The ITO, Ward 2(4), RAJKOT-GUJARAT V. M/s Hindustan Trading Co, RAJKOT-GUJARAT

ITA 85/RJT/2011

• Counselvise Citation: 8524914 RSA 2011
• Duration Of Justice: 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 08-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: MJ RANPURA
• Keywords: Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI N.R.S. GANESA N (JM) I.T.A. NO.85/RJT/2011 (ASSESSMENT YEAR 2007-08) ITO, WD,2(4) VS M/S HINDUSTAN TRADING CO RAJKOT 226-STAR PLAZA PHULCHHAB CHOWK RAJKOT PAN : AABFH8410L (APPELLANT) (RESPONDENT) DATE OF HEARING : 24-08-2011 DATE OF PRONOUNCEMENT : 26-08-2011 APPELLANT BY : SHRI MK SINGH RESPONDENT BY: SHRI MJ RANPURA O R D E R PER N.R.S. GANESAN, JM THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-III, RAJKOT DATED 23-12-2010 PERTAINING TO THE ASSESSME NT YEAR 2007-08. THE ONLY ISSUE ARISES FOR CONSIDERATION IS REGARDING LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 2. SHRI MK SINGH, THE LD.DR SUBMITTED THAT DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE A SSESSEE HAS DEBITED INTEREST EXPENSES TO THE EXTENT OF RS.7,48,987; HOWEVER, NO TAX WAS DEDUCTED FROM THE INTEREST PAYMENT AS REQUIRED U/S 194A OF THE ACT. THEREFORE, THE INTEREST PAID TO THE EXTENT OF RS.7,48,987 WAS DISALLOWED IN THE COU RSE OF ASSESSMENT PROCEEDINGS AND PENALTY WAS LEVIED. HOWEVER, THE C IT(A) WITHOUT ANY REASONABLE CAUSE DELETED THE PENALTY. ITA NO.85/RJT/2011 2 3. ON THE CONTRARY, SHRI MJ RANPURA, THE LD.REPRESE NTATIVE FOR THE ASSESSEE SUBMITTED THAT NO DOUBT A DISALLOWANCE WAS MADE TO THE EXTENT OF RS.7,48,987 FOR NON DEDUCTION OF TAX AT SOURCE. THE LD.REPRESE NTATIVE FURTHER SUBMITTED THAT THE ASSESSEE HAS SHOWN ALL THE MATERIAL FACTS INCLU DING THE PAYMENT OF INTEREST BEFORE THE ASSESSING OFFICER. THEREFORE, IT IS NOT A CASE OF CONCEALMENT OF ANY INCOME. THE ASSESSEE HAS NOT FURNISHED ANY INACCUR ATE PARTICULARS. THEREFORE, THERE IS NO QUESTION OF ANY LEVY OF PENALTY U/S 271 (1)(C) OF THE ACT. THE LD.REPRESENTATIVE PLACED HIS RELIANCE ON THE JUDGME NT OF THE APEX COURT IN CIT VS RELIANCE PETROPRODUCTS (2010) 222 ITR 185 (SC). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. NO DOUBT , THE ASSESSEE HAS NOT DEDUCTED ANY TAX AT SOURCE WHILE PAYING INTEREST TO THE EXTENT OF RS.7,48,987. THE ASSESSING OFFICER FOUND FROM THE AUDITED PROFIT & LOSS ACCOUNT THAT THE ASSESSEE HAS DEBITED INTEREST TO THE EXTENT OF RS.7 ,48,987 IN RESPECT OF LOAN OBTAINED FROM TWO PARTIES. THEREFORE, THE ASSESSIN G OFFICER FOUND THAT THE NON DEDUCTION OF TAX AT SOURCE WHILE MAKING PAYMENT WOU LD AMOUNT TO FURNISHING OF INACCURATE PARTICULARS. THE FACT REMAINS IS THAT T HE PROFIT & LOSS ACCOUNT SHOWS THE PAYMENT OF INTEREST AND THE ASSESSEE HAS NOT DE BITED ANY TAX AT SOURCE. THE ASSESSEE HAS NOT CLAIMED THAT THEY HAVE DEDUCTED TA X. IN THOSE FACTUAL CIRCUMSTANCES, THIS TRIBUNAL MAY NOT BE ABLE TO SAY THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR HAS C ONCEALED ANY PART OF THE INCOME. IT MAY BE A TECHNICAL VIOLATION OF NON DED UCTION OF TAX WHILE MAKING ITA NO.85/RJT/2011 3 PAYMENT OF INTEREST ON THE BORROWED FUNDS. THIS TE CHNICAL BREACH MAY RESULT IN DISALLOWANCE OF INTEREST PAYMENT AS PROVIDED U/S 40 (A)(I) OF THE ACT. HOWEVER, AT ANY STRETCH OF IMAGINATION IT CANNOT BE CONCLUDED T HAT THE ASSESSEE HAS FURNISHED ANY INACCURATE PARTICULARS OR HAS CONCEAL ED ANY PART OF THE INCOME. THEREFORE, IN VIEW OF THE JUDGMENT OF THE APEX COUR T IN CIT VS RELIANCE PETROPRODUCTS (SUPRA) THE CIT(A) HAS RIGHTLY DELETE D THE PENALTY. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A ). ACCORDINGLY THE SAME IS CONFIRMED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26-08-2011. SD/- SD/- (A.L. GEHLOT) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT, DT : 26 TH AUGUST, 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-III, RAJKOT 4. THE CIT-II, RAJKOT 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT