Sh. Sarbjit Singh Kandhari, Patiala V. ACIT, Patiala

ITA 944/CHANDI/2011

• Counselvise Citation: 94421514 RSA 2011
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 29-08-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 23-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJEET SINGH
• Assessee Lawyers: K P BAJAJ
• Keywords: Notional interest
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.944/CHD/2011 (ASSESSMENT YEAR : 2006-07) SH.SARBJIT SINGH KANDHARI VS. THE A.C.I.T., # 3, BHUPINDRA ROAD, PATIALA. CIRCLE PATIALA. PAN: ACFPS0217E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.P.BAJAJ RESPONDENT BY : SHRI MANJEET SINGH, DR DATE OF HEARING : 29.08.2012 DATE OF PRONOUNCEMENT : 30.08.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF THE COMMISSIONER OF INCOME-TAX(APPEALS), PATIALA DATED 04.08.2011 RELATING TO ASSESSMENT YEAR 2006-07 AGAINST THE PENALTY LEVI ED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT TH AT THE PRESENT APPEAL IS AGAINST THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. IT WAS FURTHER POINTED OUT BY THE LEARNED A.R. FOR THE ASS ESSEE THAT THE TRIBUNAL IN QUANTUM PROCEEDINGS HAD DELETED CERTAIN ADDITION S AND SET ASIDE ONE OF THE ISSUES TO THE FILE OF THE ASSESSING OFFICER AND TWO MINOR ADDITIONS HAVE BEEN CONFIRMED IN THE HANDS OF THE ASSESSEE. 3. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 2 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSING OFFICER DURING THE QUANTUM PROCEEDINGS HA D MADE CERTAIN ADDITIONS IN THE HANDS OF THE ASSESSEE UNDER WHICH THE INCOME WAS ASSESSED AT RS.2,12,71,190/- AS AGAINST THE DECLARE D INCOME OF RS.1,21,11,980/-. THE ADDITIONS WERE MADE IN THE H ANDS OF THE ASSESSEE ON ACCOUNT OF THE FOLLOWING ISSUES: ADDITION MADE AMOUNT 1. EMBEZZLEMENT BY EMPLOYEE 2,79,000/- 2. PAYMENT OF COMMISSION 6,17,805/- 3. NOTIONAL INTEREST 1,25,588/- 4. ADDITION U/S 40A(3) 90,000/- 5. PAYMENT OF LEASE OF TRUCKS 80,39,000/- 5. THE CIT (APPEALS) IN THE QUANTUM APPEAL HAD UPHE LD THE ADDITION MADE BY THE ASSESSING OFFICER AND IN FURTHER APPEAL THE TRIBUNAL HAD ALSO DISMISSED THE APPEAL OF THE ASSESSEE. HOWEVER , THE SAID APPEAL WAS THEREAFTER RECALLED VIDE ORDER PASSED IN MISCELLANE OUS APPLICATION AND WAS FINALLY ADJUDICATED VIDE ORDER DATED 9.8.2012. 6. THE TRIBUNAL IN ITA NO 905/CHD/2009 RELATING TO ASSESSMENT YEAR 2006-07 HAD ADJUDICATED THE ISSUES AGAINST THE ADDI TIONS/DISALLOWANCES MADE BY THE ASSESSING OFFICER AND HAD DELETED THE A DDITION ON ACCOUNT OF EMBEZZLEMENT BY EMPLOYEE AMOUNTING TO RS.2,79,00 0/-, AND PAYMENT OF LEASE OF TRUCKS AMOUNTING TO RS.80,39,000/-. IN VIEW THEREOF, WHERE THE ADDITIONS HAVE BEEN DELETED IN THE HANDS OF THE ASSESSEE BY THE TRIBUNAL, THERE IS NO MERIT IN LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. FURTHER THE ISSUE OF DISALLOWANCE ON ACCOUNT OF COM MISSION AMOUNTING TO RS.6,17,805/- HAS BEEN SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. CONSEQUENTLY THE ISSUE OF LEVY OF PENALTY ON SUCH D ISALLOWANCE IS ALSO 3 SET ASIDE TO THE FILE OF THE ASSESSING OFFICER TO B E DECIDED IN ACCORDANCE WITH LAW. 7. THE ISSUE OF DISALLOWANCE OF INTEREST UNDER SECT ION 36(1)(III) OF THE ACT I.E. NOTIONAL INTEREST OF RS.1,25,588/- CHARGED ON INTEREST FREE ADVANCE MADE BY THE ASSESSEE AS AGAINST INTEREST PA ID ON SECURED LOANS HAS BEEN CONFIRMED BY THE TRIBUNAL AND ALSO THE ADD ITION UNDER SECTION 40A(3) OF THE ACT AMOUNTING TO RS.90,000/- HAS BEEN CONFIRMED BY THE TRIBUNAL. THERE IS NO MERIT IN HOLDING THE ASSESSE E TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME VIS-A-VIS DISALLOW ANCE OF NOTIONAL INTEREST IN THE HANDS OF THE ASSESSEE. FURTHER EVE N THE ADDITION MADE BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE AC T DO NOT WARRANT ANY LEVY OF PENALTY U/S 271(1)(C) OF THE ACT BECAUSE OF THE SMALLNESS OF THE AMOUNT. IN LINE THEREOF, WE DIRECT THE ASSESSING O FFICER TO DELETE PENALTY LEVIED U/S 271(1)(C) OF THE ACT IN RESPECT OF TWO ADDITIONS CONFIRMED I.E. ON ACCOUNT OF NOTIONAL INTEREST OF R S.1,25,588/- AND DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT OF RS. 90,000/-. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS P ARTLY ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DAY OF AUGUST, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH AUGUST, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 4