THE ITO-EXEMPTION, Indore V. M/S VAJDI EDUCATIONAL SOCIETY, Indore

ITA 582/Ind/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1273 (ITAT-INDORE)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 11-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S AMBEDKAR
• Assessee Lawyers: S S DESH
• Keywords: Set aside
• Section: 271(1)(c); 143(3); 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.582/IND/2018 ASSESSMENT YEAR: 2012-13 ITO(EXEMPTION) INDORE / VS. M/S. VAJDI EDUCATIONAL SOCIETY, F-12, JHOOMER GHAT RAU, INDORE ( REVENUE ) ( RE SPONDENT ) PAN: AAAAC1063F REVENUE BY SHRI R. S. AMBEDKAR SR. DR RESPONDENT BY SHRI S.S. DESHPANDE , CA DATE OF HEARING: 03.06.2019 DATE OF PRONOUNCEMENT: 04.06.2019 / O R D E R PER MANISH BORAD, A.M: THIS APPEAL AT THE INSTANCE OF REVENUE PERTAINING TO ASSESSMENT YEAR 2012-13 IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-II, INDORE, (IN SHORT CIT(A)), DATED 22.03.2018 WHICH IS ARISING OU T OF THE ORDER U/S 271(1)(C) OF THE INCOME TAX ACT 1961(HERE INAFTER VAJDI EDUCATIONAL SOCIETY ITANO.582/IND/2018 2 CALLED AS THE ACT) FRAMED ON 30.03.2017 BY ITO, EXEMPTION INDORE. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: (1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE PENALTY HOLDING THAT THE QUANTUM APPEAL HAS BEEN SET ASIDE BY THE I NCOME TAX APPELLATE TRIBUNAL, EVEN THOUGH THE QUANTUM APP EAL FOR THE RELEVANT A.Y. HAS NOT YET BEEN DECIDED. 2. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE INSTANT APPEAL OF REVENUE CHALLENGING THE DELETION OF PENALTY U/S 271(1)(C) OF THE ACT DESERVES TO BE DISM ISSED AS THE HON'BLE TRIBUNAL VIDE ITS ORDER DATED 28.03.2018 HAS SET ASIDE THE ISSUES RELATING TO QUANTUM ADDITION TO TH E FILE OF LD. ASSESSING OFFICER( IN SHORT AO) FOR DECIDING AFRESH AND LD. CIT(A) HAS RIGHTLY FOLLOWED THE ORDER OF THE TRIBUNAL AND DELETED THE PENALTY U/S 271(1)(C) OF THE ACT. COP Y OF THE ORDER OF THE TRIBUNAL DATED 20.03.2018 VIDE ITANO.574/IND/2016 PERTAINING TO A.Y. 2010-11 PLACED ON RECORD. 3. PER CONTRA LEARNED DEPARTMENTAL REPRESENTATIVE (IN SHORT LD. DR) FAILED TO CONTROVERT THE SUBMISSIONS M ADE BY THE LD. COUNSEL FOR THE ASSESSEE. VAJDI EDUCATIONAL SOCIETY ITANO.582/IND/2018 3 4. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE REC ORDS PLACED BEFORE US. THE REVENUES SOLE SUBSTANTIVE GROU ND IS AGAINST THE DELETION OF PENALTY LEVIED U/S 271(1)(C) O F THE ACT BY THE LD. CIT(A). WE FIND THAT THE ASSESSEE IS AN ASSOCIATION OF PERSON (TRUST). IT FILED ITS INCOME TAX RETURN ON 28.09.2012 DECLARING LOSS OF RS.3,13,683/-. CASE W AS SELECTED FOR SCRUTINY THROUGH CASS. ASSESSMENT U/S 143(3) OF THE ACT WAS FRAMED ON 27.03.2015 AFTER MAKING ADDITIONS OF RS.97,79,116/-. 5. IN THE APPEAL BEFORE THE LD. CIT(A) ASSESSEE GOT PAR T RELIEF IN THE QUANTUM ADDITIONS. LD. AO INITIATED PEN ALTY AND FINALLY LEVIED PENALTY U/S 271(1)(C) OF THE ACT AT RS.28,70,000/-. 6. ASSESSEE AGGRIEVED WITH THE ORDER OF LD. CIT(A) CONFIRMING THE ADDITIONS WENT IN APPEAL BEFORE THE TRI BUNAL AND VIDE ORDER DATED 20.03.2018 IN ITANO.574/IND/2016 THE ISSUES RELATING TO ADDITION U/S 68 OF THE ACT AT RS.48,00,000/- AND ADDITION TOWARDS DISALLOWANCE OF INTEREST PAYMENT AT RS.49,52,090/- WERE SET ASIDE TO THE FILE OF THE LD. AO FOR DECIDING AFRESH BY THE TRIBUN AL OBSERVING AS FOLLOWS: 8. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE LD. CIT(A) HAS DECIDED THE ISSUE IN PARA 5.1 OF HIS ORDER AS UNDER : VAJDI EDUCATIONAL SOCIETY ITANO.582/IND/2018 4 5.1 THE AO HAS PRIMARILY RELIED ON THE ASSESSMENT FRAMED U/S 143(3) FOR A.Y.2010-11 AND THE CLAIM OF THE APPELLANT REGARDING LOAN TAKEN FROM THE VERY SAME COMPANY I.E. M/S. JAYANT SECURITY & FINANCE LTD. WA S NOT FOUND TO BE GENUINE. MY PREDECESSOR HAD CONFIRMED T HE ABOVE ADDITION IN APPEAL NO.IT-245/12-13 VIDE ORDER DATED 20.09.2013. RESPECTFULLY, FOLLOWING THE ORDER OF MY PREDECESSOR AND THE DETAILED REASONS MENTIONED THER EIN, I HEREBY CONFIRM THE ADDITION SO MADE ON ACCOUNT OF L OAN TAKEN RS.48 LAKHS AND ON ACCOUNT OF DISALLOWANCE OF INTEREST OF RS.49,52,090/-. BOTH THE GROUNDS OF APP EALS ARE DISMISSED. 9. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT SIMILAR ADDITIONS WAS MADE IN THE A.Y. 2010-11 AS WELL AND THE TRIBUNAL IN ITANO.653/IND/2013 PERTAINING TO A.Y. 2 010-11 HAS DECIDED AS UNDER: 13. THE CONTENTION OF THE ASSESSEE IS THAT THE OPI NION OF AO THESE COMPANIES BELONG TO LUNKAD GROUP. THE ASSE SSE HAD FILED THE CONFIRMATIONS FROM THE CREDITORS, THE BALANCE SHEET, THE COPY OF BANK STATEMENT AND COPY OF INCOM E TAX RETURN OF THE SAID CREDITORS. IT IS CONTENDED ON BE HALF OF THE ASSESSEE THAT THE COMPANIES DO NOT BELONG TO LUNKAD GROUP. THE CONFIRMATION ALONG WITH BALANCE SHEET AN D THE INCOME TAX RETURNS WITH THE BANK STATEMENT WERE FIL ED IN THE CASE OF M/S. K.K. PATEL FINANCE LTD. AND M/S. J AYANT SECURITIES FINANCE LTD. AND IF THE LD. COUNSEL DREW OUR ATTENTION TO PAPER BOOK PAGE NOS. 62 TO 68 AND 95 T O 99 IN SUPPORT OF THIS CONTENTION. THERE IS NO DISPUTE WIT H REGARD TO THE FACT THAT THE LAW IS WELL SETTLED. THE ASSES SEE IS REQUIRED TO PROVE IDENTITY OF THE CREDITORS GENUINE NESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE CREDITORS. IN THE PRESENT CASE, THE REVENUE HAS DOUBTED ABOUT THE GENUINENESS OF THE TRANSACTIONS. IT IS STATED BY TH E LD. COUNSEL FOR THE ASSESSEE THAT THE COMPANY FROM WHOM LOAN WAS TAKEN DOES NOT BELONG TO THE LUNKAD GROUP WHICH WAS INVOLVED INTO THE BUSINESS OF ENTRY PROVI DING. THE COUNSEL FOR THE ASSESSEE HAS DEMONSTRATED THAT THE COMPANIES WERE HAVING SUFFICIENT AMOUNT FOR GIVING SUCH LOANS, HOWEVER, WE FIND THAT THE LD. CIT(A) DOUBTED THE VAJDI EDUCATIONAL SOCIETY ITANO.582/IND/2018 5 GENUINENESS OF THE TRANSACTIONS, ON THE BASIS THAT THE ASSESSEE HAD NO REQUIREMENT OF LOAN AS THE ASSESSEE ITSELF HAVING SUFFICIENT FUND AVAILABLE WITH IT. IN OUR VI EW THIS SUSPICION OF THE LD. CIT(A) IS JUSTIFIED, NO SANE P ERSON WOULD TAKE LOAN THUS MAKE HIMSELF LIABLE FOR INTERE ST EXPENDITURE WHEN HE IS HIMSELF HAVING SUFFICIENT FU ND, HOWEVER, CONTENTION OF THE ASSESSEE IS THAT WAS REQ UIRED FOR CONSTRUCTION OF BUILDING. WE THEREFORE, CONSIDE RING THE TOTALITY OF THE FACT, DEEM IT PROPER TO SET ASIDE T HIS ISSUE TO THE FILE OF THE AO TO VERIFY WHETHER THE COMPANIES FOR WHICH LOAN HAS BEEN TAKEN BELONG TO LUNKAD GROUP AN D GIVE A SPECIFIC FINDING WHETHER THE TRANSACTIONS IN THE QUESTION WERE EXECUTED THROUGH CIRCUITOUS ROUTE SUGGESTING THAT MONEY BELONGING TO THE ASSESSEE IS ROUTED THROUGH THE CHANNEL OF LOAN. WITH THESE OBSERVATION S THE ISSUE IS RESTORED TO THE FILE OF THE AO FOR DECISIO N AFRESH. THE GROUND NOS. 4 TO 4.2 ARE ALLOWED FOR STATISTICA L PURPOSES. WE THEREFORE, TAKING A CONSISTENT VIEW RESTORE THE ISSUES RAISED IN THERE GROUNDS TO THE FILE OF AO AND DECIDE THE S AME AFRESH IN THE LIGHT OF THE ABOVE DIRECTION IN ITANO.653/IND/2 013(SUPRA). 7. FROM PERUSAL OF THE FINDING OF THE TRIBUNAL MENTIO NED ABOVE WE FIND THAT THE QUANTUM ADDITIONS ON WHICH THE PENALTY OF RS.28,70,000/- STANDS LEVIED U/S 271(1)(C ) OF THE ACT HAS BEEN SET ASIDE FOR DECIDING AFRESH TO THE FILE OF THE LD. AO. PENALTY U/S 271(1)(C) OF THE ACT IS LEVIABLE ON THE ADDITIONS CONFIRMED IN THE HANDS OF ASSESSEE. IN THE INSTANT CASE SINCE THE QUANTUM ADDITION HAS BEEN DELETED BECAUSE THE RELEVANT ISSUES HAVE BEEN SET ASIDE TO THE FILE OF LD. AO TO DECIDING AFRESH, THEREFORE, AT THIS STAGE , PENALTY U/S 271(1)(C) OF THE ACT CANNOT BE LEVIED. TH EREFORE, VAJDI EDUCATIONAL SOCIETY ITANO.582/IND/2018 6 LD. CIT(A) HAS RIGHTLY DELETED THE PENALTY BY FOLLOW ING THE DECISION OF THE TRIBUNAL SETTING ASIDE THE QUANTUM ISSU ES TO THE FILE OF THE LD. AO FOR EXAMINING AFRESH. HOWEV ER, THE LD. AO WILL BE AT LIBERTY TO INITIATE THE PENALTY PROC EEDINGS AFRESH IN RESPECT OF THE ISSUES RESTORED TO HIM. 8 . IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISS ED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 04 .06. 2019. SD/- (KUL BHARAT) SD/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER INDORE; DATED : 04/06/2019 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR