Lala Bansi Dhar & Sons, New Delhi V. ACIT, Circle-38(1), New Delhi

ITA 511/DEL/2018

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 9442 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 21-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Initiation of penalty proceedings
• Section: 271(1)(c)

Judgement Text

1 ITA no. 511/Del/2018 Lala Bansi Dhar & Sons Vs. ACIT IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “E”: NEW DELHI BEFORE SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA No. 511/DEL/2018 [Assessment Year: 2011-12] Lala Bansi Dhar & Sons, Diamond Press Building, 8E, Rani Jhansi Road, Jhandewalan Extension, New Delhi-110055 PAN- AAAHL0339P Vs Asstt. Commissioner of Income-tax, Circle 38(1), New Delhi. APPELLANT RESPONDENT Appellant represented by None Respondent represented by Shri Jeetender Chand, Sr. DR Date of hearing 07.09.2022 Date of pronouncement 07.09.2022 O R D E R PER KUL BHARAT, JM: This appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeals)-20, dated 22.11.2017, pertaining to the assessment year 2011-12. The assessee has raised following grounds of appeal: “1.0 That the initiation of penalty proceedings u/s 271(1)(c) of the I. T. Act and consequential levy of penalty is bad in law as no specific charge had been identified in the first show cause notice issued on 31.01.2017 as required under the law. 2.0 That the order passed by the Assessing Officer and sustained by Learned Commissioner of Income Tax (Appeals) levying a penalty of Rs. 6,40,010/- on the 2 ITA no. 511/Del/2018 Lala Bansi Dhar & Sons Vs. ACIT appellant HUF u/s 271(1 )(c) of the Income tax Act for alleged concealment of income is bad in law, since all the facts about the deduction claimed u/s 57 of the Act had duly been declared in the return of income filed. 3.0That on the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals) has erred in holding that the decision of the Hon’ble Supreme Court of India in the case of CIT v. Reliance Petroproducts Ltd. [2010] 322 ITR 158 (SC) that no penalty is leviable against the assessee only because certain disallowances/ additions have been made/ certain claims had been found to be incorrect, is not applicable to the case of the appellant since the claim of deduction u/s 57 of Rs. 20,71,233/- was not made in the return of income but during the assessment proceedings. 4.0 That on the facts and in the circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) has erred in upholding the observation of the Ld. Assessing Officer that no reply has been furnished by the appellant in response of show cause notices u/s 271(1)(c) dated 23.02.2015 & 09.03.2016 and levying the penalty. She has further held that the replies were filed after the compliance date of the notices issued which is not correct. 5.0 That the aforesaid grounds of appeal are without prejudice to each other. 6.0 That the appellant crave leave to vary, alter, amend or add to the aforesaid grounds of appeals either at or before the time of hearing and it is prayed that the order of the learned Assistant Commissioner of Income Tax be modified to the extent considered fair and proper.” 2. At the outset learned Sr. Departmental Representative appearing on behalf of the Revenue submitted that the present appeal has been filed assailing the order passed in penalty proceedings u/s 271(1)(c) of the Income-tax Act, 1961 (in short “the Act”). He fairly pointed out that the assessee had challenged the addition in quantum proceedings and the coordinate Bench of the Tribunal has allowed the appeal of the assessee and deleted the addition which has the foundation of the penalty proceedings. He however, supported the orders of the authorities below. 3 ITA no. 511/Del/2018 Lala Bansi Dhar & Sons Vs. ACIT 3. We have heard the learned Sr. Departmental Representative and perused the material available on record. We find that the Tribunal in assessee’s own case in quantum proceedings in ITA No. 1640/Del/2015 for A.Y. 2011-12 deleted the addition by observing as under: “5. After hearing both the sides and perusing the entire materials available on record, we observe that the assessee has taken loan through co- parcener of the HUF of Rs.78,00,000/-. On going through the loan sanction documents, we find that the nature of loan sanction by ICICI Bank is home equity (residential), which is on paper book page 36 to 38 and credited in the bank account of Alok B. Shriram in October, 2003. Further on 10.10.2007, a cheque bearing No. 70550 has been paid to the M/s. Ansal Properties & Infrastructure Ltd. of Rs.75,00,000/- which has been duly acknowledged by M/s. Ansal Properties & Infrastructure Ltd. on 31.12.2007 bearing the cheque No. of Standard Chartered Bank, Karolbagh, New Delhi, which at page 14 of the paper book. An affidavit has also been placed on record on behalf of the HUF by-the Karta that the booking of the property has been made by HUF and the co-parcener Mr. Alok B. Shriram has paid the said amount of Rs.75,00,000/- which is at paper book page 15-16. The EMI/processing charges are also paid by HUF co-parcener. The total interest has been received from the booking to the date of cancellation by the HUF of Rs.20,71,233/- which is eligible for deduction for the payment of interest of Rs.34,32,926/- as per section 57 of the Act because this interest has been received out of the said loan taken from ICICI Bank, which was paid by HUF to M/s. Ansal Properties & Infrastructure Ltd. through co-parcener. It is not the case of the Revenue that any such expenditure of interest incurred by the assessee was claimed by him in the preceding assessment years. Thus, there is direct nexus between earning of interest and expenditure of interest as per section 57 of the Act. Therefore, the assessee is entitled for netting of interest from the expenditure incurred. This principle is settled down in the case of ACG Associates Capsules (P) Ltd. vs. CIT (2012) 18 taxmann.com 137 (SC) that the net interest income should be included in the income of the assessee. Reliance is also placed on the decision in the case of Srnt. Virmati Ram Krishna vs. CIT (1981) 131 ITR 659 (Guj). In view of both the above decisions, the assessee is eligible for netting the interest received from the interest expenditure incurred by the assessee. As a result, the appeal of the assessee deserves to be allowed.” 4. Since the addition, which was the foundation for levy of impugned penalty by the 4 ITA no. 511/Del/2018 Lala Bansi Dhar & Sons Vs. ACIT Assessing officer, has been deleted by the coordinate Bench of the Tribunal, therefore, in our view the impugned penalty would not survive. Hence, we direct the Assessing Office to delete the penalty. Grounds of appeal taken by the assessee are allowed. 5. Appeal of the assessee is allowed. Order pronounced in open court on 07.09.2022. Sd/- Sd/- (NARENDRA KUMAR BILLAIYA) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI