Market Committee, Gohana, Sonepat V. DCIT, Sonepat

ITA 779/DEL/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6314 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 21-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 16-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ASSESSEES ADJOURNED
• 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

Judgement Text

1 ITA NO. 779/DEL/2012 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SMT SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A .NO. 779/DEL/2012 (ASSESSMENT YEAR-2007-08) APPELLANT BY ASSESSEES ADJOURNED APPLICATION REJECTED RESPONDENT BY SH. RAJESH KUMAR, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 16/11/2011 PASSED BY CIT(A)-ROHTAK FOR THE ASSESSMENT YEAR 200 7-08. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE & IN LAW, THE CIT (A) HAS ERRED IN CONFIRMING THE IMPOSITION OF PENALTY U/S 271(1)(C) OF RS 1,19,26,437/-. AS SUCH, THE PENALTY IMPOSED OF RS 1,19,26,437/- MAY PLEASE BE DELETED. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE & IN LAW, THE CIT (A) & LD AO, WHILE CONFIRMING/ IMPOSING THE PENALTY MARKET COMMITTEE, GOHANA NEW GRAIN MARKET, JIND ROAD, GOHANA SONEPAT AAALM0063B (APPELLANT) VS DCIT SONIPAT CIRCLE SONEPAT (RESPONDENT) DATE OF HEARING 21.03.2017 DATE OF PRONOUNCEMENT 28. 03.2017 2 ITA NO. 779/DEL/2012 RESPECTIVELY, HAVE OVERLOOKED THE FACT THAT THE APP ELLANT, BEING AN ENTITY REGISTERED U/S 12A, WAS HAVING BONAFIDE BELIEF AS T O THE TAXABILITY OF THE AMOUNTS SUBJECTED TO PENALTY. AS SUCH, THE PENALTY OF RS 1,19,26,437/- U/S 271 (1 )(C) MAY PLEASE BE DELETED. 3. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE & IN LAW, THE ISSUE BEING CAPABLE OF MORE THAN ONE INTERPRETATION & QUANTUM APPEAL BEING PENDING WITH HONBLE HIGH COURT OF PUNJAB & H ARYANA, THE PENALTY U/S 271 (1 )(C) OF RS 1,19,26,437/-. MAY PLEASE BE DELETED. 4. WE CRAVE TO ADD, ALTER, DELETE OR MODIFY OR WITH DRAW ANY OF ABOVE GROUNDS OF APPEAL AT THE TIME HEARING. 3. ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) AT THE INCOME OF RS.4,38,66,920/- VIDE ORDER DATED 30.11.2009. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS ADDITION OF RS. 11,02,500/- WAS MADE ON ACCOUNT OF INTEREST ACCRUED ON FDR WITH HVPNL WHICH THE ASSESS EE HAS NOT DECLARED AS INCOME IN ITS INCOME & EXPENDITURE ACCOUNT AS PER A .O. THUS, EXPENDITURE OF RS. 84,34,535/- ON ACCOUNT OF REPAIR AND CONSTRUCTI ON OF RURAL ROADS, WERE DISALLOWED BY A.O. IN THE COMPUTATION OF TOTAL INCO ME THE ASSESSEE CLAIMED REPAYMENT OF LIABILITY OF RS. 2,81,33,700/- AS APPL ICATION OF INCOME, THOUGH THE SAME WAS THE PAYMENT OF LOAN TAKEN FROM HSAMB BOARD FOR CONSTRUCTION OF RURAL ROADS AND DEVELOPMENT OF MANDIS. THE ASSES SEE CLAIMED APPLICATION OF INCOME IN RESPECT OF EXPENDITURE INCURRED ON CONSTR UCTION OF MANDIS AND RURAL ROADS ON REGULAR BASIS IN THE RELEVANT ASSESSMENT Y EAR. THE A.O HELD THAT THE EXPENDITURE ON CONSTRUCTION AND REPAIR OF RURAL ROA DS OUT OF LOAN TAKEN FROM BOARD WAS ALLOWED TO THE ASSESSEE AS APPLICATION OF INCOME, THEREFORE DISCHARGE OF LIABILITY OF LOAN WAS NOT ALLOWED FOR APPLICATION OF FUND TO THE ASSESSEE. HENCE REPAYMENT OF LOAN OF RS. 2,81,33,70 0/- WAS NOT ALLOWED TO THE ASSESSEE. 3 ITA NO. 779/DEL/2012 4. