ITO, Ludhiana V. M/s Eastman Industries, Ludhiana

ITA 639/CHANDI/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51429 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-08-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 06-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY SHARMA
• Keywords: Business income
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NOS. 638 & 639/CHD/2011 ASSESSMENT YEARS: 2000-01 & 2005-06 THE ITO, VS. M/S EASTMAN INDUSTRIES, WARD 1(1), LUDHIANA LUDHIANA PAN NO. AAAFE3411B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJAY SHARMA RESPONDENT BY : SHRI ASHWANI KUMAR DATE OF HEARING : 24.08.2011 DATE OF PRONOUNCEMENT : 26.08.2011 ORDER PER SUSHMA CHOWLA, JM BOTH THE APPEALS BY THE REVENUE ARE AGAINST THE SEP ARATE ORDERS OF CIT(A)-1, LUDHIANA BOTH DATED 4.3.2011 RELATING TO ASSESSMENT YEARS 2000-01 & 2005-06 AGAINST THE LEVY OF PENALTY UNDE R SECTION 271 (1)(C) OF THE I.T. ACT, 1961. 2. THE REVENUE HAS RAISED THE FOLLOWING COMMON GRO UND OF APPEAL IN BOTH THE ASSESSMENT YEARS:-. 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE PENALTY LEVIED U/S 271 (1)(C) BY ASSES SING OFFICER ON INTEREST RECEIVED FROM BANKS WHICH WAS CLAIMED AS BUSINESS INCOME INSTEAD OF INCOME FR OM OTHER SOURCES BY FURNISHING INACCURATE PARTICULARS OF 2 INCOME WHEN THE ASSESSEE HAS CLEARLY MISREPRESENTED THE FACTS AND SET OFF B/S BUSINESS LOSS AGAINST THIS IN COME. 3. BOTH THE APPEALS OF THE REVENUE RELATING TO SAME ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 4. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT TH E ASSESSEE HAD DECLARED THE INTEREST RECEIVED FROM THE BANK AS BU SINESS INCOME WHICH WAS ASSESSED AS INCOME FROM OTHER SOURCES BY THE ASSESSING OFFICER. THE ASSESSING OFFICER LEVIED PENALTY U/S 271 (1)(C) OF THE ACT FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. TH E LD. AR FURTHER POINTED OUT THAT THE ISSUE IN THE PRESENT APPEAL ST AND COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEE OWN CASE RELATING TO ASSESSMENT YEAR 2003-04 WHEREIN ON SIMILAR ISSUE THE PENALTY LEVIED U/S 271 (1)(C) OF THE ACT WAS DELETED. THE LD. DR FOR THE REVENUE PLACE D RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. 5. A REFERENCE IS BEING MADE TO THE FACTS RELATING TO ASSESSMENT YEAR 2001-02 IN ORDER TO ADJUDICATE THE ISSUE RAISED IN BOTH THE APPEALS BEFORE US. THE ASSESSEE HAD SHOWN INCOME FROM INTEREST REC EIPT FROM OTHER PARTIES AT RS. 69,29,379/- AND INTEREST RECEIVED FR OM THE BANK ON FDRS AT RS. 25,65,289/-. THE ASSESSEE WAS SHOW CAUSED BY T HE ASSESSING OFFICER AS TO WHY THE SAID INCOME SHOULD NOT BE ASSESSED AS INCOME FROM OTHER SOURCES. REJECTING THE EXPLANATION OF THE ASSESSEE , THE ASSESSING OFFICER INCLUDED THE SAID INCOME IN THE HEAD INCOM E FROM OTHER SOURCES AS AGAINST INCOME FROM BUSINESS AND PROFESSION RETU RNED BY THE ASSESSEE. IN THE PENALTY PROCEEDINGS INITIATED U/S 271 (1)(C) OF THE ACT, THE 3 ASSESSING OFFICER NOTED THAT THE CIT(A) HAD UPHELD THE ORDER OF ASSESSING OFFICER. THE ASSESSEE WAS HELD TO HAVE FU RNISHED INACCURATE PARTICULARS OF INCOME AND PENALTY OF RS. 8,97,851/- WAS LEVIED U/S 271 (1)(C) OF THE ACT. THE CIT(A) FOLLOWING THE ORDER IN ASSESSMENT YEARS 2002-2003 AND 2004-05 PASSED BY CIT(A) DELETED THE PENALTY U/S 271 (1)(C) OF THE ACT. 6. WE FIND THAT THE TRIBUNAL IN ITA NO. 142/CHD/201 0 RELATING TO ASSESSMENT YEAR 2003-04 VIDE ORDER DATED 28.2.2011 ON SIMILAR ISSUE RAISED UNDER WHICH THE INTEREST INCOME WAS ASSESS ED AS INCOME FROM OTHER SOURCE AS AGAINST INCOME RETURNED AS BUSINE SS INCOME HAD DELETED THE PENALTY HOLDING AS UNDER:- 7. WE HAVE HEARD BOTH THE PARTIES. IT IS A CASE WHERE THE ASSESSING OFFICER HAS MERELY CHANGED HEAD UNDER WHICH INTEREST INCOME WAS TAXABLE AND ALSO DISALLOWED EXPENSES CLAIMED BY THE ASSESSEE. THE AFORESAID ACTIONS WERE TAKEN PURSUANT TO THE DETAIL S FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFI CER. IT IS NOT THE CASE OF THE DEPARTMENT THAT ASSESSEE HAS EITHER CONCEALED ANY PARTICULAR OF ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME, WHICH W ERE MATERIAL TO THE COMPUTATION OF ITS TOTAL INCOME. M ERE CHANGE OF HEAD UNDER WHICH INCOME IS TAXABLE OR MER E DISALLOWANCE OF SOME EXPENSES CANNOT ATTRACT LEVY O F PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT. IN OU R VIEW, THE LEARNED CIT(APPEALS) HAS RIGHTLY APPRECIA TED THE FACTS OF THE CASE AND CANCELLED THE IMPUGNED PENALTY. WE ARE IN AGREEMENT WITH HIS ORDER. APPE AL FILED BY THE DEPARTMENT IS DISMISSED. 7. THE FACTS OF THE PRESENT CASE BEFORE US ARE IDEN TICAL TO THE FACT BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2003-04. DURING THE YEAR UNDER CONSIDERATION ADMIT TEDLY, IT WAS NOT THE CASE OF THE DEPARTMENT THAT THE ASSESSEE HAD NOT FU RNISHED THE MATERIAL FACTS WHICH WERE NECESSARY FOR THE COMPUTATION OF I TS TOTAL INCOME. 4 MERELY BECAUSE THE INCOME WAS HELD TO BE TAXABLE UN DER A DIFFERENT HEAD OF INCOME THAN RETURNED BY THE ASSESSEE DOES NOT MA KE THE ASSESSEE EXIGIBLE TO LEVY OF PENALTY U/S 271 (1)(C) OF THE A CT. ACCORDINGLY, WE ARE IN AGREEMENT WITH THE ORDER OF THE CIT(A) AND U PHOLD THE DELETION OF PENALTY LEVIED U/S 271 (1)(C) OF THE ACT. 8. THE FACTS RAISED IN ASSESSMENT YEAR 2005-06 ARE IDENTICAL TO THE FACTS RAISED IN ASSESSMENT YEAR 2000-01 AND FOLLOWI NG OUR DECISION IN THE SAID APPEAL, WE UPHOLD THE ORDER OF THE CIT(A) IN DELETING THE PENALTY LEVIED UNDER SECTION 271 (1)(C) OF THE ACT. 9. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF AUGUST, 2011. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 26 TH AUGUST, 2011 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH