Arunaben D.Patel, Baroda V. The Dy.CIT.,Circle-2(1), Baroda

ITA 846/AHD/2010

• Counselvise Citation: 84620514 RSA 2010
• Duration Of Justice: 2 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 17-07-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 19-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD D BENCH BEFORE: SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JU DICIAL MEMBER SMT. ARUNNABEN D. PATEL BARODA (APPELLANT) PAN NO. ACPPP3005R VS. THE DCIT CIRCLE 2 (I) BARODA (RESPONDENT) REVENUE BY : SHRI B.L. YADAV, SR. D.R. ASSESSEE BY : SRI SUNIL TALATI DATE OF HEARING : 17-07-2012 DATE OF PRONOUNCEMENT : 31-08-2012 / ORDER PER : KUL BHARAT, JUDICIAL MEMBER:- THE PRESENT APPEAL OF THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)-II BARODA DATED 28-01-2010. 2. THE ASSESSEE HAS RAISED FOLLOWING EFFECTIVE GROU NDS OF APPEAL:- 1. THE ORDER PASSED BY THE HONORABLE COMMISSIONER OF INCOME TAX (APPEALS) IS BAD IN LAW, CONTRARY TO LEGAL PRON OUNCEMENT SINCE THE AND SAME BE QUASHED. 2. THE HONBLE CIT(A) HAS ERRED IN CONFIRMING THE PENALTY ON DISALLOWANCE OF INTEREST EXPENSE: I.T.A. NO 846/AHD/2010 A.Y.:-2004-05 ITA NO. 846/AHD/2010 A.Y.:-2004-05 PAGE NO. SMT ARUNABEN D. PATEL VS. THE DY CIT 2 (I) RS. 1278474 CLAIMED AGAINST PROPERTY INCOME; (II) RS. 489974 CLAIMED AGAINST INTEREST INCOME WITHOUT APPRECIATING THE FULL FACTS OF THE CASE AND LEGAL D ECISIONS RELIED UPON BY YOUR APPELLANT. BASED ON THESE FACTS, YOUR APPELLANT HAS NEITHER CO NCEALED THE INCOME NOR FILED ANY INACCURATE PARTICULARS OF SUCH INCOME AND HENCE, LEVY OF PENALTY IS INCORRECT, UNJUST AND UNW ARRANTED AND SAME BE DELETED NOW. IT BE HELD SO NOW. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED TO DETERMINE UPON THE INCOME OF R S. 57,70,420/-. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO PART LY ALLOWED THE ASSESSEES APPEAL AND REVISED INCOME OF RS. 61,72,845/- IN T HE QUANTUM PROCEEDINGS THE FOLLOWING DISALLOWANCES ON WHICH PENALTY PROCEE DINGS UNDER SECTION 271(I)(C) WERE INITIATED ARE AS UNDER:- (I) DISALLOWANCE OF INTEREST EXPENSES OF RS. 12,78 ,474/- (II) DISALLOWANCE OF INTEREST EXPENSES OF RS. 4,89 ,974/- (II) DISALLOWANCE OF DEDUCTION U/S 24 OF THE ACT R S. 13,09,390/- ( 30% OF RS. 13,64,635/- + RS. 30,00000/- TREATED A S INCOME FROM OTHER SOURCES) 4. THE PENALTY UNDER SECTION 271(I)(C) OF THE ACT WAS LEVIED ON RS.30,47,058/- AND A MINIMUM PENALTY A SUM OF RS. 1 0,15,700/- WAS IMPOSED FOR FURNISHING INACCURATE PARTICULARS OF IN COME THEREBY CONCEALING PARTICULARS OF INCOME. THE ASSESSEE FEELING AGGRI EVED BY THE ORDER OF THE ITA NO. 846/AHD/2010 A.Y.:-2004-05 PAGE NO. SMT ARUNABEN D. PATEL VS. THE DY CIT 3 ASSESSING OFFICER FILED AN APPEAL BEFORE THE LD. CI T(A) WHO PARTLY ALLOWED THE APPEAL. THE ASSESSEE DISSATISFIED WITH THE ORD ER OF LD. CIT(A) HAS PREFERRED THE PRESENT APPEAL. 5. LD DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT O UT OF THREE ADDITIONS MADE BY THE ASSESSING OFFICER, THE HONBLE ITAT IN ITA NO. 172/AHD/2008 HAD DELETED THE ADDITION MADE OF RS. 12,87,474/- ON ACCOUNT OF INTEREST EXPENSES FROM THE RENTAL INCOME AND ALSO DISALLOWAN CE OF RS. 13,15,300/- AS CLAIMED DEDUCTION AT RATE OF 30 PER CENT UNDER SEC TION 24 OF THE INCOME TAX ACT. HE SUBMITTED THAT ONLY ADDITION REMAINED IS W ITH REGARD TO DISALLOWANCE OF INTEREST EXPENSES OF RS. 4,89,974/ - HE SUBMITTED THAT NOW FOR THE PURPOSE OF PRESENT APPEAL THE PENALTY LEVIE D ON RS. 4,89,974 REMAINS. HE SUBMITTED THAT THE DISALLOWANCE WAS MADE UNDER S ECTION 14 (A) OF THE ACT AND PLACED RELIANCE ON THE DECISION OF HONBLE CO-ORDINATE BENCH IN THE CASE OF ITO VS. ANKUR MOTORS PVT LTD IN ITA NO . 3053/AHD/2004 AND ALSO ON THE JUDGMENT OF THE HONBLE SUPREME COURT I N THE CASE OF CIT VS. RELIANCE PETRO-CHEMICAL PRODUCTS 189 TAXMAN 322 (20 10). THE LD. AUTHORIZED REPRESENTATIVE PLACED RELIANCE ON THE D ECISION IN ANKUR MOTORS (SUPRA) IN SUPPORT OF HIS CONTENTION THAT WHERE TH E REVENUE CLEARLY STATED THAT DISALLOWANCE MADE ONLY ON THE BASIS OF ABSENCE OF NEXUS BETWEEN THE INCOME EARNED AND EXPENDITURE INCURRED DOES NOT AMO UNT TO CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME. HE ALSO SUBMITTED THAT IN VIEW OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO-CHEMICAL PRODUCTS 189 TAXMAN 322 (2010) BECAUSE THE ASSESSEE HAD CLAIMED EXPENDITURE WHICH THE CLAI M WAS NOT ACCEPTED BY REVENUE THAT ITSELF WOULD NOT ATTRACT THE PENALTY U NDER SECTION 271(I)(C) OF ITA NO. 846/AHD/2010 A.Y.:-2004-05 PAGE NO. SMT ARUNABEN D. PATEL VS. THE DY CIT 4 THE ACT. ON THE CONTRARY, LD. DEPARTMENTAL REPRESE NTATIVE STRONGLY RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD RIVAL SUBMISSIONS PERUSED MATERIAL AVAILABLE ON RECORD. SINCE IN THE QUANTUM APPEAL THE HONBLE CO-ORDINATE BENCH IN ITA NO. 172/AH/2008 HAD DELETED THE ADDITION OF RS. 12,78,4 74/- AND ADDITION OF RS. 13,15,359/- THEREFORE THE PENALTY LEVIED ON THIS AM OUNT IS NOT SUSTAINABLE AND SAME IS DIRECTED TO BE DELETED. THE PENALTY LEVIE D ON INTEREST EXPENSES OF RS. 4,89,974/- IS REQUIRED TO BE ADJUDICATED IN THI S APPEAL. WE FIND THAT THE HONBLE CO-ORDINATE BENCH IN THE CASE OF INCOME TAX OFFICER VS. ANKOOR MOTOR PVT LTD (SUPRA) HAS HELD THAT WITH RESPECT TO LEVY OF PENALTY IN REGARD TO DISALLOWANCE OF EXPENDITURE OF 4,34,943/- DUE TO ADVANCEMENT OF INTEREST FREE LOAN TO SISTER CONCERN MAY ALSO BE CONSIDERED TO BE DEBATABLE SINCE THE ISSUE INVOLVED IS THE NEXUS AND THE COMMERCIAL CON NECTION BETWEEN BOTH THE CONCERNS. ACCORDINGLY, THE PENALTY WAS DIRECTED TO BE DELETED. IN THIS CASE ALSO THE ASSESSING OFFICER HAS NOT PROVED THAT INTE REST EXPENDITURE WAS NOT PAID AND THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD AS TO SHOW THAT ASSESSEE HAS CONCEALED OR FURNISHED INACC URATE PARTICULAR OF INCOME AND DISALLOWANCE HAS BEEN MADE BECAUSE THE A SSESSING OFFICER WAS OF THE OPINION THAT THERE IS NO NEXUS BETWEEN THE I NTEREST EARNED AND THE EXPENDITURE CLAIMED. IT IS HELD BY THE HONBLE SUP REME COURT IN THE CASE OF CIT VS. RELIANCE PETRO-CHEMICAL (SUPRA) THAT MERELY BECAUSE OF THE ASSESSEE HAD CLAIMED THE EXPENDITURE WHICH WAS NOT ACCEPTED OR ACCEPTABLE TO THE REVENUE THAT BY ITSELF WOULD NOT ATTRACT PENALTY UN DER SECTION 271(I)(C) OF THE INCOME TAX ACT, 1961 RESPECTFULLY FOLLOWING THE RATIO OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO -CHEMICAL PVT LTD (SUPRA) THE AO IS DIRECTED TO DELETE THE PENALTY. ITA NO. 846/AHD/2010 A.Y.:-2004-05 PAGE NO. SMT ARUNABEN D. PATEL VS. THE DY CIT 5 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED SD/- SD/- (A.K. GARODIA) (KUL BHAR AT) ACCOUNTANT MEMBER JU DICIAL MEMBER AHMEDABAD : DATED 31 / 08 /2012 A.KUMAR, P.S. / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / CONCERNED CIT 4. - / CIT (A)-III, BARODA 5. , ! , '# / DR, ITAT, AHMEDABAD 6. $% &' / GUARD FILE. BY ORDER/ , ( / ' ) ! , '# STRENGTHENED PREPARATION & DELIVERY OF ORDERS IN TH E ITAT 1) DATE OF TAKING DICTATION 27-08-2012 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE N.A. 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 28-08-2012 4) DATE OF CORRECTION 28-08-2012 5) DATE OF FURTHER CORRECTION 6) DATE OF INITIAL SIGN BY MEMBERS 7) ORDER UPLOADED ON 31-08-2012 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 31-08-2012 ITA NO. 846/AHD/2010 A.Y.:-2004-05 PAGE NO. SMT ARUNABEN D. PATEL VS. THE DY CIT 6