M/s Sunrise wine Company, Jalandhar V. The Income Tax Officer, Jalandhar

ITA 532/ASR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8791 (ITAT-AMRITSAR)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Amritsar
• Assessment Year: 2004-2005
• Appeal Filed On: 25-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR
• Keywords: Business income
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: (CIRCUIT BENCH AT JALANDHAR) BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER, AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO. 532/ASR/2016 (ASSESSMENT YEAR-2004-05) M/S SUNRISE WINE COMPANY, H. NO. 8, WARD 9, BHOGPUR, JALANDHAR. PAN NO.AASFS7311Q (ASSESSEE) VS .. ITO ,W(VI)-1, JALANDHAR (REVENUE) ASSESSEE BY SHRI . J. S. BHASIN, AR. REVENUE BY SHRI BHAWANI SHANKAR,DR. ORDER PER, A. D. JAIN, JUDICIAL MEMBER: THIS IS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2004- 05, AGAINST THE CONFIRMATION OF CONCEALMENT PENALTY OF RS.62,893/-. 2. AS PER THE RECORD, THE ASSESSEE FIRM WAS EARLIER ENGAGED IN THE BUSINESS OF WINE TRADING. FOR THE YEAR, IT SHOWED ONLY INTEREST INCOME, DECLARING AN INCOME OF RS.78,290/-. THE RETURN FILED WAS PROCESSED U/S 143 (1) OF THE I.T. ACT. LATER, THE AO NOTICED THAT THE ASSESSEE HAD CLAIMED VARIOUS EX PENSES AGAINST INTEREST INCOME. THESE EXPENSES, ACCORDING TO THE AO, WERE NOT ALLOW ABLE, AS NO BUSINESS WAS DONE DATE OF HEARING 16.01.2017 DATE OF PRONOUNCEMENT 18.01.2017 I.T.A NO. 532/ASR/2016 2 BY THE ASSESSEE FIRM DURING THE YEAR. THE ASSESSMEN T WAS RE-OPENED AND VIDE ORDER DATED 28.11.2007, THE INCOME OF THE ASSESSEE WAS AS SESSED AT RS.2,53,600/-. ALL THE ADDITIONS MADE WERE CONFIRMED BY THE LD. CIT(A). NO FURTHER APPEAL WAS PREFERRED. PENALTY OF RS.62,893/- WAS IMPOSED ON THE ASSESSEE FOR FURNISHING INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF ADDITION MAD E AMOUNTING TO RS.1,75,313/-. THE LD. CIT(A) CONFIRMED THE PENALTY. 3. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED T HAT THE ASSESSEE FIRM WAS CONSTITUTED BY SIX PARTNERS TO RUN LIQUOR VENDS FOR THE PERIOD 01.04.2002 TO 31.03.2003 ALLOTTED IN STATE AUCTION; THAT THE PART NERSHIP WAS TO DISSOLVE ON 31.03.2003; THAT, THEREFORE, DURING THE YEAR THE FI RM WAS NON-EXISTENT, THOUGH THE PROCESS OF WINDING UP CONTINUED; THAT INCOME OF RS. 78,290/- WAS GENERATED FROM THIS RESIDUAL WORK; THAT HOWEVER, AFTER THE REOPENI NG OF CASE, EXPENSES OF RS.1,75,313/-, CLAIMED IN THE PROFIT & LOSS ACCOUNT AGAINST INTEREST OF RS.2,72,250/-, EARNED ON A BUSINESS DEPOSIT GIVEN T O A SISTER CONCERN, WERE DISALLOWED, THE INTEREST HAVING BEEN TREATED AS NON BUSINESS INCOME; AND THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE PENALTY IN Q UESTION. 4. ON THE OTHER HAND, THE LD. DR HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. 5. HAVING HEARD THE PARTIES, IT IS SEEN THAT THE AS SESSEE FIRM WAS UNDISPUTEDLY CONSTITUTED TO RUN LIQUOR VENDS FOR A LIMITED PERIO D OF TWELVE MONTHS AND IT STOOD DISSOLVE ON 31.03.2003. THAT BEING SO, SINCE THE FI RM WAS NOT INEXISTENCE DURING I.T.A NO. 532/ASR/2016 3 THE YEAR UNDER CONSIDERATION, NO ASSESSMENT, MUCH L ESS PENALTY COULD HAVE BEEN FRAMED AGAINST THE FIRM. EVEN THE AO OPINED TO ASSE SS THE FIRM AS AN AOP. THEN, INTEREST RECEIVED WAS A DEPOSIT OF RS.33 LACS GIVEN TO M/S SHIVAM WINE TRADERS, MUKERIAN, FROM THE BUSINESS FUNDS. THE DISALLOWANCE OF THE EXPENSES, EVIDENTLY, WAS ALSO A CONTENTIOUS ISSUE. FURTHER, THE AO HIMSE LF RE-COMPUTED THE BUSINESS PROFIT OF RS.78,290/-, SHOWN IN THE P & L ACCOUNT, AND ENHANCED IT TO RS.2,53,603/-, BY MAKING THE DISALLOWANCE OF RS.1,7 5,313/-. AS SUCH, THE INTEREST WAS NOT EXCLUDED, AND ASSESSED AS INCOME FROM OTHER SOURCES; IT REMAINED ACCEPTED AND ASSESSED AS BUSINESS INCOME. IN THIS REGARD, TH E DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, IN THE CASE OF CIT VS. AVERY CYCLE INDUSTRIES LTD., 296 ITR 96 (P & H), IS DIRECTLY SUPPORTIVE, BESIDE S NUMEROUS OTHER DECISIONS. AS SUCH, THE ISSUE BEING A DEBATABLE ISSUE, THERE IS N O QUESTION OF IMPOSITION OF CONCEALMENT PENALTY. 6. IN VIEW OF THE ABOVE DISCUSSION, FINDING THE GRI EVANCE OF THE ASSESSEE TO BE JUSTIFIED, CONCEALMENT PENALTY NOT BEING LEVIABLE O N A DEBATABLE ISSUE, THE PENALTY IN QUESTION IS DELETED. THE ORDER UNDER APPEAL IS R EVERSED. 7. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/01/2017. SD/- SD/- (T. S. KAPOOR) (A.D. JAIN) ACCOUTANT MEMBER JUDICIAL MEMBER DATED 18 /01/2017 I.T.A NO. 532/ASR/2016 4 *AKV* ON TOUR COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT BY ORDER AR/SR.P.S./P.S.