ITO, Ward - 6(3), Kolkata, Kolkata V. M/s. New India Investment Corporation Ltd., Kolkata

ITA 776/KOL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2500 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2010
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 07-07-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 19-04-2010
• Court: TRIBUNAL
• Keywords: Business income
• Section: 271(1)(c)

Judgement Text

1 , A , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH-A , KOLKATA / ORDER . .. . . .. . , , , , SHRI C.D.RAO, ACCOUNTANT MEMBER . THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A), KOLKATA DATED 10.02.2010 FOR THE ASSESSMENT YEAR 2005-06. 2. THE ONLY ISSUE RAISED BY THE REVENUE IN THIS APP EAL IS RELATING TO THE DELETION OF THE PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT. BRIE F FACTS OF THIS ISSUE EMERGING FROM THE IMPUGNED ORDER ARE THAT THE A.O. IN THE LAST PARAG RAPH OF THE ORDER PASSED U/S 271(1)(C ) HAS OBSERVED THAT ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE, THE A.O. WAS OF THE OPINION THAT AS PER PROVISIONS OF SECTION 36(1)( VII) THE SUM OF RS.20,00,000 WAS NOT ROUTED THROUGH THE PROFIT & LOSS A/C IN EARLIER YEA R (S) WAS NOT ALLOWABLE CLAIM UNDER THE ACT AND THIS IS A CLEAR CASE OF CONCEALMENT OF IN COME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME AND PENALTY PROVIS IONS U/S 271(1)(C ) ARE CLEARLY ATTRACTED. THIS IS A CASE OF WILLFUL AND CONSCIO US ATTEMPT ON THE PART OF THE ASSESSEE ( ) BEFORE ! '#$ ! '#$ ! '#$ ! '#$, , , , , SMT. DIVA SINGH, JUDICIAL MEMBER. & %# %# %# %# /AND . .. . . .. . , , , , , SRI C.D.RAO, ACCOUNTANT MEMBER . #& #& #& #& / ITA NO. 776/KOL/10 ''( )*/ ASSESSMENT YEAR : 2005-2006 INCOME TAX OFFICER, WARD 6(3), KOLKATA M/S NEW INDIA INVESTMENT CORPN.LTD. (PAN AAACN 8998F) (,- / APPELLANT ) - ' - - VERSUS -. (/0,-/ RESPONDENT ) ,- 1 2 / FOR THE APPELLANT: / SHRI P.C.NAYAK, SR. D.R. /0,- 1 2 / FOR THE RESPONDENT: / SHRI G.R.SAHA. 2 COMPANY TO EVADE TAX. HENCE, PENALTY U/S 271(1)( C ) OF THE I.T.ACT, 1961 IS IMPOSED FOR THE ASSESSMENT YEAR 2005-06. 3 AGGRIEVED BY THIS , THE ASSESSEE WENT IN APPEAL B EFORE THE CIT(A) AND SUBMITTED THAT THE EXPRESSION CONCEALMENT OF INCOME IMPLIE S THAT AN INCOME IS BEING HIDDEN, CAMOUFLAGED OR COVERED UP SO AS IT CANNOT BE SEEN , FOUND, OBSERVED OR DISCOVERED. THE EXPRESSION FURNISHING OF INACCURATE PARTICULARS O F INCOME IMPLIES FURNISHING OF DETAILS OR INFORMATION OF ABOVE INCOME WHICH ARE NOT IN C ONFORMITY WITH THE FACTS OR TRUTH. IT DOES NOT EXTEND TO SUBJECTIVE AREAS SUCH AS THE T AXABILITY OF INCOME, ADMISSIBILITY OF A DEDUCTION OR INTERPRETATION OF LAW. THE MAKING OF AN INCORRECT CLAIM DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS. THE DEE MING FICTION OF EXPLANATION (1) TO SECTION 271(1)(C) APPLIES ONLY WITH RESPECT TO FA CTS, MATERIAL TO THE COMPUTATION OF INCOME AND NOT WITH THE COMPUTATION PER SE. TH E FICTION DOES NOT APPLY WHETHER THE CONTROVERSY IS REGARDING THE LEGALITY OF THE CLAIM MADE BY THE ASSESSEE. FURTHER WHEN THE ASSESSEE OFFERS AN EXPLANATION IN DISCHARGE OF THE ONUS CAST UPON HIM BY EXPLANATION (1) TO SECTION 271(1)(C) , THE A.O. MUST CONSIDER THE EXPLANATION OBJECTIVELY AND UNLESS HE FINDS THE SAME AGAINST THE HUMAN PROBABI LITY OR UNLESS THERE ARE ANY REAL INCONSISTENCIES OR FACTUAL ERRORS IN SUCH AN EXPLAN ATION, THE A.O. OUGHT TO ACCEPT THE SAME. 4 TAKING INTO CONSIDERATION THE ABOVE OBSERVATIONS , THE LEARNED CIT(A) HAS DELETED THE PENALTY BY OBSERVING THAT IN HIS VIE W THE ASSESSEE HAS FURNISHED ALL THE RELEVANT INFORMATION , PARTICULARS AND EXPLANATIO N IN SUPPORT OF THE CLAIM MADE FOR DEDUCTION AS BAD DEBT. THE LEARNED A.R. ARGUED T HAT THERE WAS NO TAX PAYABLE EVEN AFTER THE DISALLOWANCES BECAUSE OF THE CARRY FORWAR D LOSSES IN THE CASE OF THE ASSESSEE. THE LEARNED A.R. ALSO ARGUED THAT THE APPELLANT C OMPANY WAS INVOLVED IN THE PROCESS OF MONEY LENDING IN THE EARLIER YEARS. SINCE THE AMOUNT OF RS.20,00,000 WAS ADVANCED BY THE AMALGAMATING COMPANY, I.E. GLOBE TEA & INDU STRIES LIMITED DURING THE COURSE OF ITS MONEY LENDING BUSINESS, THE LOAN OF RS. 20,00,000 WAS TRANSFERRED TO THE BALANCE SHEET OF THE ASSESSEE COMPANY. THE A.R. A RGUED THAT BOTH BEFORE AND AFTER AMALGAMATION THE ASSESSEE COMPANY REMAINED IN TH E BUSINESS OF MONEY LENDING. THE A.O. IN THE ASSESSMENT ORDER DISALLOWED THE CLAI M U/S 36(1)(VII) AND CONTENDED THAT IT WAS A CAPITAL LOSS WHICH COULD NOT BE DEBITED TO TH E PROFIT & LOSS ACCOUNT. THE A.O. ONLY RELIED ON THE ORDER OF THE CIT(A) AND HONBLE IN COME TAX APPELLATE TRIBUNAL IN CONFIRMING THE DISALLOWANCE MADE BY THE A.O. NO MATERIAL WAS BROUGHT ON RECORD TO PROVE THE WILLFUL AND CONSCIOUS ATTEMPT ON THE PAR T OF THE ASSESSEE COMPANY TO AVOID 3 TAX. THE CIT(A) WAS OF THE VIEW THAT THE ASSESSEE HAS NEITHER CONCEALED NOR FURNISHED ANY INACCURATE PARTICULARS OF INCOME WARRANTING L EVY OF PENALTY U/S 271(1)(C). 5 AGGRIEVED BY THIS NOW THE REVENUE IS IN APPEAL BEFORE US. AT THE TIME OF HEARING BEFORE US, THE LEARNED D.R., APPEARING ON BEHALF O F THE REVENUE, HAS HEAVILY RELIED ON THE ORDER OF THE A.O. AND FURTHER REITERATED THE FINDIN GS OF THE A.O. AS MENTIONED IN THE PRECEDING PARAGRAPHS OF THIS ORDER. 6 ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE HAS RELIED ON THE ORDER OF THE CIT(A) AND FURTHER CONTENDED THAT THE ASSES SEE IS CONTINUOUSLY OFFERING THE INCOME ON THE SAID LOAN OF RS.20 LAKHS AND THE REVENUE IS ACCEPTING THE SAME AS BUSINESS INCOME OF THE ASSESSEE. HE FURTHER RELIED ON THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158 (SC) WHEREIN THE SUPRE ME COURT HELD THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE WHICH CLAI M WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE THAT BY ITSELF WOULD NOT , IN OUR OPINION, ATTRACT THE PENALTY U/S 271(1)(C) . IF WE ACCEPT THE CONTENTION OF T HE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY THE A.O. FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY U/S 271(1)(C) . THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. THEREFORE, HE REQUESTED TO UPHOLD THE ORDER OF THE CIT(A). 7. AFTER HEARING THE RIVAL SUBMISSIONS AND CAREFUL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD AND RESPECTFULLY FOLLOWING THE RATIO LA ID DOWN BY THE APEX COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA ) , WE ARE OF THE CONSIDERED OPINION THAT NO INTERFERENCE IS REQUIRED IN THE ORDER OF THE CIT(A). THEREFORE, WE CONFIRM THE SAME AND DISMISS THE APPEAL OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. $ 3 4 3' 5 $6 THIS ORDER IS PRONOUNCED IN OPEN COURT ON 09.07.20 10 SD/- SD/- [ ! '#$ ! '#$ ! '#$ ! '#$ ] , [ DIVA SINGH] JUDICIAL MEMBER. [ . .. . . .. . ] [C.D.RAO] ACCOUNTANT MEMBER . ( (( ( ) )) ) DATE: 09.07.2010 *B.C.DE 78 ''9: ';/ SR. PRIVATE SECRETARY. 4 1 /''< =<)>- COPY OF THE ORDER FORWARDED TO : 1. ,- / THE APPELLANT : ITO, WARD 6(3), KOLKATA 2 /0,- / THE RESPONDENT: M/S NEW INDIA INVESTMENT CORPN. LT D., 31, N.S.ROAD, 4 TH FLOOR, KOLKATA. 3. ''/ THE CIT, 4. '' ()/ THE CIT(A), 5. D'5 /'' / DR, KOLKATA BENCHES, KOLKATA 6. GUARD FILE . 0< /'/ TRUE COPY , '3/ BY ORDER, F #: /DEPUTY REGISTRAR . 5