SHRI SACHIN T. SANKPAL, MUMBAI V. ACIT-26(3), MUMBAI

ITA 5202/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3484 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 08-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURBINDER SINGH
• Assessee Lawyers: RADHA HALBE
• Keywords: Rectification of order; Wrong claim; Difference of opinion
• Section: 271(1)(c); 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5202/MUM/2019 ASSESSMENT YEAR: 2014-15 SHRI SACHIN T. SANKPAL, BUNGLOW NO. A-1, SANGEETA TOWER CHS LTD., SION- TROMBAY ROAD, CHEMBUR (EAST), MUMBAI-400 071. VS. ACIT-26(3), C-11, 5 TH FLOOR, BANDRA KURLA COMPLEX, MUMBAI-400 051. PAN NO. AQTPS 3746 G APPELLANT RESPONDENT ASSESSEE BY : MS. RADHA H ALBE, AR REVENUE BY : MR. GURBINDER SINGH, DR DATE OF HEARING : 17/02/2021 DATE OF PRONOUNCEMENT : 02/03/2021 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2014-15. THE APPEAL IS DIRECTED AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-38, MUMBAI [IN SHORT CIT(A)] AND ARISES OUT OF PENALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT 1961, (T HE ACT). 2. THE GROUND OF APPEAL FILED BY THE ASSESSEE READS AS UNDER : IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A)-38 MUMBAI HAS ERRED IN CONFIRMING THE PENALTY OF RS.2,31,628/- LE VIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. ITA NO. 5202/M/2019 SHRI SACHIN T. SANKPAL 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2014-15 ON 26.1 1.2016 DECLARING TOTAL INCOME OF RS.49,32,500/-. THE ASSESSMENT WAS COMPLE TED U/S 143(3) OF THE ACT ON 14.12.2016 ASSESSING TOTAL INCOME AT RS.57,88,08 1/-. THE SAME WAS RECTIFIED U/S 154 ON 08.02.2017 REVISING TOTAL INCOME AT RS.5 6,82,105/-. IN THE ASSESSMENT COMPLETED U/S 143(3) DATED 14.12 .2016, THE ASSESSING OFFICER (AO) OBSERVED THAT IN THE BALANCE SHEET, IT IS REFLECTED THAT LOANS ADVANCED TOTALING TO RS.1,04,57,183/- HAVE BEEN CON TINUED TO THE PREVIOUS YEAR TO THE FOLLOWING PARTIES, FROM WHOM NO INTERES T HAS BEEN CHARGED : CHETAN LOKHANDE RS.2,00,000/- RAJENDRA K. PATEL RS.58,356/- SACHIN KAKDEKAR RS.11,00,000/ - SESHA SAID INFRA PROJECTS P. LTD. RS.90,98,827/ - TOTAL RS.1,04,57,183/ - THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.8,55,582/ - ON ACCOUNT OF INTEREST PAID. THE AO CAME TO A FINDING THAT INTERE ST TO THE EXTENT THE ADVANCE HAD BEEN MADE WITHOUT CHARGING ANY INTEREST IS TO B E DISALLOWED U/S 36(1)(III) OF THE ACT. ACCORDINGLY, HE COMPUTED THE INTEREST O N THE LOAN OF RS.1,04,57,183/- @ 12% WHICH COMES TO RS.12,54,862/ -. FURTHER OBSERVING THAT THE DEDUCTION ON ACCOUNT OF INTEREST PAID EXCE EDS THE ABOVE AMOUNT, HE DISALLOWED THE INTEREST EXPENSES TO THE EXTENT OF R S.8,55,582/-. THEN HE REVISED THE DISALLOWANCE TO RS.7,49,606/- VIDE RECTIFICATION ORDER DATED 08.02.2017. SUBSEQUENTLY, HE LEVIED A MINIMUM PENALTY OF RS.2, 31,628/- U/S 271(1)(C) ON THE SUPPOSED CONCEALED INCOME OF RS.7, 49,606/-. ITA NO. 5202/M/2019 SHRI SACHIN T. SANKPAL 3 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE F ILED AN APPEAL BEFORE THE LD. CIT(A). WE FIND THAT VIDE ORDER DATED 18.01.2019, THE LD. CIT(A) CONFIRMED THE ABOVE PENALTY LEVIED BY THE AO ON MERITS BY OBS ERVING THAT : EVEN DURING THE APPELLATE PROCEEDINGS, THE APPELLA NT CONTENDED THAT THIS IS ONLY MATTER OF DIFFERENCE IN OPINION AND DISALLOWANCE OF CLAIM AND THEREFORE NOT LIABLE TO PENALTY. I FURTHER OBSERVED THAT THE APPELLANT HAS FIXED ASSETS WORTH RS.4.98 CRORES AND CAPITAL OF RS.2.63 CRORES. HOWEVER, IT IS SEEN THAT THE APPELLANT HAS NOT PRODUCED ANY FUND FLOW STATEMENT SHOWING SOURCES AND APPLICA TION OF FUNDS. THEREFORE, THE NEXUS BETWEEN THE UNSECURED LOANS TAKEN AND GRANTED ARE NOT ESTABLISHED. IN VIEW OF THE SAME, THE INTEREST EXPENSE CLAIMED BY THE APPEL LANT HAS NO NEXUS WITH THE BUSINESS CARRIED ON THE APPELLANT. THE APPELLANT HA S ALSO NOT PROVED THAT THE INTEREST FREE LOANS WERE ADVANCED TO THE AFORESAID PARTIES/P ERSONS ON ACCOUNT OF BUSINESS EXIGENCIES. IN THE GIVEN FACT AND CIRCUMSTANCES OF THE CASE, I FIND THAT THE PENALTY LEVIED BY THE AO IS ON SOUND FOOTING. ACCORDINGLY, THE PENALTY OF RS.2,31,628/- LEVIED BY THE AO IS CONFIRMED. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE RELI ES ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN CIT V. RELIANCE PETROPRODUCTS (P.) LTD. (2010) 189 TAXMAN 322 (SC). ON THE OTHER HAND, THE LD. DEPARTM ENTAL REPRESENTATIVE SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISIONS ARE GIVEN BELOW. AS MENTIONED EARLIER, THE DETAILS ON WHICH THE AO DERIVED HIS FINDING ON CONCEALMENT WERE REFLECTED IN THE BALANCE SHEET (PA RA 4 OF THE ASSESSMENT ORDER DATED 14.12.2016). THE INTEREST PAID IS REFLE CTED IN THE PROFIT AND LOSS ACCOUNT. ITA NO. 5202/M/2019 SHRI SACHIN T. SANKPAL 4 IN RELIANCE PETROPRODUCTS (P) LTD . (SUPRA), THE HONBLE SUPREME COURT HAS HELD THAT MERELY BECAUSE ASSESSEE HAD CLAIMED EXP ENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO REVENUE, THAT BY ITSELF WOULD NOT ATTRACT PENALTY U/S 271(1)(C). IN A RECENT DECISION DATED 12.06.2020, THE HONBLE BOMBAY HIGH COURT, HAVING CONSIDERED SIMILAR ISSUES IN VENTURA TEXTILES LTD. VS. CIT (ITA.NO.958/2017), HELD AS UNDER:- 33. IN RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA), S UPREME COURT EXAMINED MEANING OF THE WORDS 'PARTICULARS' AND 'INACCURATE'. AS PER LA W LEXICON, THE WORD 'PARTICULARS' MEANS 'DETAIL OR DETAILS; THE DETAILS OF A CLAIM OR THE SEPARATE ITEMS OF AN ACCOUNT'. THEREFORE, IT WAS HELD THAT THE WORD 'PARTICULARS' USED IN SECTION 271(1)(C) OF THE ACT WOULD EMBRACE THE MEANING OF THE DETAILS OF THE CLA IM MADE. REFERRING TO WEBSTER'S DICTIONARY WHERE THE WORD 'INACCURATE' HAS BEEN DEF INED AS 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS A N INACCURATE STATEMENT, COPY OR TRANSCRIPT', SUPREME COURT HELD THAT THE TWO WORDS I.E., 'INACCURATE' AND 'PARTICULARS' READ IN CONJUNCTION MUST MEAN THAT THE DETAILS SUPP LIED IN THE RETURN ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TR UTH OR ERRONEOUS. IT WAS HELD THAT MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WOULD NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. THEREFORE, SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURN ISHING INACCURATE PARTICULARS OF INCOME. ELABORATING FURTHER, SUPREME COURT HELD THA T IF SUCH STAND OF THE REVENUE WAS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WHICH IS CLEARLY NOT THE INTEN DMENT OF THE LEGISLATURE. 34. THIS DECISION WAS FOLLOWED BY THIS COURT IN CIT VS. M/S. MANSUKH DYEING & PRINTING MILLS, INCOME TAX APPEAL NO.1133 OF 2008, DECIDED ON 24.06.2013. IN CIT VS. DCM LTD., 359 ITR 101, DELHI HIGH COURT APPLIED THE SAID DECISION OF THE SUPREME COURT AND FURTHER OBSERVED THAT LAW DOES NOT DEBAR AN ASSESSEE FROM MAKING A CLAIM WHICH HE BELIEVES IS PLAUSIBLE AND WHEN HE KNOWS TH AT IT IS GOING TO BE EXAMINED BY THE ASSESSING OFFICER. IN SUCH A CASE A LIBERAL VIE W IS REQUIRED TO BE TAKEN AS NECESSARILY THE CLAIM IS BOUND TO BE CAREFULLY SCRU TINIZED BOTH ON FACTS AND IN LAW. THREAT OF PENALTY CANNOT BECOME A GAG AND / OR HAUN T AN ASSESSEE FOR MAKING A CLAIM WHICH MAY BE ERRONEOUS OR WRONG. AGAIN, IN CIT VS. SHAHABAD CO-OPERATIVE SUGAR MILLS LTD., 322 ITR 73, PUNJAB & HARYANA HIGH COURT HELD THAT MAKING OF WRONG CLAIM IS NOT AT PAR WITH CONCEALMENT OR GIVING OF INACCUR ATE INFORMATION WHICH MAY CALL FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ITA NO. 5202/M/2019 SHRI SACHIN T. SANKPAL 5 35. REVERTING BACK TO THE PRESENT CASE IT IS QUITE EVIDENT THAT ASSESSEE HAD DECLARED THE FULL FACTS; THE FULL FACTUAL MATRIX OR FACTS WE RE BEFORE THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER. IT IS ANOTHER MATTER THAT THE CLAIM BASED ON SUCH FACTS WAS FOUND TO BE INADMISSIBLE. THIS IS NOT THE SAME THING AS FURNISHING INACCURATE PARTICULARS OF INCOME AS CONTEMPLATED UNDER SECTION 271(1) (C) OF THE ACT. 6.1 WE ARE OF THE CONSIDERED VIEW THAT THE RATIO LA ID DOWN IN RELIANCE PETROPRODUCT (P) LTD. (SUPRA) AND VENTURA TEXTILES LTD . (SUPRA) IS SQUARELY APPLICABLE TO THE INSTANT CASE. FOLLOWING THE SAME, WE DELETE THE PENALTY OF RS.2,31,628/- LEVIED BY THE AO U/S 271(1)(C) OF THE ACT. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/03/2021. SD/- SD/- (SAKTIJIT DEY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 02/03/2021 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSISTANT REGISTRAR) ITAT, MUMBAI