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) RO HTAK. THE CIT(A) ROHTAK PARTLY ALLOWED THE QUANTUM APPEAL OF THE ASSESSEE. THE CIT(A) ALLOWED THE EXPENDITURE CONSTRUCTION AND REPAIR OF RURAL ROADS AMOUNTING TO RS. 84,34,535/- AND FURTHER TREATED THE REPAYMENT OF LO AN OF RS. 2,81,33,700/- AS APPLICATION OF INCOME OF THE ASSESSEE. 5. THE DEPARTMENT PREFERRED FURTHER APPEAL TO THE T RIBUNAL AGAINST THE ORDER OF CIT(A) ROHTAK. THE TRIBUNAL HELD THAT THE CIT(A) HAS MISUNDERSTOOD THE CASE OF THE A.O. THE CASE OF THE ASSESSING OFFI CER IS THAT WHEN THE LOAN WAS OBTAINED BY THE ASSESSEE MARKET COMMITTEE AND USED FOR SPENDING ON REPAIR WORKS OF MANDIS, CONSTRUCTIONS AND REPAIRS OF VARIO US RURAL ROADS, DEVELOPMENTS OF MANDIS IN THE YEAR OF SUCH INCURRIN G OF EXPENDITURE, IT WAS CLAIMED BY THE ASSESSEE THAT THERE IS APPLICATION O F INCOME TO THE EXTENT OF SUCH CONSTRUCTION OR RURAL RODS AND DEVELOPMENT OF MANDIS AND IT WAS ALLOWED IN THAT YEAR ALTHOUGH SUCH EXPENSES WERE INCURRED N OT OUT OF OWN FUNDS OF THE ASSESSEE MARKET COMMITTEE BUT OUT OF BORROWED FUNDS . THE TRIBUNAL FURTHER HELD THAT THE ASSESSEE IS MAKING REPAYMENT OF SUCH BORROWED FUNDS AND CLAIMING DEDUCTION AS APPLICATION OF INCOME AND HEN CE THIS IS LIKE CLAIMING OF DOUBLE DEDUCTION FOR THE SAME EXPENDITURE. ONCE AT THE TIME OF INCURRING EXPENDITURE OUT OF BORROWED FUNDS AND NOW AT THE TI ME OF REPAYMENT OF SUCH BORROWED FUNDS. THE TRIBUNAL REVERSED THE ORDER OF CIT(A) AND RESTORED THE ORDER OF A.O. 6. PENALTY PROCEEDINGS U/S 271(I)(C) OF THE I.T. AC T WERE INITIATED FOR FURNISHING OF WRONG PARTICULARS OF ITS INCOME BY TH E ASSESSING OFFICER AND PASSED PENALTY VIDE ORDER DATED 28.03.2011. AGGRIE VED BY THE SAME, THE ASSESSEE FILED APPEAL BEFORE CIT(A) WHICH WAS DISMI SSED. 7. THE ASSESSEE FILED ADJOURNMENT APPLICATION AT TH E TIME OF HEARING. THE SAME IS REJECTED. 8. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER HAS CORRECTLY PASSED 4 ITA NO. 779/DEL/2012 THE PENALTY ORDER AS THE DOUBLE DEDUCTION CLAIMED B Y THE ASSESSEE AMOUNTS TO FILING OF INACCURATE PARTICULARS. 9. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVAN T RECORDS. THE ASSESSEE MADE CLAIM FOR APPLICATION OF INCOME ONCE WHILE INCURRING EXPENDITURE ON CONSTRUCTION OF RURAL ROADS AND MAND IS FROM THE LOAN TAKEN FROM HSAMB & AGAIN ON ACCOUNT OF REPAYMENT OF LOAN TO HSAMB. THOUGH IT IS A MISTAKE, THE SAME DOES NOT AMOUNT TO FILING OF IN ACCURATE PARTICULARS. ALL THE RELEVANT PARTICULARS WERE PRESENT BEFORE THE ASSESS ING OFFICER DURING THE ASSESSMENT PROCEEDINGS. THUS, THIS IS NOT A VALID R EASON FOR PASSING THE PENALTY ORDER WHEN THE SAME WAS PROPERLY DISALLOWED BY THE ASSESSING OFFICER AFTER VERIFYING THE RELEVANT RECORDS. THUS, THE ASS ESSEE HAS NOT FURNISHED ANY INACCURATE PARTICULARS. THE ASSESSING OFFICER AS WE LL AS THE CIT(A) WAS INCORRECT IN HOLDING THAT THERE WAS INACCURATE PART ICULARS FURNISHED BY THE ASSESSEE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 28TH OF MARCH, 2017. SD/- SD/- (R.S. SYAL) (SUCHITRA K AMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED: 28/03/2017 *R.NAHEED* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT 5 ITA NO. 779/DEL/2012 ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 21/03/2017 SR. PS 2. DRAFT PLACED BEFORE AUTHOR 21/03/2017 SR. PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 28.03.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 28.03.2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.