Dr. Kantilal S. Patel, Patan V. The ACIT, Patan Circle, Patan

ITA 514/AHD/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0071 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 18-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Onus to prove

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.514/AHD/2014 ( / ASSESSMENT YEAR : 2009-10) DR. KANTILAL S. PATEL CITY HOSPITAL BHAGAT COMPLEX STATION ROAD, PATAN / VS. THE ASST.CIT PATAN CIRCLE PATAN (N.G.) # ./ ./ PAN/GIR NO. : ABZPP 1194 LN ( #% / APPELLANT ) .. ( &#% / RESPONDENT ) #%' / APPELLANT BY : -NONE- &#%(' / RESPONDENT BY : SHRI JAMES KURIAN, SR.DR )*(+ / DATE OF HEARING 11/11/2016 ,-./(+ / DATE OF PRONOUNCEMENT 16/11/2016 / O R D E R PER PRADIP KUMAR KEDIA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-III, AHMEDABAD DATED 27/11/2013 [CIT(A) IN SHORT] FOR ASSESSMENT YEAR(A Y) 2009-10. 2. THE APPEAL OF THE ASSESSEE IS AGAINST PENALT Y UNDER S.271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED T O AS 'THE ACT') RESULTING FROM ADDITIONS MADE TOWARDS DISALLOWANCE OF INTEREST ITA NO.514/AHD/ 2014 DR. KANTILAL S. PATEL VS. ASST.CIT ASST.YEAR 2009-10 - 2 - EXPENDITURE OF RS.2,32,732/-. IT WAS NOTICED BY TH E AO THAT INTEREST EXPENSES OF RS.2,32,732/- WAS INCURRED BY THE ASSES SEE DURING RELEVANT ASSESSMENT YEAR. IT WAS OBSERVED BY THE AO THAT TH E ASSESSEE HAS ADVANCED AN AMOUNT OF RS.75 LACS TO ONE SHRI BABULA L J. PATEL TOWARDS PURCHASE OF LAND AND INTEREST PAID ON THE CORRESPON DING OVER-DRAFT FACILITY CANNOT BE SAID TO BE INCURRED FOR THE BUSINESS PURP OSE. THE DISALLOWANCE OF INTEREST EXPENDITURE WAS THUS MADE IN QUANTUM AS SESSMENT. THE AO ACCORDINGLY ALSO IMPOSED PENALTY FOR IMPUGNED DISAL LOWANCE OF INTEREST EXPENDITURE ALLEGING FURNISHING INACCURATE PARTICUL ARS OF INCOME. IN FIRST APPEAL, THE ASSESSEE COULD NOT GET ANY RELIEF FROM THE CIT(A) TOWARDS PENALTY QUANTIFIED AT RS.79,110/-. 3. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE T RIBUNAL AGAINST THE IMPOSITION OF PENALTY. 4. NONE APPEARED ON BEHALF OF ASSESSEE. WE OBSERVE FROM THE RECORDS THAT THE NOTICE WAS DULY SERVED ON THE ASSE SSEE. HAVING REGARD TO THE PRIMA-FACIE CASE, WE ARE INCLINED TO PROCEED WITH THE MATTER EX-PARTE IN THE ABSENCE OF THE ASSESSEE. 5. THE LD.DR FOR THE REVENUE RELIED UPON THE ORDER OF THE CIT(A) FOR SUSTAINING THE PENALTY. ITA NO.514/AHD/ 2014 DR. KANTILAL S. PATEL VS. ASST.CIT ASST.YEAR 2009-10 - 3 - 6. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. THE SOLE BASIS FOR IMPOSITION OF PENALTY UNDER S.27 1(1)(C) OF THE ACT BY THE AO IS DISALLOWANCE OF RS.2,32,732/- OUT OF INTE REST EXPENDITURE SINCE THE INTEREST BEARING-FUNDS WERE ALLEGEDLY UTILIZED BY THE ASSESSEE FOR NON- BUSINESS PURPOSE. WE DO NOT FIND MERIT IN THE ACTI ON OF THE REVENUE. WHILE THE DISALLOWANCE OF INTEREST EXPENDITURE MAY BE POSSIBLY JUSTIFIED, IMPOSITION OF PENALTY FLOWING FROM SUCH DISALLOWANC E IS FARFETCHED. NEEDLESS TO SAY, THE BURDEN OF PROOF IN THE PENALT Y PROCEEDINGS VARIES FROM THAT IN AN ASSESSMENT PROCEEDINGS. MERE DISAL LOWANCE OF EXPENDITURE THEREIN DOES NOT IPSO FACTO CALL FOR IMPOSITION OF PENALTY UNDER S.271(1)(C) OF THE ACT. ON FACTS, WE NOTE T HAT THERE IS ABSENCE OF ANY FINDING IN THE PENALTY ORDER THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN PER SE WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. IT IS TRITE THAT A MERE MAKING OF A CLAIM WHICH IS NOT S USTAINABLE IN LAW BY ITSELF WILL NOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME AS ALLEGED. THE CASE OF THE ASSESSEE SQUARELY FALL S WITHIN FOUR CORNERS OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. REPORTED AT (2010) 322 ITR 158 (SC), WHEREIN THE HONBLE APEX COURT HAS HELD AS UNDER:- 9. WE ARE NOT CONCERNED IN THE PRESENT CASE WITH THE MENS REA. HOWEVER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A MATTER OF FACT, THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS . IN WEBSTER'S DICTIONARY, THE WORD 'INACCURATE' HAS BEEN DEFINED AS : ITA NO.514/AHD/ 2014 DR. KANTILAL S. PATEL VS. ASST.CIT ASST.YEAR 2009-10 - 4 - 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRAN SCRIPT.' WE HAVE ALREADY SEEN THE MEANING OF THE WORD 'PARTI CULARS' IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERR ONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO F INDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND T O BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER S. 271(1)(C) OF THE A CT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSE LF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. APPLYING THE AFORESAID RATIO LAID DOWN BY THE HONB LE APEX COURT, WE FIND THAT THE ACTION OF THE REVENUE IN IMPOSING PENALTY UNDER S.271(1)(C) OF THE ACT IS NOT SUSTAINABLE IN LAW. THUS, ORDER OF CIT(A) DESERVES TO BE SET ASIDE AND QUASHED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . THIS ORDER PRONOUNCED IN OPEN COURT ON 16/11/2016 SD/- SD/- () ( ) (RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 16/ 11 /2016 3..),.)../ T.C. NAIR, SR. PS ITA NO.514/AHD/ 2014 DR. KANTILAL S. PATEL VS. ASST.CIT ASST.YEAR 2009-10 - 5 - !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &#% / THE RESPONDENT. 3. 456+ 7+ / CONCERNED CIT 4. 7+ ( ) / THE CIT(A)-III, AHMEDABAD 5. 89:+)56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<* / GUARD FILE. / BY ORDER, &8++ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 11.11.16 (DICTATION-PAD 7- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 15.11.16 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.16.11.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 16.11.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER