M/s Moti Ram Munna Lal & Sons Rice Mills, Patiala V. ITO, Nabha

ITA 71/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73562 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 10-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Assessee Lawyers: N K SHAHI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.71 /CHD/2014 ASSESSMENT YEAR : 2007-08 MOTI RAM MUNNA LAL & SONS RICE MILLS, VS. THE INC OME TAX OFFICER, ROHIT BRIDGE, NABHA , NABHA. DISTT. PATIALA. PAN: AAHFM8651N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K.SHAHI RESPONDENT BY : SHRI J.S.NAGAR, DR DATE OF HEARING : 10.03.2014 DATE OF PRONOUNCEMENT : 20.03.2014 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), PATIALA DATED 31.12.2013 RELATING TO ASSESSMENT YEAR 2007-08 AGAINST THE PEN ALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN S HORT THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL: 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW I N CONFIRMING THE PENALTY IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 ON DISALLOWANCE MADE U/S 36(1)(III) OF THE ACT. 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT ON DISALL OWANCE OF INTEREST UNDER SECTION 36(1)(III) OF THE ACT. 4. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSING OFFICER 2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD DIS ALLOWED INTEREST RELATABLE TO INTEREST FREE ADVANCES MADE BY THE ASS ESSEE AS ASSESSEE HAD BORROWED INTEREST BEARING FUNDS. THE SAID ADDITION WAS UPHELD BY THE CIT (APPEALS) AND ALSO BY THE TRIBUNAL IN ASSESSEE S OWN CASE IN ITA NO.1003/CHD/2010 VIDE ORDER DATED 19.10.2010. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT ON SAID DISALLOWANCE OF INTEREST UNDER SECT ION 36(1)(III) OF THE ACT. 5. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT TH AT THE ISSUE IN THE PRESENT APPEAL IS COVERED BY THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT-III, LUDHIANA VS. TRIDENT INFOTECH CORPN. LTD. REPORTED IN (2013) 34 TAXMAN 132 (P&H). 6. THE ISSUE ARISING BEFORE US IS IN RELATION TO LE VY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD BORROWED FUNDS ON INTEREST AND ON THE OTHER HAND, HAD MADE INTEREST FEE ADVANCES. IN VIEW OF THE RATIO L AID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. ABHI SHEK INDUSTRIES [286 ITR 1 (P&H), THE INTEREST RELATABLE TO SUCH IN TEREST FREE ADVANCES WERE NOT ALLOWED AS DEDUCTION IN THE HANDS OF THE A SSESSEE RESULTING IN DISALLOWANCE OF INTEREST AT RS.5,53,126/- UNDER SEC TION 36(1)(III) OF THE ACT. THE SAID DISALLOWANCE WAS MADE IN THE HANDS O F THE ASSESSEE IN VIEW OF THE RATIO LAID DOWN BY THE JURISDICTIONAL H IGH COURT AND THE ISSUE ARISING IN THE PRESENT APPEAL IS WHETHER ON S UCH ADDITION BEING MADE IN THE HANDS OF THE ASSESSEE, IT COULD BE HELD THAT THE ASSESSEE HAD EITHER CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. WE FIND THAT THE HON'BLE PUNJAB & HARYANA HIGH COURT CIT-III, LUDHIANA VS. TRIDENT INFOTECH CORPN. LTD. (SUPRA) H AVE LAID DOWN THE PROPOSITION THAT NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE 3 IN CASES WHERE DISALLOWANCE IS MADE UNDER SECTION 3 6(1)(III) OF THE ACT. ON THE BASIS OF THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. ABHISHEK INDUSTRIES (SUPRA), THE ISSUE ARISING BEFORE US IS IDENTICAL TO THE ISSUE BEFORE THE HON' BLE PUNJAB & HARYANA HIGH COURT IN CIT ABHISHEK INDUSTRIES (SUPRA) AND F OLLOWING THE SAME PARITY OF REASONING WE HOLD THAT THE ASSESSEE IS NO T EXIGIBLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE D ISALLOWANCE MADE UNDER SECTION 36(1)(III) OF THE ACT. THE ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY LEVIED UNDER SECTION 271(1)(C) O F THE ACT. THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS THUS ALLOWED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF MARCH, 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20 TH MARCH, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 4