Shri Vishal Vinubhai Patel, Ahmedabad V. The Income Tax Officer, Ward-7(2), Ahmedabad

ITA 378/AHD/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0586 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 06-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L CHANDEL
• Assessee Lawyers: ASHWIN C SHAH
• Keywords: Revised return
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER ./ ITA NO. 378/AHD/2014 / ASSESSMENT YEAR : 2009-10 SHRI VISHAL VINUBHAI PATEL, 9, CHARANKRUPA HSG. SOCIETY-1, NR. RACHNA SOCIETY, SATELLITE, AHMEDABAD-380015 PAN : AFJPP 3832 R VS INCOME TAX OFFICER, WARD-7(2), AHMEDABAD / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI ASHWIN C. SHAH, AR REVENUE BY : SHRI S.L. CHANDEL, SR DR / DATE OF HEARING : 06/09/2016 / DATE OF PRONOUNCEMENT: 07/09/2016 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XXI, AHMEDABAD DATED 22.01.2014 FOR AY 2009-10. BY THIS APPEAL THE ASSESSEE CHALLE NGES THE IMPOSITION OF PENALTY OF RS.5,34,036/- LEVIED BY THE AO U/S 271(1 )(C) OF THE INCOME-TAX ACT, 1961. 2. THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT I N THE RETURN OF INCOME FILED ON 22.07.2009 THE ASSESSEE HAS DECLARED NIL I NCOME FROM HOUSE PROPERTY OTHER THAN SELF OCCUPIED. HOWEVER, BY A BO NA FIDE MISTAKE, INTEREST ON BORROWED CAPITAL AMOUNTING TO RS.15,60,352/- WAS CLAIMED AS DEDUCTION. DURING THE COURSE OF ASSESSMENT, THE ASSESSEE REALI ZED THE MISTAKE AND WITHDREW THE CLAIM OF INTEREST ON BORROWED CAPITAL U/S 24, FOLLOWING THE EARLIER YEAR. IN THE PRECEDING YEAR, SIMILAR ISSUE ABOUT PENALTY AROSE AND LD. CIT(A) ON SIMILAR FACTS AND CIRCUMSTANCES BY ORDER DATED 27.02.2013 DELETED THE PENALTY BY FOLLOWING OBSERVATIONS:- . IN MY OPINION 'SUBMISSION OF AN INCORRECT CLAI M FOR EXPENDITURE WOULD AMOUNT TO GIVING INACCURATE PARTICULARS OF SU CH INCOME' IS NOT CORRECT. BY NO STRETCH OF IMAGINATION CAN THE MAKIN G OF INCORRECT CLAIM IN SMC-ITA NO. 378/AHD/2014 SHRI VISHAL VINUBHAI PATEL VS. ITO AY : 2009-10 2 LAW TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS . A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. IF THE CONTENTION OF THE AO IS ACCEPTED THEN IN CASE OF EVE RY RETURN WHERE CLAIM MADE IS NOT ACCEPTED BY THE ASSESSING OFFICER FOR A NY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271 (1)(C). THAT IS CLEA RLY NOT THE INTENTION OF THE LEGISLATURE. THE DECISION WOULD HAVE BEEN DIFFE RENT HAD THERE BEEN ANY EVIDENCE OR GATHERED FACTS BROUGHT ON RECORD BY AO O THER THAN THAT STATED IN THE RETURN OF INCOME. FURTHER THE APPELLANT HAS SUBMITTED THAT IT HAD NOT SUPPRESSED ANY OF THE PARTICULARS OF INCOME OR EXPENDITURE IN THE RET URN OF INCOME WHICH WAS FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE OR INAC CURATE, IT HAD MADE A GENUINE CLAIM OF DEDUCTION OF INTEREST U/S. 24(B) OF THE I. T. ACT, 1961. THE APPELLANT SUBMITTED THE LETTER OF WITHDRAWING THE C LAIM ON 07/10/2010 BEFORE THE ASSESSMENT ORDER WAS ISSUED ON 12/11/2010 AND T HIS LETTER INTER-ALIA STATES, 'THE CLAIM OF 20% WAS NOT MADE FOR A.Y. 2010 -2011 WHILE FILING THE RETURN, THEREFORE THE RETURN FOR A.Y. 2010-2011 IS B EING REVISED CLAIMING THE DEDUCTION OF INTEREST PAID FOR A.Y. 2010-2011 PLUS 2 0% OF THE INTEREST PAID PRIOR TO A.Y. 2010-2011.' IT APPEARS THAT THE APPROA CH OF APPELLANT LACKS MENS REA AS THE CORRECT FAVOURABLE CLAIM WAS ALSO M ADE AFTER THE MISTAKE CAME TO THEIR KNOWLEDGE FOR A. Y. 2010-11. HOWEVER, ANY INCORRECT CLAIM CANNOT MAKE THE APPELLANT LIABLE FOR PENALTY U/S. 2 71(L)(C) OF THE I. T. ACT, 1961. IT IS STATED IN THE CASE OF NEMICHAND VS. ACIT (INV.), IT AT (BANGALORE) [93 TTJ (BANG) 564], PENALTY PROVISIONS S HOULD BE INTERPRETED AS IT STANDS AND IN CASE OF DOUBT IN A MANNER FAVOURAB LE TO THE TAX PAYER. IF THE COURT FINDS THAT THE LANGUAGE OF TAXING PROVISION I S AMBIGUOUS OR CAPABLE OF MORE MEANINGS THAN ONE, THEN THE COURT HAS TO ADOPT INTERPRETATION WHICH FAVOURS THE ASSESSEE, MORE PARTICULARLY SO WHERE PR OVISION RELATES TO IMPOSITION OF PROCEEDINGS. IN VIEW OF THE ABOVE FAC TS AND CIRCUMSTANCES, I AM OF THE OPINION THAT THE APPELLANT HAS MADE INCORREC T BUT BONAFIDE CLAIM IN RETURN OF INCOME AND THE MOMENT IT WAS KNOWN TO THE M THAT IT WAS INCORRECT CLAIM THEY SWIFTLY WITHDRAWN THE SAME BEFORE THE OR DER U/S. 143(3) OF THE I. T. ACT, 1961 WAS ISSUED BY THE AO. AS A SEQUEL TO IT, THEY HAVE ALSO REVISED RETURN FOR SUBSEQUENT YEAR I.E. ASSESSMENT YEAR 2010 -11 TO INCORPORATE ENHANCED CLAIM OF INTEREST PAYMENT. IN VIEW OF FACT S STATED ABOVE AND RATIO LAID DOWN IN DIFFERENT CASE LAWS, I CONSIDER IT NOT A FIT CASE FOR IMPOSITION OF PENALTY. THEREFORE, I DIRECT THE AO TO DELETE THE PE NALTY U/S. 271(L)(C) OF THE I. T. ACT, 1961 IMPOSED ON THE APPELLANT. THE GROUND OF APPEAL IS ACCORDINGLY ALLOWED. SMC-ITA NO. 378/AHD/2014 SHRI VISHAL VINUBHAI PATEL VS. ITO AY : 2009-10 3 2.1 THE ASSESSEE HAS RELIED ON THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT LTD, [2010] 322 ITR 158 (SC). THE ABOVE ORDER OF THE LD. CIT(A) HAS BEEN ACCEPTED BY THE REVENUE. IN THIS YEAR, HOWEVER, LD. CIT(A) MISDIRECTED HIMSELF BY CH ANGING THE VIEW ON SIMILAR FACTS BY FOLLOWING OBSERVATIONS:- 3.2 I HAVE CONSIDERED THE PENALTY ORDER, ASSESSMEN T ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT. THE APPELLANT HA S ARGUED THAT HE HAS DISCLOSED EVERYTHING IN THE STATEMENT OF INCOME UND ER BONAFIDE IMPRESSION THAT IT IS ALLOWABLE AS DEDUCTION AND RELIED UPON T HE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCT S PVT. LTD. 322 ITR 158. THE APPELLANT ALSO RELIED UPON CIT(A)'S ORDER FOR ASS T. YEAR 2007-08. IN MY OPINION, FACTS OF THIS CASE ARE DIFFERENT FROM THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD., AS IN THAT CASE, THE ASSESSEE H AS HIMSELF MADE DISALLOWANCE U/S. 14A WHICH HAS BEEN FURTHER ENHANC ED BY THE ASSESSING OFFICER ON ESTIMATE BASIS. IN THE PRESENT CASE, THE APPELLANT IS NOT ENTITLED FOR DEDUCTION U/S. 24, STILL IT HAS CLAIMED DEDUCTION A ND THEREFORE FACTS ARE ENTIRELY DIFFERENT. AS REGARDS TO APPELLANT'S ARGUM ENT THAT IT HAS VOLUNTARILY OFFERED TO DISALLOW THE INTEREST, THE ASSESSING OFFI CER HAS CLEARLY BROUGHT OUT THE FACT THAT THE APPELLANT HAS OFFERED FOR DISALLO WANCE ONLY AFTER SPECIFIC QUERIES WERE RAISED BY HIM AND FOR THE SAME REASONS , THIS CASE IS DIFFERENT FROM ASST. YEAR 2007-08, WHERE THE APPELLANT HAS VOL UNTARILY OFFERED FOR THE DISALLOWANCE. IN MY OPINION, THIS IS A CLEAR CASE O F FURNISHING INACCURATE PARTICULARS OF INCOME AND THEREFORE THE ASSESSING OF FICER HAS CORRECTLY LEVIED THE PENALTY U/S. 271(1)(C) OF THE I.T. ACT. 2.2 IT IS CONTENDED THAT THERE IS NO CHANGE OF FACT S AND THE ISSUE OF DISALLOWANCE U/S 14A HAS NO RELEVANCE TO THE ISSUE OF CLAIM OF INTEREST ON BORROWED CAPITAL AGAINST RENT. THUS, FROM THE RECO RD IT IS CLEAR THAT THERE IS NO CHANGE IN FACTS. REVENUE HAS ALREADY ACCEPTED T HE ORDER OF LD. CIT(A) FOR AY 2008-09. THE JUDGMENT OF THE HONBLE SUPREME CO URT IN THE CASE OF RELIANCE PETROPRODUCTS PVT LTD (SUPRA) IS SQUARELY APPLICABLE INASMUCH AS ALL THE RELEVANT PARTICULARS WERE FILED ALONG WITH THE RETURN OF INCOME. THEREAFTER, IF A CLAIM IS DISALLOWED OR WITHDRAWN, THE SAME DOES NOT AMOUNT SMC-ITA NO. 378/AHD/2014 SHRI VISHAL VINUBHAI PATEL VS. ITO AY : 2009-10 4 TO FURNISHING OF INACCURATE PARTICULARS OR CONCEALM ENT OF INCOME. IN VIEW OF THESE FACTS, PENALTY SHOULD BE DELETED. 3. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORD ER OF THE ASSESSING OFFICER AND CONTENDS THAT THE FACTS IN THIS CASE AR E DISTINGUISHABLE AS HAS BEEN RIGHTLY HELD BY THE LD. CIT(A). 4. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. IT IS NOT IN DISPUTE THAT THE ORDER OF LD. CIT(A) FOR AY 2008-09 DELETING THE PENALTY ON SAME ISSUE HAS NOT BEEN CHALLENGED BY THE REVENUE. IN THIS YEAR, LD. CIT(A) HAS WRONGLY NOT GIVEN THE CORRECT FINDING, THOUGH C ONSIDERING THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF RELIANCE PETR OPRODUCTS PVT LTD (SUPRA), BY HOLDING THAT FACTS ARE DIFFERENT AS ASS ESSEE HAS MADE DISALLOWANCE U/S 14A. IN MY CONSIDERED VIEW, THE F ACTS AND CIRCUMSTANCES ARE SIMILAR. THE DISTINCTION SOUGHT TO BE DRAWN BY THE LD. CIT(A) IS WITHOUT ANY BASIS AND NOT RELEVANT TO THE FACTS ABOUT CLAIM U/S 24. THEREFORE, IN MY CONSIDERED VIEW, THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF RELIANCE PETROPRODUCTS PVT LTD (SUPRA) IS APPLICABL E TO THE PRESENT CASE. ON THE SAME FACTS AND CIRCUMSTANCES, THE DELETION OF P ENALTY BY LD. CIT(A) HAS BEEN ACCEPTED BY THE REVENUE IN THE PRECEDING YEAR. THUS, KEEPING IN VIEW THE ENTIRETY OF FACTS AND CIRCUMSTANCES, THIS IS NO T A FIT CASE FOR IMPOSITION OF PENALTY WHICH IS DELETED. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 7 TH SEPTEMBER, 2016 AT AHMEDABAD. SD/- R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 07/09/2016 *BIJU T. SMC-ITA NO. 378/AHD/2014 SHRI VISHAL VINUBHAI PATEL VS. ITO AY : 2009-10 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD