Income Tax Appellate Tribunal - Pune
Pushpam Plaza Pvt. Ltd., Pune vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
Pune Bench "B" , Pune
Before Shri I.C. Sudhir, Judicial Member
and Shri D. Karunakara Rao, Accountant Member
ITA No. 209/PN/2010
(Asstt. Year: 2004-05)
Asstt. Commissioner of Income Tax, ... Appellant
Circle-4, Pune
Room No. 212, 2nd Floor,
PMT Commercial Complex,
Swargate, Pune 411 037
v.
Pushpam Plaza Pvt Ltd., ... Respondent
Krishnakunj 51, Luullanagar
Pune - 30
PAN : Not available
Appellant by : Ms. S. Praveena
Department by : Shri. Vipin Gujarathi
Date of hearing :13.9.11
Date of Pronouncement: 08.11.11
ORDER
Per I.C. Sudhir, JM
The Revenue has questioned the first appellate order on several grounds involving the issue as to whether the Ld CIT(A) has erred in upholding the penalty of Rs. 17,00,000/- levied by the A.O u/s. 271(1)(c) on the ground of concealment of particulars relating to interest of Rs. 41,21,637/- claimed as deduction.
2. In support of the ground, the Ld. D.R. has basically placed reliance on the penalty order with this submission that the Ld CIT(A) while upholding the penalty has failed to appreciate the contents of clause (B) of Explanation 1 to Section 271(1)(c ) which casts the onus of rebutting the presumption of concealment on the assessee.
2 ITA . No 209/PN/2010 Pushpam Plaza Pvt Ltd A.Y. 2004-05 Page of 5
3. The Ld. A.R., on the other hand, tried to justify the first appellate order deleting the penalty with this submission that requirement of Explanation 1(b) to section 271(1)(c ) was fulfilled. He placed reliance on the following decisions :
1) CIT Vs. Reliance Petro Products (P) Ltd., (2010), 322 ITR 158 (SC)
2) Surrel Enterprises (P) Ltd., Vs. ACIT (2010) 37 SOT 117 (Ahd.)
4. Having gone through the orders of the authorities below and the decisions cited above, we find that the A.O levied penalty of Rs. 17,00,000/- u/s. 271(1)(c ) on the basis that in the auditor's report enclosed with the return of income, it was mentioned that the assessee had defaulted in re-payment of loan of Oriental Bank of Commerce (OBC) amounting to Rs.3,06,95,635/- as on 31 March 2004 whereas the default in payment of this loan was w.e.f. December 2001. It was further stated that as per provision of Section 43B, interest debited to Profit & Loss Account and not paid to the Scheduled Banks was not an allowable expenditure. The return of income was processed u/s. 143(1). Subsequently, notice u/s. 148 was issued on the aforesaid reason. The assessee in its return of income filed in response to notice issued u/s. 148 disclosed returned loss at Rs. 53,06,420/-. Assessment u/s. 143(3) r.w.s. 147 was completed determining the total loss at this figure of Rs. 53,06,420/-. In its return filed in response to notice u/s. 148, the assessee in the computation had disallowed the interest not paid to the Scheduled Bank u/s. 43B of the Act which was Rs. 41,21,637/- and thereby returned loss was reduced by this amount.
5. Before the A.O, in penalty proceedings, the assessee tried to explain that the mistake was through oversight and not intentional or deliberate. The A.O did not accept the explanation and observed that the assessee had debited the interest expenditure of Rs. 61,26,768/- but the details of this interest expenditure being shown in schedule "J" forming part of the accounts was not enclosed with the return of income. Further, no break-up of principle and interest was given in the Balance 3 ITA . No 209/PN/2010 Pushpam Plaza Pvt Ltd A.Y. 2004-05 Page of 5 Sheet under the head 'secured loans'. The A.O thus inferred that the assessee had deliberately concealed the fact of non-payment of interest to Scheduled Bank.
6. After detailed discussion, the Ld CIT(A) has deleted the penalty with the following conclusion in para 3.5 of his order :
"3.5 I have considered the facts of the case and the material available on record. It is noticed that it was from the return of income originally filed on 1.11.2204, that as per the auditor's report point No. 10, the Assessing Officer noticed that the default in payment of loan of OBC amounting to Rs.3,06,95,635/- was mentioned by the auditor and also that the default was w.e.f. December, 2001. The appellant has explained the Assessing Officer's point in this regard that the auditor had mentioned only the total amount of default in repayment of loans of OBC by the assessee, without mentioning the default amount in respect of interest payment. However, it has been explained by the assessee that in accordance with the Companies Act, 1956, in the company audit report only the amount and period of default is to be reported and not the break up of principal amount and the interest amount. In fact, it was on the basis of this statement itself that assessment was reopened u/s. 147; since default period w.e.f. December, 2001 was also specified. The Assessing Officer has also stated that the schedule J to the P & L A/c which gave details of the interest of Rs. 61,26,768/- debited to the P&L A/c, was not enclosed with the return. This schedule-J merely gave the break up of this interest amount of Rs. 61,27,768/- which included interest to OBC Rs. 41,21,637/- and interest on deposits Rs. 20,05,131/-. It is, therefore, obvious that since the remark of the statutory auditor was already there in the originally filed return; that there was default in repayment of loan to OBC amounting to Rs. 3,06,95,635/- w.e.f. December, 2001, it would necessarily include interest for the default period of this loan as well. Therefore, it cannot be inferred that the appellant had deliberately concealed the particulars of income or furnished inaccurate particulars of income related to the interest on loan taken from OBC. It was also explained by the appellant that it is a case when there are repeatedly losses incurred year after year till date and there was no benefit in claiming enhanced losses which were not existing. The decision of the Delhi High Court cited by the appellant in the case of PHI Seeds India Ltd., 301 ITR 13 was relied upon by the appellant to 4 ITA . No 209/PN/2010 Pushpam Plaza Pvt Ltd A.Y. 2004-05 Page of 5 substantiate the proposition that the penalty was attracted only when the assessee had concealed the particulars of income with an intend to mislead the revenue."
7. On perusal of the above finding of the Ld CIT(A) on the issue, we find that the Ld CIT(A) has deleted the penalty with this observation that remark of the statutory auditor was already there in the originally filed return that there was default in repayment of loan to OBC amounting to Rs. 3,06,95,635/- w.e.f. December 2001. Thus, it would necessarily include interest for the default period for this loan as well. The Ld CIT(A) accordingly held that it cannot be inferred that the assessee had deliberately concealed the particulars of income or furnished inaccurate particulars of income related to the interest on loan taken from OBC. The Ld CIT(A) has noted further that the explanation of the assessee that it is a case where there are repeatedly losses incurred year after year till date and there was no benefit in claiming enhanced losses which were not existing. Under these circumstances, we are of the view that the Ld CIT(A) has rightly come to the conclusion that there was no concealment of particulars of income or furnishing inaccurate particulars of income related to the interest on loan taken from OBC to attract penal action u/s. 271(1)(c ) on the addition made in this regard. We, therefore, do not find infirmity in the first appellate order whereby the Ld CIT(A) has deleted penalty in question. The same is upheld. The ground involving the issue are thus rejected.
8. Consequently, appeal is dismissed.
The order is pronounced in the open Court on 8th November 2011.
Sd/- Sd/-
(D. KARUNAKARA RAO) (I.C. SUDHIR )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Pune, dated the 8th November, 2011
5 ITA . No 209/PN/2010
Pushpam Plaza Pvt Ltd
A.Y. 2004-05
Page of 5
US
Copy of the order is forwarded to :
1. The Appellant
2. The Respondent
3. The CIT -II, Pune
4. The CIT(A)-II, Pune
5. The D.R. "B" Bench, Pune
6. Guard File
By order
Senior Private Secretary
Income Tax Appellate Tribunal
Pune