RATILAL L SHAH, MUMBAI V. ACIT 12(1), MUMBAI

ITA 4046/MUM/2012

• Counselvise Citation: 404619914 RSA 2012
• Duration Of Justice: 2 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 08-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM BATRA
• Assessee Lawyers: SHARMESH SHAH
• Keywords: Business income; Business expenditure; Opportunity of being heard; Wrong claim
• Section: 143(3); 27

Judgement Text

+ D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI .. , . . . . BEFORE SHRI P.M. JAGTAP, AM AND DR. S.T.M. PAVALAN, JM ./ I.T.A. NO.4046 /MUM/2012 ( / ASSESSMENT YEAR : 2007-2008 RATILAL L. SHAH, SHOP NO. 1 AND 2, HOMJI STREET, FORT, MUMBAI 400 001. / VS. A .C.I.T. 12(1), MUMBAI. ./ PAN : AAEPSO708D ( % / APPELLANT ) .. ( &'% / RESPONDENT ) A PPELLANT BY SHRI SHARMESH SHAH R E SPONDENT BY : SHRI VIKRAM BATRA * / DATE OF HEARING : 19-05-2014 * / DATE OF PRONOUNCEMENT : 181612014 [ / O R D E R PER P.M. JAGTAP, A.M . : .. , THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A) 24, MUMBAI DATED 05-03-2012 FOR ASSESSMENT YEAR 2007-08 WHEREBY HE CONFIRMED THE PENALTY IMPOSED BY THE A.O. U/S 27 1(1)(C) OF THE INCOME TAX ACT, 1961 IN RESPECT OF ADDITION MADE TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF DISALLOWANCE OF INTEREST AMOUNTING TO RS . 22,55,829/-. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO IS ENGAGED IN THE BUSINESS OF RUNNING A SHOP UNDER THE NAME AND STYLE OF HIS PROPRIETARY CONCERN M/S MODERN COPY CENTRE. HE IS ALSO A PARTN ER IN THE FIRM OF M/S GEMINI CAREER MFG. CO. AND DERIVES INCOME FROM OTHE R SOURCES. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED B Y HIM ON 26-10-2007 ITA 4046/M/12 2 DECLARING A LOSS OF RS. 25,02,591/-. IN THE SAID R ETURN, DEDUCTION ON ACCOUNT OF INTEREST EXPENDITURE AMOUNTING TO RS. 22,55,829/ - WAS CLAIMED BY THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE SAID CLAIM OF THE ASSES SEE WAS EXAMINED BY THE A.O. AND ON SUCH EXAMINATION, HE FOUND THAT INTERES T EXPENDITURE TO THE EXTENT OF RS. 9.43 LACS CLAIMED BY THE ASSESSEE WAS PERTAINING TO THE LOAN BORROWED BY HIM FOR PURCHASE OF SHARES OF RS. 51 LA CS OF M/S NAYANA PLASTICS DURING THE PERIOD 5-10-96 TO 31-3-99. SINCE THE SA ID INVESTMENT MADE IN PURCHASE OF SHARES OF M/S NAYANA PLASTICS WAS NOT R EFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND NO INCOME FROM THE SAID INVESTMENT WAS OFFERED TO TAX, THE INTEREST EXPENDITURE OF RS. 9.43 LACS W AS HELD TO BE NOT ALLOWABLE BY THE A.O. AS REGARDS THE BALANCE INTEREST EXPEND ITURE OF RS. 13.12 LACS, THE A.O. FOUND THAT THE SAID EXPENDITURE WAS ALSO CLAIM ED BY THE ASSESSEE AS BUSINESS EXPENDITURE OF HIS PROPRIETARY CONCERN. TH E A.O. HELD THAT THE CLAIM OF THE ASSESSE FOR THE SAID EXPENDITURE AGAIN UNDER THE HEAD INCOME FROM OTHER SOURCES THUS AMOUNTED TO CLAIMING DOUBLE DED UCTION AND THE SAME WAS ALSO DISALLOWED BY THE A.O. ACCORDINGLY, INTERE ST EXPENDITURE OF RS. 22,55,829/- CLAIMED BY THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES WAS DISALLOWED BY THE A.O. IN THE ASSESSME NT COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 1961 VIDE AN ORDER DATED 23- 12-2009. THE ASSESSEE DID NOT PREFER ANY APPEAL AGAINST THE SAID ASSESSME NT ORDER. THEREAFTER, THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE I NITIATED BY THE A.O. AND IN REPLY TO THE SHOW CAUSE NOTICE ISSUED DURING THE CO URSE OF SAID PROCEEDING, IT WAS EXPLAINED BY THE ASSESSEE THAT THE RELEVANT LOA N HAD BEEN TAKEN BY HIM IN THE EARLIER YEARS AND INTEREST PAID THEREON WAS CONSISTENTLY ALLOWED IN THE EARLIER YEARS INCLUDING ASSESSMENT YEARS 2004-05, 2 005-06 AND 2006-07 WHEREIN THE ASSESSMENTS WERE COMPLETED U/S 143(3) O F THE ACT. THIS EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABL E BY THE A.O. AS ACCORDING TO HIM EACH ASSESSMENT YEAR WAS SEPARATE. HE HELD THAT BY MAKING WRONG CLAIM FOR DEDUCTION ACCOUNT OF INTEREST, THE ASSESSEE WAS GUILTY OF ITA 4046/M/12 3 FURNISHING IN-ACCURATE PARTICULARS OF HIS INCOME FO R WHICH PENALTY U/S 271(1)(C) OF THE ACT WAS CLEARLY ATTRACTED. ACCORDI NGLY PENALTY U/S 271(1)(C) OF THE ACT WAS IMPOSED BY THE A.O. IN RESPECT OF ADDIT ION MADE TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF DISALLOWANCE O F INTEREST TO THE EXTENT OF RS. 22,55,829/-. 3. THE PENALTY IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT WAS CHALLENGED BY THE ASSESSEE IN AN APPEAL FILED BEFORE THE LD. C IT(A) AND IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(A) THA T COMPLETE DETAILS OF INTEREST EXPENDITURE CLAIMED WERE DULY FURNISHED BY THE ASSE SSEE. IT WAS ALSO SUBMITTED THAT THE ASSESSEE WAS UNDER WRONG IMPRESS ION THAT INTEREST EXPENDITURE TO THE EXTENT OF RS. 13,12,619/- CLAIME D UNDER THE HEAD INCOME FROM OTHER SOURCES WAS THE SAME EXPENDITURE CLAIME D WHILE COMPUTING BUSINESS INCOME OF HIS PROPRIETARY CONCERN. IT WAS SUBMITTED THAT THERE WAS NO SUCH CLAIM OF DOUBLE DEDUCTION OF THE SAID INTER EST EXPENDITURE CLAIMED BY THE ASSESSEE AND THE INTEREST EXPENDITURE CLAIMED U NDER BOTH THE HEADS WAS IN RESPECT OF SEPARATE LOANS. AS REGARDS THE BALANC E INTEREST EXPENDITURE OF RS. 9.43 LACS, IT WAS REITERATED ON BEHALF OF THE A SSESSEE BEFORE THE LD. CIT(A) THAT THE SAME WAS PERTAINING TO THE LOAN TAKEN IN T HE EARLIER YEARS AND SIMILAR INTEREST CLAIMED ON THE SAID LOANS WAS ALLOWED IN T HE EARLIER YEARS EVEN IN THE ASSESSMENTS COMPLETED U/S 143(3) OF THE ACT. 4. THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE W ERE NOT FOUND ACCEPTABLE BY THE LD. CIT(A) AND HE CONFIRMED THE P ENALTY IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT IN RESPECT OF ADDITION OF RS. 22,55,829/- MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST FOR THE FOLLOWI NG REASONS GIVEN IN PARA 2.3.3 & 2.3.6 OF HIS IMPUGNED ORDER:- ITA 4046/M/12 4 2.3.3 AS REGARDS THE PENALTY LEVIED ON THE DISALLO WANCE OF INTEREST EXPENDITURE OF RS. 22,55,829/-, THE INTEREST EXPEND ITURE COMPRISES OF TWO COMPONENTS - (I) INTEREST OF RS. 9.43 LAKHS AND (II) INTEREST OF RS. 13.12 LAKHS. THE INTEREST OF RS. 9.43 LAKHS HAS ADM ITTEDLY BEEN PAID BY THE ASSESSEE ON BORROWINGS WHICH HAS BEEN UTILIZED EXCLUSIVELY FOR THE PURCHASE OF SHARES OF NAYANA PLASTICS. ON THIS, THE RE IS NO DISPUTE. IT IS, THEREFORE, CLEAR THAT THE BORROWINGS WERE MADE FOR THE PURPOSE OF MAKING INVESTMENTS IN SHARES AND NOT FOR EARNING IN COME ASSESSABLE, UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASS ESSEE HAS NOT EXPLAINED AS TO HOW AND UNDER WHICH PROVISION OF TH E ACT, THE INTEREST OF RS. 9.43 LAKHS IS ALLOWABLE AS A DEDUCTION. THE INTEREST EXPENDITURE AS ABOVE HAS NOT BEEN INCURRED FOR THE PURPOSES OF THE BUSINESS. THE SAID INTEREST EXPENDITURE IS ALSO NOT DEDUCTIBLE U/ S 57 OF THE I.T. ACT, 1961. IT WOULD, THEREFORE, BE CLEAR THAT THE ASSESS EE HAS MADE A CLAIM OF DEDUCTION WHICH IS NOT ONLY INCORRECT AND UNACCE PTABLE, IT IS WHOLLY AND COMPLETELY UNTENABLE IN LAW. ONLY BECAUSE THE S AID EXPENDITURE HAS BEEN ALLOWED IN ANY EARLIER ASSESSMENT YEAR WOU LD NOT IPSO FACTO MEAN THAT THE CLAIM OF THE ASSESSEE MAY BE CORRECT. IN I.T. PROCEEDINGS, PRINCIPLES OF RESJUDICATA ARE NOT APPLICABLE. EACH ASSESSMENT YEAR IS TO BE DEALT WITH SEPARATELY. IF A WRONG CLAIM HAS BEEN ACCEPTED IN AN EARLIER YEAR, IT WOULD NOT MEAN THAT SUCH CLAIM IS TO BE CONTINUED TO BE ALLOWED IN SUBSEQUENT YEARS EVEN IF THE CLAIM IS WH OLLY UNTENABLE IN LAW. PRINCIPLES OF CONSISTENCY CANNOT BE APPLIED TO DEFEAT THE PROVISIONS OF THE ACT. I FIND THAT IN RESPECT OF THE INTEREST EXPENDITURE OF RS. 9.43 LAKHS, THE ASSESSEE HAS FURNISHED AN EXPLANATION W HICH HE HAS NOT BEEN ABLE TO SUBSTANTIATE AND HAS ALSO NOT BEEN ABL E TO SHOW THAT SUCH EXPLANATION WAS BONAFIDE. RATHER, THE ASSESSEE HAS CLAIMED A DEDUCTION WHICH IS TOTALLY UNTENABLE IN LAW. HENCE, IN VIEW OF THE RATIO OF THE DECISION LAID DOWN BY THE HONBLE SUPREME COU RT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (322 1TR 158) AND THE RATIO OF THE DECISION LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF ZOOM COMMUNICATIONS LTD. (327 1TR 510), THE CASE OF THE ASSESSEE IS COVERED BY THE PROVISIONS OF SEC. 271(1)(C) AND PEN ALTY WOULD BE LEVIABLE ON THE AMOUNT OF RS. 9.43 LAKHS FOR FURNISHING INAC CURATE PARTICULARS OF INCOME. 2.3.6 COMING TO THE LEVY OF PENALTY ON THE DISALLOW ANCE OF INTEREST EXPENDITURE OF RS. 13.12 LAKH (WHICH IS PART OF THE INTEREST EXPENDITURE OF RS. 22.55 LAKHS CLAIMED AS EXPENDITURE AGAINST I NTEREST INCOME), I FIND THAT THIS INTEREST EXPENDITURE IS EXACTLY IDEN TICAL TO THE INTEREST EXPENDITURE ALREADY CLAIMED AS DEDUCTION FROM THE B USINESS INCOME. THIS FACT WAS NOT DISPUTED BY THE ASSESSEE AT THE T IME OF THE ASSESSMENT AND THE PENALTY PROCEEDINGS. IN FACT, TH E ASSESSEE HAD NOT EVEN SUBMITTED DETAILS OF SUCH INTEREST EXPENDITURE . HENCE, IT IS CLEAR THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF THE SAME INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASSESSEE HAS, THEREFORE, CLEARLY FURNISHED INACCURATE PARTICULARS OF INCOME WITHIN T HE MEANING OF SEC. 271(1)(C) OF THE ACT. THE RATIO OF THE DECISION OF THE HONBLE SUPREME ITA 4046/M/12 5 COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LT D. IS CLEARLY APPLICABLE TO THE FACTS OF THE CASE. HENCE, PENALTY U/S 271(1)(C) WOULD BE LEVIABLE IN THE CASE OF THE ASSESSEE FOR FURNISH ING INACCURATE PARTICULARS OF INCOME IN RESPECT OF THE AMOUNT OF I NCOME. IN THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS FURNISHED C ERTAIN DETAILS TO SHOW THAT THE INTEREST EXPENDITURE OF RS. 22.55 LAK HS CLAIMED UNDER THE HEAD INCOME FROM OTHER SOURCES DID NOT INCLUD E THE INTEREST EXPENDITURE OF RS. 13.12 LAKHS CLAIMED AS A DEDUCTI ON AGAINST THE BUSINESS INCOME. ASSUMING THAT THIS CONTENTION OF T HE ASSESSEE IS CORRECT, THE ASSESSEE HAS STILL NOT EXPLAINED AS TO HOW THE INTEREST EXPENDITURE OF RS. 13.12 LAKHS CLAIMED AGAINST THE INTEREST INCOME OF RS. 789/- UNDER THE HEAD INCOME FROM OTHER SOURCES WAS ALLOWABLE AS A DEDUCTION U/S 57 OF THE I.T. ACT, 1961. THE AS SESSEE HAS ONLY MADE A GENERAL ASSERTION THAT THE BORROWED FUNDS WE RE GIVEN TO NAYANA PLASTICS AS LOANS BUT HE COULD NOT RECOVER THE INTE REST ON SUCH ADVANCES. THIS ASSERTION OF THE ASSESSEE IS CLEARLY ONLY AN AFTER THOUGHT WHICH HAS BEEN MADE FOR ESCAPING THE CONSEQUENCES O F THE PROVISIONS OF SEC. 271(1)(C). NO SUCH ASSERTION WAS MADE BEFOR E THE AO, EITHER IN THE ASSESSMENT OR IN THE PENALTY PROCEEDINGS. EVEN IN THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS NOT GIVEN ANY EVIDENC E TO SHOW AS TO WHEN THE LOAN WAS GIVEN, THE AMOUNT OF LOAN GIVEN, AS TO THE TERMS AND THE RATE OF INTEREST ON WHICH THE LOAN WAS GIVEN TO NAYANA PLASTICS, EVIDENCE TO SHOW THAT THE INTEREST WAS EVER ACCOUNT ED FOR ON SUCH ALLEGED LOAN ADVANCED, EVIDENCE TO SHOW THAT NAYANA PLASTICS WAS NOT IN A POSITION TO PAY THE INTEREST, EFFORTS, IF ANY, MADE BY THE ASSESSEE TO RECOVER THE INTEREST AND/OR THE PRINCIPAL. IN SHORT , THE ASSESSEE HAS NOT GIVEN ANY EVIDENCE IN SUPPORT OF ITS ASSERTION AS A BOVE. IT HAS NOT EVEN BEEN SHOWN THAT THE ALLEGED LOAN WAS REFLECTED IN T HE BOOKS OF THE ASSESSEE. HENCE, THIS ASSERTION OF ASSESSEE IS NOT ONLY NOT ACCEPTABLE, IT IS WHOLLY UNTENABLE AS THE ASSESSEE HAS FAILED TO S UBSTANTIATE HIS EXPLANATION AND HAS ALSO NOT SHOWN THAT SUCH EXPLAN ATION IS BONAFIDE. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSES SEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. THE LD. COUNSEL FOR THE ASSESSEE REITERATED BEFO RE US THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(A ). HE SUBMITTED THAT THE RELEVANT LOAN HAD BEEN TAKEN BY THE ASSESSEE IN THE EARLIER YEARS AND THE SAME WERE UTILIZED FOR MAKING INVESTMENT IN SHARES AS WELL AS GIVING LOAN. HE SUBMITTED THAT INTEREST PAID ON THE SAID LOANS WAS ALSO CLAIMED BY THE ASSESSEE IN THE EARLIER YEARS AND THE SAME WAS ALSO ALLOWED BY THE A.O. CONSISTENTLY IN ALL THE EARLIER YEARS INCLUDING THE IMMEDIATELY PRECEDING THREE ITA 4046/M/12 6 YEARS WHEREIN THE ASSESSMENTS WERE COMPLETED U/S 14 3(3) OF THE ACT. HE SUBMITTED THAT EVEN THE INTEREST RECEIVED BY THE AS SESSEE ON LOANS GIVEN IN THE EARLIER YEARS WAS DULY OFFERED TO TAX BUT SINCE NO SUCH INTEREST WAS RECOVERED DURING THE YEAR UNDER CONSIDERATION, THE AMOUNT WAS NOT OFFERED TO TAX. HE CONTENDED THAT SUCH INTEREST, HOWEVER, WAS AGAIN RECEIVED BY THE ASSESSEE IN THE SUBSEQUENT YEAR AND SAME WAS DULY O FFERED TO TAX. HE SUBMITTED THAT THE DISALLOWANCE MADE BY THE A.O. ON ACCOUNT OF INTEREST FOR THE YEAR UNDER CONSIDERATION, HOWEVER, WAS NOT DISP UTED BY THE ASSESSEE FOR THE SIMPLE REASON THAT THERE WAS HUGE LOSS RESULTIN G INTO NO TAX LIABILITY EVEN AFTER MAKING DISALLOWANCE ON ACCOUNT OF INTEREST. 6. THE LD. D.R., ON THE OTHER HAND, STRONGLY SUPPO RTED THE IMPUGNED ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE PENA LTY IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT IN RESPECT OF DISALLOWANCE OF INTEREST EXPENDITURE WAS RIGHTLY CONFIRMED BY THE LD. CIT(A) BY GIVING CONVI NCING REASONS IN PARA 2.3.3 AND 2.3.6 OF HIS IMPUGNED ORDER. HE THEREFORE STRON GLY RELIED ON THE SAID REASONS GIVEN BY THE LD. CIT(A) IN SUPPORT OF THE R EVENUES CASE THAT THE CASE OF THE ASSESSEE IS A FIT CASE TO IMPOSE PENALTY U/S 271(1)(C) OF THE ACT. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT A LTHOUGH THE DISALLOWANCE OF RS. 22,55,829/- MADE BY THE A.O. ON ACCOUNT OF INTE REST EXPENDITURE IS ACCEPTED BY THE ASSESSEE APPARENTLY FOR THE REASON THAT THERE WAS A HUGE LOSS RESULTING INTO NO TAX LIABILITY EVEN AFTER THE SAID DISALLOWANCE, ALL THE FACTS RELEVANT TO THIS ISSUE AS BORNE OUT FROM THE RECORD ARE NOT VERY CLEAR. FIRST OF ALL, IT WAS AGREED BY THE ASSESSEE BEFORE THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS PENALTY PROCEEDIN GS THAT THE CLAIM OF INTEREST EXPENDITURE TO THE EXTENT OF RS. 13.12 LAC S WAS MADE TWICE AND IT WAS THEREFORE THE CASE OF DOUBLE DEDUCTION CLAIMED BY T HE ASSESSEE. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT( A), THE ASSESSEE, HOWEVER, ITA 4046/M/12 7 CONTENDED THAT THERE WAS NO SUCH CLAIM MADE FOR DOU BLE DEDUCTION OF THE SAME AMOUNT OF INTEREST EXPENDITURE AND IT WAS A CA SE OF INTEREST PAID ON TWO SEPARATE LOAN AMOUNTS. SECONDLY, IT WAS CLAIMED BY THE ASSESSEE RIGHT FROM THE BEGINNING THAT THE RELEVANT LOAN AMOUNT HAD BEE N TAKEN IN THE EARLIER YEARS AND INTEREST PAID THEREON CLAIMED IN THE EARL IER YEAR WAS CONSISTENTLY ALLOWED BY THE A.O. THIS CLAIM OF THE ASSESSEE WAS BRUSHED ASIDE BY THE A.O. SIMPLY ON THE GROUND THAT EVERY ASSESSMENT YEAR IS SEPARATE WITHOUT LOOKING INTO AS TO HOW AND ON WHAT GROUND THE CLAIM OF THE ASSESSEE FOR INTEREST PAID ON THE SAME LOAN AMOUNT WAS ALLOWED IN THE EARLIER YEARS EVEN ON SCRUTINY IN THE ASSESSMENTS COMPLETED U/S 143(3) OF THE ACT. TH IS ASPECT, IN OUR OPINION, WAS RELEVANT TO FIND OUT THE BONAFIDE OF THE ASSESS EE TO CLAIM DEDUCTION FOR INTEREST EXPENDITURE CLAIMED IN THE YEAR UNDER CONS IDERATION ESPECIALLY IN THE CONTEXT OF IMPOSITION OF PENALTY U/S 271(1)(C) OF T HE ACT. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS RAISED AN ALTOGETHER DIFFERENT CONTENTION BY SUBMITTING THAT BESIDES THE AMOUNT UTILIZED FOR INVESTMENT MADE IN THE SHARES OF M/S NAYANA PLASTIC S, THE LOAN AMOUNT WAS ALSO UTILIZED FOR GIVING LOANS ON INTEREST AND THE INTEREST RECEIVED ON THE SAID LOANS IN THE EARLIER YEARS AS WELL AS IN THE SUBSEQ UENT YEARS WAS DULY OFFERED TO TAX BY THE ASSESSEE. HE HAS CONTENDED THAT SUCH INTEREST, HOWEVER, WAS NOT RECOVERED BY THE ASSESSEE DURING THE YEAR UNDER CON SIDERATION AND THE SAME THEREFORE WAS NOT OFFERED TO TAX. THIS NEW CONTENTI ON RAISED BY THE ASSESSEE, IN OUR OPINION, ALSO REQUIRES VERIFICATION BEFORE T HE SAME IS TAKEN INTO CONSIDERATION FOR DECIDING THE ISSUE RELATING TO IM POSITION OF PENALTY U/S 271(1)(C) OF THE ACT. KEEPING IN VIEW THIS AMBIGUI TY AND LACK OF CLARITY IN THE RELEVANT FACTS OF THE CASE WHICH IS MATERIAL TO DEC IDE THE ISSUE RELATING TO PENALTY U/S 271(1)(C) OF THE ACT, WE ARE OF THE VIE W THAT IT WOULD BE FAIR AND PROPER AND IN THE INTEREST OF JUSTICE TO RESTORE TH E MATTER TO THE FILE OF THE A.O. TO DECIDE THE SAME AFRESH AFTER VERIFYING ALL THE R ELEVANT FACTS AND GIVING A CLEAR FINDING THEREON. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE T HE MATTER TO THE FILE OF THE ITA 4046/M/12 8 A.O. FOR DECIDING THE SAME AFRESH AFTER VERIFYING A LL THE RELEVANT FACTS OF THE CASE AND AFTER GIVING THE ASSESSEE A PROPER AND SUF FICIENT OPPORTUNITY OF BEING HEARD. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JUNE, 2014. * 7 8 181612014 * SD/- SD/- (DR. S.T.M. PAVALAN) (P.M. JAGTAP ) JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 8 DATED 181612014 [ .../ RK , SR. PS # $&' (' / COPY OF THE ORDER FORWARDED TO : 1. % / THE APPELLANT 2. &'% / THE RESPONDENT. 3. ; () / THE CIT(A)24,MUMBAI. 4. ; / CIT 12,MUMBAI 5. > &@ , @ , / DR, ITAT, MUMBAI D BENCH 6. B / GUARD FILE. / BY ORDER, '> & //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI