Latha Hospitals Pvt., Ltd., Visakhapatnam V. THE DCIT, Visakhapatnam

ITA 649/VIZ/2014

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9884 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 18-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M. BHUPAL REDDY
• Keywords: Bonafide belief
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 143(1)

Judgement Text

ITA NO.649/VIZAG/2014 LATA HOSPITALS PVT. LTD., VISAKHAPATNAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.649/VIZAG/2014 ( / ASSESSMENT YEAR: 2010-11) LATA HOSPITALS PVT. LTD., VISAKHAPATNAM VS. DCIT, CIRCLE - 3(1), VISAKHAPATNAM [PAN: AAACL2999J ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI I. KAMASASTRY, AR / RESPONDENT BY : SHRI M. BHUPAL REDDY,DR / DATE OF HEARING : 17.06.2016 / DATE OF PRONOUNCEMENT : 09.09.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A), VISAKHAPATNAM DATED 20.10.2014 FOR THE ASSE SSMENT YEAR 2010-11. ITA NO.649/VIZAG/2014 LATA HOSPITALS PVT. LTD., VISAKHAPATNAM 2 2. FACTS ARE IN BRIEF THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF RUNNING A HOSPITAL AND HAS FILED ITS E- RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11 DECLARING A TOTAL LOSS OF ` 38,08,548/-. THE RETURNED FILED BY THE ASSESSEE WAS PROCESSED IN ITIALLY U/S 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'TH E ACT') AND AFTER DUE PROCESS, ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. HAS OBSE RVED THAT THE ASSESSEE COMPANY IN ITS SCHEDULE 16 OF PROFIT & LOS S ACCOUNT HAS DEBITED AN AMOUNT OF ` 38,46,611/- TOWARDS INTEREST PAID TO APSFC, BY ISSUING A SHOW CAUSE NOTICE, THE DETAILS FOR THE A BOVE PAYMENTS WERE CALLED FOR. ON GOING THROUGH THE STATEMENT OF ACCO UNT, IT IS OBSERVED THAT DURING THE FINANCIAL YEAR 2009-10, THE ASSESSE E HAS PAID ONLY AN AMOUNT OF ` 19,68,980/- TOWARDS INTEREST PAID TO APSFC, BUT HA S CLAIMED AN AMOUNT OF ` 38,46,611/-. BUT, AS PER THE PROVISIONS OF SECTION 43B(D) OF THE ACT, ANY SUM PAYABLE BY THE ASSESSEE AS AN INTEREST ON ANY LOAN OR BORROWING FROM ANY PUBLIC F INANCIAL INSTITUTION SHALL BE ALLOWED ONLY IN COMPUTING THE INCOME REFER RED TO SECTION 28 OF THAT PREVIOUS YEAR IN WHICH SUCH SUM IS ACTUALLY PA ID. ACCORDINGLY, AN AMOUNT OF ` 19,68,980/- IS ALLOWED AND REMAINING BALANCE OF ` 18,77,631/- IS DISALLOWED AND ADDED BACK TO THE TOT AL INCOME OF THE ASSESSEE. SUBSEQUENTLY, THE A.O. HAS INITIATED THE PENALTY PROCEEDINGS ITA NO.649/VIZAG/2014 LATA HOSPITALS PVT. LTD., VISAKHAPATNAM 3 U/S 271(1)(C) OF THE ACT AND LEVIED PENALTY BY OBSE RVING THAT THE ASSESSEE TRIED TO EVADE THE INCOME TAX WHICH WOULD BE THE BASIS FOR THE LEVY OF PENALTY, ACCORDINGLY, PENALTY WAS LEVIED ON ACCOUNT OF DISALLOWANCE OF INTEREST OF ` 18,77,631/- AND ALSO ON ACCOUNT OF UNSECURED LOANS OF ` 57,22,918/-. 3. ON BEING AGGRIEVED, ASSESSEE CARRIED MATTER IN A PPEAL BEFORE THE TRIBUNAL. 4. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED T HAT, THE ASSESSEE HAS TO PAY AN INTEREST OF ` 38,46,611/- TO THE APFSC AND ONLY AN AMOUNT OF 19,68,980/- WAS PAID. HOWEVER, THE ASSES SEE, IN A BONAFIDE BELIEF, CLAIMED AN AMOUNT OF ` 38,46,611/-, WHICH IS ALLOWABLE AS PER SECTION 43B(D) OF THE ACT AND SUBMITTED THAT THE AS SESSEE FILED ALL THE DETAILS AND THE ASSESSEE NEITHER CONCEALED THE INCO ME NOR FILED INACCURATE PARTICULARS. THE ONLY CLAIM MADE BY THE ASSESSEE IS EXCESSIVE AND WHICH IS UNDER BONAFIDE BELIEF, THERE FORE, PENALTY PROVISIONS CANNOT BE ATTRACTED. 5. ON THE OTHER HAND, THE LD. D.R. SUPPORTED THE OR DER PASSED BY THE AUTHORITIES BELOW. ITA NO.649/VIZAG/2014 LATA HOSPITALS PVT. LTD., VISAKHAPATNAM 4 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ONLY ISSUE BEFORE US FOR CONSIDERATION IS WHETHER T HE ASSESSEE EITHER CONCEALED THE INCOME OR FILED INACCURATE PARTICULAR S IN RESPECT OF ` 18,77,631/-. THE ASSESSEE IS IN THE BUSINESS OF R UNNING HOSPITALS. THE ASSESSEE COMPANY HAS TO PAY AN INTEREST OF ` 38,46,611/- TO APSFC. THE ASSESSEE ACTUALLY PAID AN AMOUNT OF ` 19,68,980/-, HOWEVER, IT HAS CLAIMED ENTIRE AMOUNT OF ` 38,46,611/- AS PER SECTION 43B(D) OF THE ACT. IN THE ASSESSMENT ORDER, THE A.O. HAS DISALLOWED TH E AMOUNT WHICH IS NOT ACTUALLY PAID OF ` 18,77,631/- AND SAME IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ASSESSEE ACCEPTED IT AND NO APPEA L WAS CARRIED. SUBSEQUENTLY, THE A.O. HAS INITIATED THE PENALTY PR OCEEDINGS AND ALSO IMPOSED PENALTY BY OBSERVING THAT THE ASSESSEE TRIE D TO EVADE THE INCOME TAX PAYMENT AND PENALTY LEVIED. ON APPEAL, THE LD. CIT(A) HAS ALSO CONFIRMED THE SAME. 7. AFTER CAREFUL CONSIDERATION OF THE ORDERS PASSED BY THE AUTHORITIES BELOW, WE FIND FROM THE PENALTY ORDER THAT THE A.O. HAS NOT GIVEN ANY FINDING THAT THE ASSESSEE EITHER CONCEALED THE INCO ME OR FILED INACCURATE PARTICULARS. IT IS ONLY OBSERVATION OF THE A.O. TH AT THE ASSESSEE TRIED TO EVADE THE TAX. THE CIT(A) HAS ALSO NOT GIVEN ANY F INDING THAT THE ITA NO.649/VIZAG/2014 LATA HOSPITALS PVT. LTD., VISAKHAPATNAM 5 ASSESSEE HAS EITHER CONCEALED THE INCOME OR FILED I NACCURATE PARTICULARS. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT THE ASSESSEE NEITHER CONCEALED THE INCOME NOR FILED INACCURATE PARTICULARS. THE ASSESSEE HAS TO PAY INTEREST OF ` 38,46,611/- TO THE APSFC. HE HAS ALREADY PAID AN AMOUNT OF ` 19,68,980/-. THE BALANCE AMOUNT PAYABLE IS ` 18,77,631/-. ACCORDING TO THE ASSESSEE, HE IS ENTITLED TO CLAIM A BENEFIT U/S 43B(D) OF THE ACT F OR ENTIRE AMOUNT, WHICH IS PAYABLE TO APSFC. THEREFORE, THE ASSESSEE FILED ALL THE DETAILS BEFORE THE A.O. AND UNDER BONAFIDE BELIEF, HE HAS CLAIMED EXCESS RELIEF WHICH IS NOT PERMISSIBLE IN ACCORDANCE WITH LAW. THUS, PENA LTY PROVISIONS SHOULD NOT BE ATTRACTED TO THE ASSESSEE. 8. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 150 HAS CONSIDERED THE SCOPE OF SECTION 271(1)(C) OF THE ACT AND OBSERVED THAT A M ERE MAKING OF CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO INACCURAT E PARTICULARS. THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPEN DITURE AS WELL AS INCOME IN THE RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INCORRECT NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. ITA NO.649/VIZAG/2014 LATA HOSPITALS PVT. LTD., VISAKHAPATNAM 6 IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN RETURN OR NOT. MERELY BECAUSE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTABLE OR WAS NOT ACCEPTABLE TO THE REVENUE, TH AT BY ITSELF WOULD NOT ATTRACT THE PENALTY U/S 271(1)(C) OF THE ACT. THE ABOVE DECISION OF THE HONBLE SUPREME COURT SQUARELY APPLIES TO THE F ACTS OF THE PRESENT CASE. 9. IN THE CASE OF ACIT VS. VARUN PIN STOCK PVT. LTD. (2010) 5 ITR (TRIB) WHEREIN THE TRIBUNAL HAS OBSERVED THAT WHEN THE A SSESSEE GENUINELY MAKES A CLAIM FOR A PARTICULAR DEDUCTION BY DISCLOSING ALL NECESSARY FACTS RELATING TO IT, IT CANNOT BE RECORD ED TO BE CONCEALMENT EVEN IF ASSESSEES CLAIM IS REJECTED. THIS IS A SE TTLED LAW THAT PENALTY PROCEEDINGS ARE DIFFERENT FROM THE ASSESSMENT PROCE EDINGS AND THEREFORE IF ANY ADDITION IS MADE, IT DOES NOT MEAN THAT PENALTY AUTOMATICALLY BE LEVIED. 10. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE BY FOLLOWING THE JUDGEMENT OF THE HONBLE SUPREME COUR T IN THE CASE OF RELIANCE PETRO PRODUCTS (SUPRA), WE HOLD THAT THIS IS NOT A FIT CASE TO IMPOSE PENALTY U/S 271(1)(C) OF THE ACT. ACCORDING LY, THE PENALTY LEVIED IS CANCELLED AND APPEAL FILED BY THE ASSESSEE IS AL LOWED. ITA NO.649/VIZAG/2014 LATA HOSPITALS PVT. LTD., VISAKHAPATNAM 7 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 9 TH SEPT16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 09.09.2016 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT LATA HOSPITALS PVT. LTD., 10-51- 1, CBM COMPOUND, VISAKHAPATNAM 2. / THE RESPONDENT THE DCIT, CIRCLE-3(1), VISAKHAP ATNAM 3. ) / THE CIT, VISAKHAPATNAM 4. ) ( ) / THE CIT(A), VISAKHAPATNAM 5. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM