M/s Preet Land Promoters & Developers Pvt. Ltd., Mohali V. DCIT, Mohali

ITA 677/CHANDI/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5769 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 19-11-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 01-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N D GUPTA
• Keywords: Bonafide belief
• Section: 271(1)(c)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH , ! '# $ % & '# , () BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO. 677/CHD/2016 / ASSESSMENT YEAR : 2009-10 M/S PREET LAND PROMOTERS & DEVELOPERS PVT LTD., VILL NANU MAJRA SECTOR 86, MOHALI VS. THE DCIT, CIRCLE-6,(1) MOHALI ./PAN NO: / APPELLANT /RESPONDENT ! /ASSESSEE BY : SH. VINEET KRISHAN, ADVOCATE ' ! / REVENUE BY : SH. N.D. GUPTA, SR. DR # $ % /DATE OF HEARING : 11.12.2018 &'() % / DATE OF PRONOUNCEMENT : 11.12.2018 (*/ ORDER PER ANNAPURNA GUPTA, A.M.: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 07.03.2016 OF THE COMMISSIONER OF INCOM E TAX(APPEALS)-2, CHANDIGARH [HEREINAFTER REFERRED TO AS CIT(A)] AGITATING THE LEVY OF PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 ( IN SHORT 'THE ACT'). 2. IN THIS CASE, THE ASSESSING OFFICER DURING THE A SSESSMENT PROCEEDINGS FOUND THAT THE ASSESSEE HAD SET OF INTEREST INCOME EARNED FROM THE FDRS AGAINST THE PROJECT EXPENSES. HE OBSERVED THAT THE EXPENDITURE RELATING TO THE PROJECT WAS REQUIRED TO BE CAPITALIZED AND THA T THE ASSESSEE WAS NOT ENTITLED TO SET OFF THE INTEREST INCOME AGAINST THE PROPERTY EXPENDITURE. HE, ITA NO. 677-CHD-2016- M./S PREET LAND PROMOTERS & DEVELOPERS PVT.LTD, MOH ALI 2 THEREFORE, DISALLOWED THE AFORESAID CLAIM OF THE AS SESSEE TREATING THE INTEREST INCOME SEPARATELY UNDER THE HEAD INCOME F ROM OTHER SOURCES AND ALLOWED THE ASSESSEE TO CARRY FORWARD THE EXPENDITU RE RELATING TO THE PROJECT TILL THE COMPETITION OF THE PROJECT. THE AS SESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT FOR CL AIMING WRONG DEDUCTION / SET OFF OF EXPENDITURE AND, THEREBY, LEVIED THE I MPUGNED PENALTY. 3. THE ASSESSEE UNSUCCESSFULLY CONTESTED THE APPEAL BEFORE THE LD. CIT(A). 4. BEFORE US, LD. COUNSEL FOR THE ASSESSEE HAS INV ITED OUR ATTENTION TO THE PARA 6.2 OF THE ORDER OF THE CIT(A) AND SUBMITT ED THAT, IN FACT, THE ASSESSEE HAD TAKEN OVER DRAFT LIMIT FROM BANK. THE ASSESSEE INCURRED INTEREST EXPENDITURE ON THE UTILIZATION OF THE AMOU NT OUT OF THE SAID OVER DRAFT LIMIT. THE SAID AMOUNT WAS USED FOR THE PURPO SE OF PROJECT ONLY. THE ASSESSEE TO MAINTAIN THE SAID OVER DRAFT LIMIT HAD TO FURNISH SECURITY TO THE BANK IN THE SHAPE OF THE FDR UPON WHICH INTEREST IN COME WAS EARNED. THE ASSESSEE WAS OF THE BONAFIDE BELIEF THAT THE INTERE ST INCOME EARNED WAS ELIGIBLE FOR SET OFF AGAINST THE EXPENDITURE INCLUD ING THAT ONE SPENT ON THE OVERDRAFT LIMIT. IT HAS BEEN PLEADED THAT THE AFORE SAID CLAIM OF THE ASSESSEE WAS A BONAFIDE CLAIM AND THERE WAS NO INTENTION TO EVADE THE TAX. THE LD. COUNSEL HAS SUBMITTED THAT EVEN OTHERWISE NON-ALLOW ANCE OF SET OFF OF THE INTEREST INCOME WOULD GO TO INCREASING THE CLAIMED EXPENDITURE WHICH THE ASSESSEE OTHERWISE WOULD HAVE BEEN ENTITLED TO CLA IM ON OFFERING INCOME FROM THE PROJECT AT THE COMPLETION STAGE. HE, THERE FORE, HAS SUBMITTED THAT THE ASSESSEE HAD NO INTENTION TO FURNISH THE INACCU RATE PARTICULARS OF INCOME OR CONCEAL ITS INCOME. ITA NO. 677-CHD-2016- M./S PREET LAND PROMOTERS & DEVELOPERS PVT.LTD, MOH ALI 3 5. CONSIDERING THE ABOVE SUBMISSIONS OF THE ASSES SEE , WE ARE OF THE VIEW THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AS THE ASSESSEE HAS PROVED HIS BONAFIDE FOR THE CLAIM OF THE AFORESAID SET OFF OF INTEREST INCOME. IT HAS BEEN HELD TIME AND AGAIN THAT EVERY DISALLOWANCE MADE BY THE ASSESSING OFFICER DOES NOT SUO MOTO ATT RACT PENALTY PROVISIONS. CONSIDERING THE OVERALL FACTS OF THE CASE, WE ARE O F THE VIEW, THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE A CT AND THE SAME IS ORDERED TO BE DELETED. THE APPEAL OF THE ASSESSEE IS THEREFORE, ALLOWED. ORDER DICTATED AND PRONOUNCED IN THE OPEN COURT IM MEDIATELY ON COMPLETION OF HEARING. SD/- SD/- ( / SANJAY GARG) $ % & '# / ANNAPURNA GUPTA) / JUDICIAL MEMBER () / ACCOUNTANT MEMBER DATED : 11.12 .2018 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR