ACIT 25(3), MUMBAI V. SADGURU ASSOCIATES, MUMBAI

ITA 6684/MUM/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87889 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 06-01-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 17-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Wrong claim

Judgement Text

, , , , , ,, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.6684/MUM/2010 ASSESSMENT YEAR: 2006-07 THE ACIT - 25(3), C-11, ROOM NO.308, PRATYAKSHA KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400067 ! ! ! ! / VS. M/S SADGURU ASSOCIATES, C/101, MANISH APARTMENT, MATHRUDAS ROAD, KANDIVALI (W), MUMBAI-400067 ( # / REVENUE) ( ! %& /ASSESSEE) P.A. NO.AAAFL1363K # ' ( ' ( ' ( ' ( / REVENUE BY : SHRI NEIL PHILIP-DR ! %& ' ( ' ( ' ( ' ( / // / ASSESSEE BY NONE ! ' &) / // / DATE OF HEARING : 06 /01/2015 *+, ' &) / DATE OF PRONOUNCEMENT : 06/01/2015 - - - - / / / / O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER : AGGRIEVED BY THE IMPUGNED ORDER DATED 30/06/2010 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI, THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL, ON THE GROUND THAT THE LD. CO MMISSIONER OF INCOME TAX (APPEALS) DELETED THE PENALTY IMPOSED U/ S 271(1)(C) OF THE ACT WITHOUT APPRECIATING THE FACTS THAT THE ASS ESSEE M/S SADGURU ASSOCIATES 2 FURNISHED INACCURATE PARTICULARS OF INCOME WITHOUT VERIFYING THE FACTS HIMSELF OR GOT THEM VERIFIED FROM THE ASSESSI NG OFFICER REGARDING THE CORRECTNESS OF CLAIM OF THE ASSESSEE FOR INTEREST PAYMENTS. 2. AT THE TIME OF HEARING, LD. DR, SHRI NEIL PHILIP , ADVANCED HIS ARGUMENTS WHICH ARE IDENTICAL TO THE GROUND RAISED BY SUBMITTING THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) NEITHER VERIFIED THE FACTS OF INTEREST PAYMENTS HIM SELF NOR ASKED THE ASSESSING OFFICER TO EXAMINE THE CORRECTNESS OF SUCH PAYMENTS. NOBODY APPEARED FOR THE ASSESSEE. WE NOT E THAT ON 19/11/2013 AND 05/05/2014, THE LD. DR WAS DIRECTED TO EFFECT SERVICE ON THE ASSESSEE. HOWEVER, NO REPORT OF SERV ICE OF NOTICE HAS BEEN BROUGHT TO OUR NOTICE BY THE DEPARTMENT, T HEREFORE, THIS APPEAL CANNOT BE KEPT PENDING INDEFINITELY, CO NSEQUENTLY, WE HAVE NO OPTION BUT TO PROCEED EX-PARTY QUA THE ASSE SSEE AND PROCEED TO DISPOSE OFF THIS APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM, AT THE RELEVANT TIM E, WAS ENGAGED IN CONSTRUCTION ACTIVITY, DECLARED INCOME OF RS.57, 09,728/- ON 30/10/2006, WHICH WAS PROCESSED UNDER SCRUTINY ASSE SSMENT AND THE RETURNED INCOME WAS ACCEPTED. SURVEY U/S 1 33A OF THE ACT WAS CARRIED OUT ON THE ASSESSEE FIRM ON 15/02/2 006, WHEREIN, THE ASSESSEE AGREED TO PAY ADVANCE TAX ON THE ESTIMATED INCOME OF RS.7,90,000/-. AT THE TIME OF SURVEY, THE ASSESSEE SUBMITTED THE TRIAL BALANCE COPY UP TO THE PERIOD OF SURVEY AND AS PER THE ASSESSEE, IT AGREED TO PAY AD VANCE TAX AND NOT THE FINAL TAX ON THIS AMOUNT. THE STAND OF THE ASSESSEE M/S SADGURU ASSOCIATES 3 BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS THAT NEITHER THERE WAS CONCEALMENT OF INCOME NOR FURNISH ING OF INACCURATE PARTICULARS, THEREFORE, PENALTY IS NOT L EVIABLE U/S 271(1)(C) OF THE ACT. WE ARE REPRODUCING HEREUNDE R THE RELEVANT PORTION FROM THE IMPUGNED ORDER:- 4. I HAVE CONSIDERED THE SUBMISSIONS OF THE REPRES ENTATIVE AND THE STAND TAKEN BY THE A.O. A PERUSAL OF PROVISIONAL P& L ACCOUNT AND FINAL P&L ACCOUNT SHOWS THAT THE DIFFERENCE WAS MAI NLY ON ACCOUNT OF ENHANCED INTEREST ON LOAN FROM RS.8,23,769/- TO 29,92,638/-. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THE A.O. HAS NOT GIVEN ANY SPECIFIC FINDING REGARDING CORRECTNESS OF THE CLAIM OF THIS INTEREST. HE HAS FRAMED THE ASSESSMENT ORDER SOLELY ON THE BA SIS OF ADMISSION OF THE APPELLANT AT THE TIME OF SURVEY WI THOUT EXAMINING THE REASON FOR THE DIFFERENCE BETWEEN THE PROVISION AL P&L ACCOUNT AND FINAL P&L ACCOUNT. A PERUSAL OF THE PENALTY ORD ER ALSO SHOWS THAT THE A.O. DID NOT GIVE ANY FINDING REGARDING CO RRECTNESS OF CLAIM OF ENHANCED INTEREST EVEN THOUGH IT WAS CONTENDED B EFORE THE A.O. THAT DUE TO ENTRIES MADE A~ THE END OF THE YEAR, TH ERE WAS DIFFERENCE IN THE INCOME OFFERED. THE A.O. DID NOT EXAMINE THE CLAIM OF ENTRIES MADE AT THE END OF THE YEAR REGARDING EN HANCED INTEREST ON LOAN IN THE ABSENCE OF WHICH THE PENALTY IMPOSED CANNOT BE UPHELD. IT IS SEEN THAT THE APPELLANT IS LIABLE TO GET HIS BOOKS OF ACCOUNT AUDITED U/S. 44AB AND THE AUDIT REPORT HAS BEEN FILED ALONGWITH THE RETURN OF INCOME IN CASE THE INTEREST CLAIMED IS NOT CORRECT THERE WOULD BE SOME REMARKS IN RESPECT OF T HE SAME IN THE AUDIT REPORT. A PERUSA1 OF LEDGER OF INTEREST ON LO AN SHOWS THAT THE FOLLOWING ENTRIES WERE MADE AFTER 15.2.2006 DATE PARTICULARS BROUGHT FORWARD VCH TYPE VCH NO. DEBIT CREDIT 25.3.2006 (AS PER DETAILS VINITA BIYANI SATYA NARAYAN BIHANI PREMLATA BIYANI BEING INTERST ON LOAN TILL 20/01/2006 9,699 CR. 14,548 CR. 9,699 CR. 9,699 CR. JOURNAL 550 43,645.00 ---- 31.3.2006 (AS PER DETAILS NANDLAL B CHOUHAN 6,66,568 CR. JOURNAL 555 321,25,224 ------ M/S SADGURU ASSOCIATES 4 PRANGNABEN C CHOUHAN AMIT & ASSOCIATES AMITBHAI SHAH- HUF JITENDRA S. SHAH-HUF KIRIT S SHAH-HUF BEING AMT WITH INTEREST 46,000 CR. 7,10,402 CR. 1,03,896 CR. 2,99,178 CR. 2,99,180 CR. 29,92,638 29,92,638 CLOSING BALANCE 29,92,638 29,92,638 FROM THE ABOVE, IT IS CLEAR THAT THE DIFFERENCE WAS ONLY ON ACCOUNT OF INTEREST DEBITED AFTER 15.2.2006 AND THE A.O. NE VER BOTHERED TO EXAMINE THIS EITHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR PENALTY PROCEEDINGS. THE A.O, OUGHT TO HAVE EXAMINE D THE REASON FOR THE DIFFERENCE IN THE INTEREST CLAIMED AND SCRU TINIZED THE CORRECTNESS OF THE CLAIM WHICH WAS NOT DONE. FURTHE R AS SEEN FROM THE TAX AUDIT REPORT, THE APPELLANT HAS DEDUCTED TA X AT SOURCE WHEREVER APPLICABLE AS PER COI.27(A) OF THE TAX AU DIT REPORT. IN THE CIRCUMSTANCES, THERE IS NO REASON TO DOUBT THE GENU INENESS OF CLAIM OF ENHANCED INTEREST BY THE APPELLANT WHICH ARE SUP PORTED BY THE ENTRIES IN THE BOOKS OF ACCOUNTS AND TAX AUDIT REPO RT. THE ADDITION WAS MADE MERELY ON THE BASIS OF DISCUSSION AT THE T IME OF SURVEY. IN VIEW OF THE ABOVE DISCUSSION, I FIND THAT EVEN T HOUGH THE APPELLANT ACCEPTED THE ASSESSMENT ORDER WITHOUT FIL ING APPEAL, THERE IS NO CASE FOR PENALTY AS IT CANNOT BE SAID T HAT HE ENHANCED CLAIM OF INTEREST WAS A FALSE OR BOGUS CLAIM. THE A .O. NEITHER IN THE ASSESSMENT ORDER NOR IN THE PENALTY ORDER HAS ATTEM PTED TO BRING ON RECORD ANY MATERIAL TO SHOW THAT THE CLAIM OF EN HANCED INTEREST AS PER THE FINAL P &L ACCOUNT FILED ALONGWITH THE RE URN OF INCOME WAS NOT CORRECT. FOR LEVYING CONCEALMENT PENALTY, T HE A.O. HAS TO PROVE THAT THE CLAIM OF THE APPELLANT WAS FACTUALLY INCORRECT AND MERELY BECAUSE ADDITION IS 'NODE WHICH IS ACCEPTED BY THE APPELLANT. CONCEALMENT PENALTY CANNOT BE IMPOSED. T HE CLAIM OF ENHANCED INTEREST IS SUPPORTED BY ENTRIES IN THE BO OKS OF ACCOUNTS AND TAX AUDIT REPORT WHICH HAS NOT BEEN PROVED FALS E BY THE A.O. M/S SADGURU ASSOCIATES 5 THERE IS NO SPECIFIC FINDING IN THE ASSESSMENT ORDE R OR IN THE PENALTY ORDER TO HOLD THAT THE APPELLANT SUPPRESSED ITS INCOME BY CLAIMING BOGUS INTEREST. THE ADDITION WAS MADE MERE LY ON THE BASIS OF ADMISSION AT THE TIME OF SURVEY. IN VIEW O F THE ABOVE DISCUSSION, I FIND THAT THERE IS NO JUSTIFICATION F OR LEVY OF CONCEALMENT PENALTY AND THE SAME IS CANCELLED. 5. IN THE RESULT, THE APPEAL IS ALLOWED. 2.2. TOTALITY OF FACTS, AND THE FACTUAL FINDING RECORDED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CLEARL Y INDICATES THAT THE PROVISIONAL AND FINAL PROFIT AND LOSS ACCO UNT SHOWS THAT THE DIFFERENCE WAS MAINLY ON ACCOUNT OF ENHANCED IN TEREST ON LOAN FROM RS.8,23,769/- TO RS.29,92,638/- FOR WHICH NO FINDING WITH RESPECT TO ITS CORRECTNESS HAS BEEN MENTIONED BY THE ASSESSEE FOR THE CLAIM OF THE INTEREST. IT SEEMS T HAT THE ASSESSING OFFICER HAS MERELY CONCLUDED ON THE BASIS OF ADMISSION OF THE ASSESSEE, MADE DURING SURVEY, THAT TOO WITHOUT EXAMINING THE ACTUAL ACCOUNTS. EVEN NO REASONABLE FINDING REGARDING THE CORRECTNESS OF CLAIM OF ENHANCED INTE REST HAS BEEN MENTIONED IN PENALTY ORDER. EVEN, THE ASSESSING OFF ICER DID NOT EXAMINE THE CLAIM OF ENTRIES MADE BY THE ASSESSEE A T THE END OF THE YEAR REGARDING ENHANCED INTEREST ON LOAN; CONSE QUENTLY, WE FIND THAT NEITHER THE FACTUM OF CONCEALMENT NOR FUR NISHING OF INACCURATE PARTICULARS OF ITS INCOME HAS BEEN PROVE D BY THE ASSESSING OFFICER. THUS, IT CAN BE CONCLUDED THAT IT CANNOT BE A GOOD CASE FOR IMPOSING PENALTY U/S 271(1)(C) BECAUS E THE DIFFERENCE WAS ON ACCOUNT OF INTEREST DEBITED AFTER 15/02/2006 WHICH WAS ALSO NOT EXAMINED BY THE ASSESSING OFFICE R NEITHER DURING ASSESSMENT PROCEEDINGS NOR AT THE TIME OF PE NALTY PROCEEDINGS. IT IS ALSO SEEN THAT IN ITS AUDIT REP ORT TAX AT SOURCE HAS BEEN DEDUCTED BY THE ASSESSEE WHEREVER APPLICAB LE AS IS M/S SADGURU ASSOCIATES 6 EVIDENT FROM COLUMN 27(A) OF THE TAX AUDIT REPORT. IN VIEW OF THIS FACT, WE FIND NO INFIRMITY IN THE CONCLUSION D RAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FOR DELETING THE PENALTY IMPOSED U/S 271(1)(C) OF THE ACT. THE IMPUGNED ORD ER IS AFFIRMED. RESULTANTLY, THE APPEAL OF THE REVENUE IS DISMISSED . % &. # ' %# ' #& /0 THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. DR AT THE CONCLUSION OF THE HEARING ON 06/01/2015. - ' *+, 1!. 06/01/2015 + ' 7 SD/- SD/- (SANJAY ARORA) (JOGINDER SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 1! DATED : 06/01/2015 F{X~{T? P.S/. !.. - ' 9&: ;:,& - ' 9&: ;:,& - ' 9&: ;:,& - ' 9&: ;:,&/ COPY OF THE ORDER FORWARDED TO : 1. <= / THE APPELLANT 2. 9><= / THE RESPONDENT. 3. ? ( ) / THE CIT, MUMBAI. 4. ? / CIT(A)- , MUMBAI 5. :A7 9&! , , / DR, ITAT, MUMBAI 6. 7B C / GUARD FILE. -! -! -! -! / BY ORDER, >:& 9& //TRUE COPY// D DD D/ // // # / # / # / # (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI