SANGEETA P. PODDAR, MUMBAI V. ASST CIT CIR 18(2), MUMBAI

ITA 5258/MUM/2012

• Counselvise Citation: 525819914 RSA 2012
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2001-2002
• Appeal Filed On: 21-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Assessee Lawyers: SANJIV M SHAH

Judgement Text

` IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI . . , ! ' #'' '$ , % ! & BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : 5258 / / 2012 A.Y. 2001-2002 ITA NO. : 5258/MUM/2012 (ASSESSMENT YEAR: 2001-2002) SMT SANGEETA P. PODDAR, TRADE WORLD, B WING, 3 RD FLOOR, KAMLA CITY, SENAPATI BAPAT MARG, LOWER PAREL, MUMBAI -400 013 .: PAN: AACPP 2350 G VS ASST. COMMISSIONER OF INCOME TAX -18(2), R. NO. 115, 1 ST FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJIV M. SHAH RESPONDENT BY : SHRI PITAMBAR DAS /DATE OF HEARING : 09-10-2013 !' / DATE OF PRONOUNCEMENT : 23-10-2013 * O R D E R #'' '$ , : PER VIVEK VARMA, JM: THE APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) 29, MUMBAI, DATED 08.06.2012, CONFIRMING THE PENALTY OF RS. 79,6 84/- LEVIED U/S 271(1)(C). 2. THE FACTS ARE THAT THE ASSESSEE CLAIMED INTEREST OF RS. 2,61,185/- AGAINST INCOME FROM OTHER SOURCES SHOWN AT RS . 37,99,724/-. ACCORDING TO THE AO, THIS INTEREST IS ON LOAN S WHICH WERE UTILIZED FOR MAKING INVESTMENTS IN UNITS, WHOSE INCOME WAS C LAIMED AS EXEMPT. ACCORDING TO THE AO, THIS INTEREST COULD NOT HAVE BEEN CLAIMED AS THE INVESTMENTS MADE WERE FROM BORROWED FUNDS. SMT SANGE ETA P. PODDAR. ITA 5258/MUM/2012 2 3. THE DISALLOWANCE WAS CONFIRMED BY THE CIT(A) AND BECAUS E OF SMALLNESS OF AMOUNT, THE ISSUE WAS NOT AGITATED BEFORE THE ITAT. THE AO, THEREAFTER INITIATED PENALTY PROCEEDINGS AND LEVIED PENA LTY U/S 271(1)(C), EQUAL TO THE TAX ON RS. 2,61,185/-. THIS WAS ALSO CO NFIRMED BY THE CIT(A). AGGRIEVED, THE ASSESSEE IS BEFORE THE ITAT. 4. IN THE INSTANT APPEAL, THE AR POINTED OUT THAT THE RE VENUE AUTHORITIES WHILE DEALING WITH THE PENALTY PROCEEDINGS COMPLE TELY IGNORED AN IMPORTANT OBSERVATION NOTED BY THE CIT(A) IN QUANTUM, WHICH READS AS UNDER: THE LAST ISSUE IN THIS CASE HAS BEEN TAKEN UP AS P R GROUNDS OF APPEAL NO. 15, 16 & 17 PERTAINS TO DISALLOWANCE OF RS. 2,6 1,185/-. THE A.O. HAD DISALLOWED THIS CLAIM OF INTEREST AS EXPENDITUR E FOR THE REASON THAT THE INVESTMENT CORRESPONDING TO THE SAME WERE MADE IN THE UNITS TOE EARNING TAX FREE DIVIDEND INCOME. 8.1 ON THE OTHER HAND THE LD. A.R. HAS POINTED OUT THAT THE APPELLANT HAS SIMULTANEOUSLY RECEIVED INTEREST DURING THE ABOVE S AID A.Y. AT RS. 20,17,229/-. THE CLAIM OF PAYMENT OF INTEREST OF RS . 2,61,185/- IS SOUGHT TO BE CLAIMED AGAINST INCOME FROM OTHER SOUR CES. THE AR. ALSO ALLEGED THAT THE A.0. HAS NOT EXAMINED THE MOVEMENT OF FUNDS BORROWED AND ITS USE THEREAFTER. 8.2 I HAVE CAREFULLY CONSIDERED THE DISPUTE IN THE ABOVE ISSUE. THE A.R. HAS POINTED OUT THAT THE MOVEMENT OF FUNDS BORROWED AND ITS SUBSEQUENT USE HAS NOT BEEN EXAMINED BY THE AO BUT AT THE SAME TIME NOT VOLUNTEERED THIS INFORMATION IN THE COURSE OF ASSES SMENT PROCEEDINGS; OR APPEAL PROCEEDINGS. I FIND THAT THE QUANTUM OF INVE STMENT IN THE UNITS IS MUCH MORE & HIGHER A COMPARED TO THE INVESTMENTS IN LOANS/ADVANCES GIVEN TO MRS. SANGEETA V. PODDAR, MASTER GAURAV POD DAR AND MASTER ANKIT PODDAR IN RESPECT OF WHICH THE INTEREST INCOM E AT RS. 20,17,229/- HAS BEEN EARNED IN VIEW OF THIS SUBSTANTIATED DIFFE RENCE AND IN VIEW OF THE FACT THAT THE APPELLANT HAS NOT OFFERED ANY STA TEMENT OF FUND FLOW/CASH FLOW, I UPHOLD THE DISALLOWANCE TO THE EX TENT AT 90%. THE APPELLANT GETS RELIEF OF RS. 26,118 /-. 