : SHRI B.L. YADAV, SR.DR 2 / %3'/ DATE OF HEARING : 10 TH APRIL, 2012 456 / %3'/ DATE OF PRONOUNCEMENT : 15-05-2012 &7 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-2006 IS DIREC TED AGAINST THE ORDER OF THE LD CIT(A)-V, BARODA DATED 23.12.2011. 2. THE ONLY ISSUE IS REGARDING THE VALIDITY OF PENA LTY AMOUNTING TO RS.1,64,550/- IMPOSED UNDER SECTION 271(1)(C) OF TH E ACT. ITA NO.375/AHD/2012 -2- 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT PENALTY UNDER SECTION 271(1)(C) WAS IMPOSED ON TWO COUNTS I .E. INTEREST DISALLOWED ON AD HOC BASIS AND DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT FOR NON-TDS. THE LEARNED COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE AO HAS MADE AD HOC DISALLOWANCE OUT OF INTEREST CLAIMED BY THE ASSESSEE AND NO BASIS FOR THE INTERE ST DISALLOWANCE WAS DETAILED BY THE AO. SHE SUBMITTED THAT ALL THE MAT ERIAL FACTS REGARDING THE CLAIM OF INTEREST WERE DISCLOSED BY THE ASSESSE E AT THE TIME OF ASSESSMENT BEFORE THE AO. REGARDING OTHER ISSUES O F DISALLOWANCE UNDER SECTION 40(A)(IA), SHE SUBMITTED THAT THIS IS THE FIRST YEAR OF THE TECHNICAL PROVISION OF THE SECTION HAVING BEEN INTR ODUCED ON THE STATUTE BOOK. SHE SUBMITTED THAT ALL THE RELEVANT DETAILS WHEREOF WERE FILED BY THE ASSESSEE AND IT IS NOT THE CASE OF THE REVENUE THAT SOME BOGUS CLAIM WAS MADE BY THE ASSESSEE. SHE SUBMITTE D THAT IT IS A DEEMING PROVISION OF LAW ON WHICH PENALTY UNDER SEC TION 271(1)(C) OF THE ACT WAS NOT IMPOSABLE AND RELIED ON THE DECISIO NS OF HONBLE PUNJAB & HARYANA COMMISSIONER OF INCOME-TAX VS SHAH ABAD CO-OP. SUGAR MILLS LTD., 322 ITR 73, COMMISSIONER OF INCOM E-TAX VS SIDHARTHA ENTERPRISES (P&H), 322 ITR 80 AND COMMIS SIONER OF INCOME-TAX VS RELIANCE PETROPRODUCTS PVT. LTD. (SC ), 322 ITR 158 (SC) AND ALSO TAX APPEAL NO.1408 OF 2011 IN CIT VS. AIA EXPORTS P. LTD. DECIDED BY THE HONBLE JURISDICTIONAL HIGH COURT. THE LEARNED DR HAS OPPOSED THE SUBMISSIONS OF THE LEARNED COUNS EL FOR THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE WAS NOT I GNORANT OF THE PROVISIONS OF THE LAW AND BUT WAS RATHER NEGLIGENT TO COMPLY WITH THE STATUTORY PROVISIONS. HE REFERRED TO PARA 5.2 OF T HE ORDER OF THE CIT(A) WHERE THE CIT(A) HAS RECORDED THE REASONS FO R SUSTAINING THE PENALTY. HE SUBMITTED THAT IN THE FACTS OF THE CAS E, THE ASSESSEE WAS ITA NO.375/AHD/2012 -3- GUILTY OF FILING OF INACCURATE PARTICULARS OF INCOM E, AND THEREFORE LEVY OF PENALTY UNDER SECTION 271(1)(C) WAS JUSTIFIED. HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT PENALTY IN THI S CASE WAS LEVIED ON TWO COUNTS, FIRSTLY, THE DISALLOWANCE OUT OF INT EREST ON AD HOC BASIS MADE BY THE AO AT RS.1 LAKH. IN APPEAL THIS DISALL OWANCE WAS RESTRICTED BY THE CIT(A) TO RS.31,700/-. WE FIND T HAT ALL THE NECESSARY