DCIT 1(1), MUMBAI V. BHAICHAND AMOLUK CONSULTANCY SERVICES P. LTD, MUMBAI

ITA 5703/MUM/2010

• Counselvise Citation: 570319914 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 14-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O A MAO
• Assessee Lawyers: D V LAKHANI
• Keywords: Set aside
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B : MUMBAI BEFORE SHRI D. MANMOHAN, (VICE PRESIDENT [MZ]) AND SHRI RAJENDRA SINGH,(ACCOUNTANT MEMBER) ITA NO.5703/MUM/2010 ASSESSMENT YEAR : 2003-04 ITA NO.5704/MUM/2010 ASSESSMENT YEAR : 2004-05 THE DY. COMMISSIONER OF INCOME TAX -1(1) ROOM NO.579 AAYAKAR BHAVAN MUMBAI-400 020. ..( APPELLANT ) VS. BHAICHAND AMOLUK CONSULTANCY SERVICES PVT. LTD. COMMERCIAL UNION HOUSE, 2 ND FLOOR 9, WALLACE STREET, FORT MUMBAI-400 001. ..( RESPONDENT ) P.A. NO. (AAACB 6034 A) APPELLANT BY : SHRI O.A. MAO RESPONDENT BY : SHRI D. V. LAKHANI DATE OF HEARING : 8.11.11 DATE OF PRONOUNCEMENT : 16 TH NOVEMBER, 2011 O R D E R PER RAJENDRA SINGH (AM). THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE DIFFERENT ORDERS DATED 10.3.2010 BY THE CIT(A) FOR THE ASSESSMENT YEARS 2003- 04 AND 2004-05. THE ONLY DISPUTE RAISED IN THESE APP EALS IS REGARDING LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME T AX ACT. AS THE DISPUTE RAISED IN BOTH THE APPEALS IS IDENTICAL, THESE AR E BEING DISPOSED OF BY A SINGLE CONSOLIDATED ORDER FOR THE SAKE O F CONVENIENCE. ITA NO.5703 & 04/M/10 A.Y:03-04 & 04-05 2 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AO DUR ING THE ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAD MADE INTER EST FREE ADVANCES TO THE GROUP CONCERNS AND IT HAS ALSO INVESTE D IN THE SHARES OF THESE CONCERNS. THE ASSESSEE HAD ALSO TAKEN LOANS ON WHICH SUBSTANTIAL INTEREST HAD BEEN PAID. THE AO, THEREFORE , DISALLOWED THE INTEREST PROPORTIONATE TO THE ADVANCES GIVEN OR INVESTM ENT MADE IN THE GROUP CONCERN AMOUNTING TO RS.63,44,625/- AND RS.59 ,53,551/- RESPECTIVELY. IN APPEAL, THE CIT(A) REDUCED THE DISALL OWANCE OF INTEREST TO RS.29,60,413/- AND RS.31,03,994/- RESPECTIVE LY. THE AO ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)( C) AND LEVIED PENALTY FOR CONCEALMENT OF INCOME AMOUNTING TO RS.10,87 ,951/- AND RS.11,13,557/- RESPECTIVELY. IN APPEAL THE CIT(A) OBSE RVED THAT DISALLOWANCE OF INTEREST HAD BEEN MADE ON ESTIMATE WHICH HAD ALSO BEEN REDUCED BY CIT(A). HE ACCORDINGLY HELD THAT DISALL OWANCE OF INTEREST DID NOT AMOUNT TO CONCEALMENT OF INCOME AND ACC ORDINGLY DELETED THE PENALTIES LEVIED, AGGRIEVED, BY WHICH THE REVENUE IS IN APPEAL IN BOTH THE YEARS. 2.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. WE FIND THAT ADDITIO NS MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST IN THE TWO YEARS UNDE R ITA NO.5703 & 04/M/10 A.Y:03-04 & 04-05 3 CONSIDERATION HAVE BEEN CONSIDERED BY THE TRIBUNAL IN T HE ORDER DATED 23.7.2010 IN ITA NO.523 &524/M/2008. THE TRIBUNAL OBSERVED THAT CLAIM OF THE ASSESSEE THAT ADVANCE/INVESTMENT HAD BEEN MA DE OUT OF OWN FUNDS HAD NOT BEEN EXAMINED PROPERLY. THE TRIBU NAL ALSO OBSERVED THAT FOR DECIDING THE ISSUE WHETHER ADVANCE/INV ESTMENT HAD BEEN MADE FROM OWN FUNDS OR NOT THE POSITION OF FUNDS ON DATE OF ADVANCE/INVESTMENT IS REQUIRED TO BE SEEN AND NOT ON DA TES OF BALANCE SHEET. THE TRIBUNAL ACCORDINGLY SET ASIDE THE ORDER OF CIT(A) AND RESTORED THE MATTER BACK TO AO FOR PASSING FRESH ORDERS AND AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. AS THE VERY ADDITION BASED ON WHICH THE PENALTIES HAVE BEEN LEVIED, HAVE BE EN SET ASIDE, THE PENALTIES CANNOT SURVIVE. WE, THEREFORE, CONFIRM THE ORDER OF CIT(A) CANCELLING THE PENALTIES, THOUGH NOT ON MERIT BUT ON THE GROUND THAT THE ADDITIONS HAVE ITSELF BEEN SET ASIDE. THE PEN ALTY, IF ANY, CAN BE AGAIN INITIATED BY THE AO IN THE FRESH ASSESSMENT PRO CEEDINGS. 3. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.11.2011. SD/- SD/- (D. MANMOHAN) (RAJENDRA SINGH ) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 16.11.2011. JV. ITA NO.5703 & 04/M/10 A.Y:03-04 & 04-05 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.