5. ACCORDING TO THE AR, CIT(A) IN QUANTUM HAS REDUCED TH E AMOUNT OF ADDITION TO 90%, THIS BY ITSELF SATISFIES THE CIRCUMSTANCES THAT THE CLAIM OF THE ASSESSEE WAS NEITHER WRONG NOR MALA FIDE . THIS IS ONCE AGAIN PROVED FROM THE FACT THAT THERE IS A SUBSTANTIAL RE CEIPT OF INTEREST, AT RS. 20,17,229/-, AGAINST PAYMENT OF RS. 2,61,185 /-, DISALLOWED BY THE AO AND WHICH HAS REACHED THIS STAGE. 6. THE AR, THEREFORE, PLEADED THAT THE CLAIM OF INTEREST PAID WAS A BONA FIDE EXPENSE CLAIM. SMT SANGE ETA P. PODDAR. ITA 5258/MUM/2012 3 7. THE AO REFERRED TO THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS (P) LTD. REPORT ED IN 322 ITR 158 (SC), WHEREIN ON SIMILAR SITUATION, THE PENALTY U/S 271(1)(C) WAS HELD TO BE UNTENABLE. 8. THE AR ALSO PLACED RELIANCE ON THE DECISION IN THE CASE OF SKIL INFRASTRUCTURE LTD. VS ACIT, REPORTED IN 139 ITD 25 (MUM ), WHEREIN IT WAS EXPLAINED THAT PENALTY BECOMES EXIGIBLE, IF THERE WAS AN ATTEMPT BY THE ASSESSEE TO EVADE TAX. BUT IN THE INSTANT CASE, THE DEPARTMENT BY ESTIMATING THE ALLOW ABILITY, HAS ACCEPTED THE EXPENSE. 9. THE DR ON THE OTHER HAND STRONGLY SUPPORTED THE O RDERS OF THE REVENUE AUTHORITIES. 10. WE HAVE HEARD THE ARGUMENTS AND HAVE PERUSED THE ORDERS IMPUGNED BEFORE US AND ALSO THE ORDER OF CIT(A) IN QUANTUM . FROM THIS ORDER, WE ARE OF THE OPINION, THAT THE REVENUE AUTH ORITIES DID NOT LOOK INTO THE ENTIRE AND SURROUNDING FACTS, SPECIALLY THE FA CT, THAT THE INTEREST RECEIVED IS SUBSTANTIALLY HIGHER THEN THE INTEREST PAID (WH ICH IS THE ADDITION ON WHICH PENALTY HAS BEEN LEVIED). 11. FROM THESE PATENT FACTS, THE OBSERVATIONS OF THE REV ENUE AUTHORITIES WITH REGARD TO WRONG AND MALA FIDE INTENTION OF THE ASSESSEE TO CONCEAL PARTICULARS OF INCOME , CANNOT BE ESTABLISHED. SPECIALLY IN THE CIRCUMSTANCE, WHERE, THE DEPARTMENT BY E STIMATING THE ALLOW ABILITY, HAS ACCEPTED THE EXPENSE. 12. THIS IS EXACTLY, WHAT THE HONBLE SUPREME COURT IN TH E CASE OF RELIANCE PETROPRODUCTS ( SUPRA ) HAS LAID DOWN AND ALSO THAT THERE IS NO PATENTLY WRONGFUL DISCLOSURE OF FACTS. RESPECTFULLY FOLLOWING TH E DECISION OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF RELIANCE PETROPRODUCTS LTD. (SUPRA) AND THE DECISION OF COORDINATE BENCH OF THE ITAT IN THE CASE OF SKIL INFRASTRUCTURE LTD. (SUPRA), WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY. SMT SANGE ETA P. PODDAR. ITA 5258/MUM/2012 4 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD OCTOBER, 2013. SD/- SD/- ( . . ) ( #'' '$ ) ! ! (P.M. JAGTAP) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 23 RD OCTOBER, 2013 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) & & ' ( ) - 29 MUMBAI / THE CIT (A)-29, MUMBAI. 4) & & ' 18 MUMBAI / THE CIT -18 MUMBAI, 5) )*+ , , & , , -. / THE D.R. E BENCH, MUMBAI. 6) +/ 0 COPY TO GUARD FILE. &12 / BY ORDER / / TRUE COPY / / [ 3 / 4 5 & , , -. DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *784 . . * CHAVAN, SR. PS