PARTICULARS FOR THE ASSESSMENT WERE FURNISHED BY TH E ASSESSEE AT THE TIME OF ASSESSMENT ITSELF, AND THERE WAS A DIFFEREN CE OF OPINION, BETWEEN TWO REVENUE AUTHORITIES I.E. THE AO AND THE CIT(A) ON THE QUANTUM OF DISALLOWANCE TO BE MADE OUT OF INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE. THE FACTS MAY JUSTIFY SOM E DISALLOWANCE OUT OF INTEREST EXPENSES FOR DIVERSION OF INTEREST BEAR ING FUNDS, BUT ARE NOT SUFFICIENT TO VISIT THE ASSESSEE WITH PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS MADE SOME BOGUS CLAIM OF EXPENSES AND THE FACT REMAINS T HAT THE ASSESSEE HAS MADE THE INTEREST PAYMENT, OUT OF WHICH SOME DI SALLOWANCE WAS MADE BY THE REVENUE. IN THESE FACTS, WE HOLD THAT NO JUSTIFICATION FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT COULD BE MADE OUT BY THE REVENUE ON THE AMOUNT OF DISALLOWANCE OUT OF INTEREST EXPENSES CLAIMED BY THE ASSESSEE, WHICH IS ACCORDIN GLY CANCELLED. OTHER ISSUE ON WHICH PENALTY UNDER SECTION 271(1)( C) OF THE ACT WAS LEVIED WAS ON AN AMOUNT OF DISALLOWANCE MAD E UNDER SECTION 40(A)(IA) OF THE ACT. WE FIND THAT THIS WAS THE FI RST ASSESSMENT YEAR FOR THE APPLICABILITY OF THE TECHNICAL PROVISION OF SECTION 40(A)(IA) OF ITA NO.375/AHD/2012 -4- THE ACT. THE ASSESSEE HAS FILED ALL THE DETAILS RE LEVANT FOR THE ASSESSMENT BEFORE THE AO. THE CLAIM OF THE ASSESSE E WAS GENUINE AND THE AO NO WHERE STATED THE SAME AS A BOGUS CLAIM. THE DISALLOWANCE WAS MADE ON ACCOUNT OF DEEMING PROVISION OF SECTION 40(A)(IA) OF THE ACT AND THE DISALLOWANCE WAS RESTRICTED TO RS.4,17, 969/- BY THE CIT(A) AS AGAINST THE DISALLOWANCE OF RS.5,55,964/- MADE BY THE AO. WE FIND THAT THE ASSESSEE HAS DISCLOSED ITS PARTICU LARS OF INCOME CORRECTLY AND MERELY BECAUSE SOME DISALLOWANCE DUE TO A DEEMING PROVISION OF LAW NEWLY INTRODUCED ON THE STATUTE BO OK WAS MADE, IT CANNOT BE SAID THAT THE ASSESSEE WAS GUILTY FOR FIL ING INACCURATE PARTICULARS OF INCOME. THE DECISIONS OF THE HONBL E HIGH COURTS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE HELP THE CASE OF THE ASSESSEE. THE CONDUCT OF THE ASSESSEE CANNOT BE SA ID TO BE NOT BONA FIDE . THE REASONING OF THE CIT(A) WHILE CONFIRMING THE PENALTY IS NOT SUSTAINABLE IN THE FACTS OF THE CASE. IN THIS VIEW OF THE MATTER, WE ARE OF THE CONSIDERED VIEW THAT NO CASE FOR LEVY OF PEN ALTY UNDER SECTION 271(1)(C) OF THE ACT COULD BE MADE OUT BY THE REVEN UE ON THIS ISSUE OF DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT WHICH IS ACCORDINGLY CANCELLED. THE GROUNDS OF THE ASSESSEE S APPEAL ARE, ACCORDINGLY, ALLOWED AND THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT IS CANCELLED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %& %& %& %& / TEJ RAM MEENA) &' ( &' ( &' ( &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT