M/s. Kajal Exports, Ahmedabad V. The ACIT, Circle-10, Ahmedabad

ITA 999/AHD/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6301 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 04-09-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 07-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: P M MEHTA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 999/AHD/2014 (ASSESSMENT YEAR: 2003-04) M/S. KAJAL EXPORTS ANJANI AVENUE BUNGLOWS, BESIDES SAMBHAV HOUSE, OPP: JUDGES BUNGLOW, BODAKDEV, AHMEDABAD V/S ACIT, CIRCLE-10, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AACFK 1564H APPELLANT BY : SHRI P.M. MEHTA, AR RESPONDENT BY : SHRI V.K. SINGH, SR. D.R. ( )/ ORDER DATE OF HEARING : 11 -01-201 8 DATE OF PRONOUNCEMENT : 15 -01-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. WITH THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE C ORRECTNESS OF THE ORDER OF THE LD. CIT(A)-XVI, AHMEDABAD DATED 14.02.2014 PERT AINING TO A.Y. 2003-04. ITA NO. 999/ AHD/2014 . A.Y.2003-04 2 2. THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 3. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASSESS MENT ORDER DATED 28.03.2006 FRAMED U/S. 143(3) OF THE ACT. WHILE SCRUTINIZING T HE RETURN OF INCOME, THE A.O. FOUND THAT THE ASSESSEE HAS CLAIMED, INTERALIA , LC OPENING & PROCESSING CHARGES OF RS. 8,49,108/- UNDER THE HEAD INTEREST A ND FINANCE CHARGES. THE ASSESSEE WAS ASKED TO JUSTIFY THE CLAIM OF LC CHARG ES. ON FINDING NO PLAUSIBLE REPLY, LC OPENING CHARGES OF RS. 8,49,108/- WERE DI SALLOWED AND PENAL PROCEEDINGS WERE SEPARATELY INITIATED. 4. THE QUANTUM DISALLOWANCE TRAVELLED UP TO THE TRIBUN AL AND THE TRIBUNAL IN ITA NO. 496 & 497/AHD/2010 CONFIRMED THE DISALLOWANCE. THE RELEVANT FINDINGS OF THE TRIBUNAL READ AS UNDER:- 12. REGARDING THE DISALLOWANCE OF RS. 8,49,108 BEIN G THE EXPENDITURE ON L/C, WE FIND THAT A CLEAR FINDING IS GIVEN BY LD. CIT(A) TH AT IF THE L/C WAS FOR THE BENEFIT OF THE ASSESSEE THEN WHEY THE NAME OF M/S. KARNAVATI P ETROCHEM P. LTD. WAS MENTIONED THEREIN. HE HAS ALSO GIVEN A FINDING THAT ACTUAL BENEFICIARY IS KARNAVATI PETROCHEM PVT. LTD. AND THE ASSESSEE HAD MADE PURCHASES FOR THEM. HE HAS ALSO GIVEN A FINDING THAT THE LIABILITY TO PAY THE L/C CHARGES IS THAT OF KARNAVATI PETROCHEM PVT. LTD. AND NOT OF THE ASSESS EE. HE HAS ALSO NOTED THAT AS PER CLAUSE 71B OF THE L/C IT WAS STATED THAT BENEFI CIARY IS M/S. KARNAVATI PETROCHEM LTD. AND THE CHARGES WOULD BE ACCOUNTED F OR IN THEIR ACCOUNT. THESE FINDINGS OF LD. CIT(A) COULD NOT BE CONTROVERTED BY THE LD. A.R. AND HENCE, WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) O N THIS ISSUE. THIS GROUND NO. 2 OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2003-04 IS REJ ECTED WHEREAS GROUND NO. 1 OF THIS YEAR IS PARTLY ALLOWED. 5. A PERUSAL OF THE AFOREMENTIONED FINDINGS OF THE TRI BUNAL SHOWS THAT IN THE LC, THE NAME OF KARNAVATI PETROCHEM PVT. LTD. WAS MENTI ONED WHICH HAPPENS TO BE A SISTER CONCERN OF THE ASSESSEE. IT IS ALSO CLE AR THAT THE ASSESSEE WAS HAVING ITA NO. 999/ AHD/2014 . A.Y.2003-04 3 BUSINESS TRANSACTION OF PURCHASES WITH ITS SISTER C ONCERN. THE DISALLOWANCE HAVE BEEN CONFIRMED BECAUSE THE LIABILITY TO PAY THE LC CHARGES IS THAT OF KARNAVATI PETROCHEM PVT. LTD. AND NOT OF THE ASSESSEE. A PER USAL OF THE AFOREMENTIONED FACTS AS DISCUSSED BY THE TRIBUNAL IN ITS ORDER IN ITA NO. 496 & 497/AHD/2010 CLEARLY SHOWS THAT THE ASSESSEE HAS FU RNISHED ALL THE DETAILS IN RELATION TO THE CLAIM OF LC CHARGES THOUGH THE SAME WAS DISALLOWED BUT THAT DOES NOT MEAN THAT THE ASSESSEE HAS FURNISHED SOME INACCURATE PARTICULARS LIABLE FOR PENALTY U/S. 271(1)(C) OF THE ACT. WE FURTHER F IND THAT THE A.O. HAS LEVIED THE PENALTY FOR FILING INACCURATE PARTICULARS OF IN COME WHEREAS THE LD. COMMISSIONER HAS CONFIRMED THE LEVY OF PENALTY FOR CONCEALMENT OF INCOME. IN OUR CONSIDERED OPINION, MERELY BECAUSE THE CLAIM OF LC CHARGES WAS DENIED WOULD NOT IPSO FACTO MAKE THE ASSESSEE LIABLE FOR P ENALTY U/S. 271(1)(C) OF THE ACT. FOR THIS PROPOSITION, WE DRAW SUPPORT FROM THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCT S 322 ITR 158. 6. CONSIDERING THE FACTS IN TOTALITY, WE DO NOT FIND T HIS TO BE A FIT CASE FOR THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. WE ACCORDINGL Y SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE PE NALTY SO LEVIED. 7. APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 15 - 01- 20 18 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCO UNTANT MEMBER AHMEDABAD: DATED 15/01/2018