SURESHKUMAR P BAPNA, MUMBAI V. ACIT 15(3), MUMBAI

ITA 4497/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9791 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 06-07-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 30-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Assessee Lawyers: BHAVIN PAREKH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM ITA NO. 4497 / MUM/20 1 4 ( ASSESSMENT YEAR : 2007 - 0 8 ) SHRI SURESHKUMAR P. BAPNA ASIA METALS AND FERRO ALLOYS 2 ND FLOOR, 44 CP. TANK ROAD MUMBAI 400 004 VS. ACIT 15(3), 1 ST FLOOR, MATRU MANDIR, OPP. BHATIA HOSPITAL, TARDEO, MUMBAI 400 007 PAN/GIR NO. AAEPB5844K APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI BHAVIN PAREKH REVENUE BY SHRI RAM TIWARI DATE OF HEARING 06 / 07 /201 7 DATE OF PRONOUNCEME NT 23 / 08 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 26, MUMBAI DATED 07/05/2014 FOR THE A.Y. 2007 - 08 IN THE MATTER OF IMPOSITION OF PENALTY U/S.271( 1)(C) OF THE IT ACT. 2. IN THIS APPEAL, ASSESSEE IS AGGRIEVED FOR PENALTY OF RS.1,65,919/ - IMPOSED U/S.271(1)(C) OF THE IT ACT. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. IN THIS CASE, THE ASSESSMENT WAS MADE U/S.143(3) ON 24/12/2009 DETER MINING TOTAL INCOME OF RS.37,80,030/ - AS AGAINST THE RETURNED INCOME OF RS.32,87,103/ - . THE DIFFERENCE BETWEEN THE ASSESSED INCOME AND THE RETURNED INCOME IS ON ACCOUNT OF DISALLOWANCE OF RS.4,62 ,925/ - BEING INTEREST COST IN RESPECT OF FUNDS DIVERTED FOR N ON - BUSINESS PURPOSES ITA NO. 4497/MUM/2014 SHRI SURESHKUMAR P. BAPNA 2 AND DISALLOWANCE OF RS.30,000/ - OUT OF OTHER EXPENSES SUCH AS HAMALI CHARGES, LOADING AND UNLOADING CHARGES. SIMULTANEOUSLY, PENALTY U/S.271(1)(C) WAS IMPOSED WHICH WAS CONFIRMED BY THE CIT(A) AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. LEARNED AR HAS DRAWN OUR ATTENTION TO THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE WHICH WAS USED BY HIM FOR GIVING ADVANCE TO THE FAMILY MEMBERS. AS PER LEARNED AR, NO DISALLOWANCE OF INTEREST IS WARRANTED. IN VIEW OF DECISION OF BOM BAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND HDFC BANK, H E FURTHER CONTENDED THAT THERE WAS NO FURNISHING OF INACCURATE PARTICULARS AND ONLY ON THE BASIS OF PART DISALLOWANCE OF INTEREST THE AO HAS LEVIED PENALTY. 6. SIMILARLY, AO HAS ALSO LEVIED P ENALTY FOR DISALLOWANCE OF RS.30,000/ - OUT OF HAMALI, LOADING AND UNLOADING CHARGES. 7. ON THE OTHER HAND LEARNED DR RELIED ON THE ORDER OF THE AUTHORITIES BELOW. 8. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORIT IES BELOW AND FOUND THAT DISALLOWANCE OF INTEREST IS MADE BY OBSERVING THAT INTEREST FREE FUNDS HAVE BEEN DIVERTED FOR NON - BUSINESS PURPOSES. ON THE OTHER HAND IT APPEARS THAT THE ASSESSEE HAS RECEIVED FUNDS ON WHICH IT HAS NOT PAID ANY INTEREST AMOUNTING TO RS.38.90 LAKHS. OUT OF THE ABOVE TOTAL UNSECURED INTEREST FREE LOAN, THE ASSESSEE HAS GIVEN INTEREST FREE LOAN OF RS.30,00,000/ - . ONCE, AO HAS NOT DISPUTED THE INTEREST FREE FUNDS AVAILABLE, NO DISALLOWANCE IS WARRANTED FOR SUCH INTEREST FREE FUNDS HAVI NG BEEN ADVANCED FOR NON - ITA NO. 4497/MUM/2014 SHRI SURESHKUMAR P. BAPNA 3 BUSINESS PURPOSES. HOWEVER, HERE WE ARE ONLY CONCERNED WITH THE LEVY OF PENALTY U/S.271(1)(C) KEEPING IN VIEW THE FACT THAT ASSESSEE WAS HAVING SUFFICIENT INTEREST FREE FUNDS, NO PENALTY IS IMPOSABLE FOR ANY DISALLOWANCE OUT OF INT EREST EXPENSES. IN THE INTEREST OF JUSTICE WE DIRECT THE AO TO VERIFY THE SAME AND DECIDE THE ISSUE AFRESH IN THE LIGHT OF OUR ABOVE OBSERVATION. WE DIRECT ACCORDINGLY. 9. THE AO HAS ALSO LEVIED PENALTY WITH RESPECT TO ADHOC DISALLOWANCE OF 10% OUT OF HAMA LI, LOADING AND UNLOADING CHARGES. AS PER OUR CONSIDERED VIEW, NO PENALTY IS LEVIABLE FOR THE ADHOC DISALLOWANCE SO MADE OUT OF EXPENSES. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART FOR STATISTICAL PURPOSES . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 23 / 08 /2017 SD/ - ( AMARJIT SINGH ) SD/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 23 / 08 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT . REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//