Income Tax Appellate Tribunal - Mumbai
Ito 7(1)(1), Mumbai vs Naman Estate P. Ltd, Mumbai on 1 March, 2017
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IN THE INCOME TAX APPELLATE TRIBUNNAL
MUMBAI BENCH ''B'', MUMBAI
BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER)
AND
SHRI ASHWANI TANEJA ( ACCOUNT MEMBER)
I.T.A.No. 5975 & 5976/Mum/2014
( Assessment years 2004-2005 & 2005-06)
Income tax Officer 7(1)(1), V/s M/s Naman Estates Pvt.Ltd.,
Mumbai (Merged with Prudential Management
and services Pvt.Ltd,) Mahindra
Towers, Road No.-13
Mumbai-400018
PAN AAACN1980F
Appellant Respondent
Appellant by Shri Suman kumar(DR)
Respondent by None
Date of hearing 01.03.2017
Date of order 01.03.2017
ORDER
Per Ashwani Taneja, AM:-
These appeals pertain to same assessee involving identical issue for different assessment years filed by the Revenue, therefore these appeals were heard together and being disposed of by this common order, for the sake of convenience.
22. First we shall take up appeal for the assessment year 2004-05 in I.T.A. No. 5975/Mum/2014.
3. This appeal has been filed by the Revenue against the order passed by the Learned Commissioner of Income tax (Appeals) [in short, referred to as "'CIT(A)"] passed against the order of the Assessing Officer u/s 271(1)(c) of the Act, dated 29.05.13 for assessment year 2004-05 on the following grounds:-
"The Ld.CIT(A) has erred on facts and in law in deleting the penalty of Rs. 17,19,762/- levied u/s 271(1)(c) of the Income Tax Act, 1961, by the Assessing Officer without properly Appreciating the factual and legal matrix of the case as clearly brought out by the Assessing Officer in the penalty order imposing the penalty.
The Ld.CIT(A)s order is contrary to law and facts and deserves to be set aside and A.O.s order may be restored.
The appellant craves leave to amend or alter any ground or add a new ground that may be necessary."
4. During the course of hearing none appeared before us on behalf of the assessee. Learned DR made arguments on behalf of the Revenue.
5. The solitary issue in this appeal is about levy of penalty u/s 271(1)(c) of the Act. The penalty was levied by the AO on the amount of disallowance made by him u/s 36(1)(iii) of the Act on account of interest expenditure. It has been brought to our notice that similar disallowance was made in assesse's own case in assessment year 2001-02 and the penalty was also levied upon the same. The matter reached before the tribunal wherein the penalty order was upheld by the Tribunal vide its order passed in I.T.A.No. 863/Mum/2008 by observing as under:-
"The question as to when funds are borrowed for the purpose of business and where such borrowed funds are deployed and yields income which does not form part of the total income still disallowance can be made u/s 36(l)(iii) of the Act was debatable issue. In fact a special bench was constituted to decide the question where share traders borrow funds for purpose of business but where the shares purchased yielded 3 dividend income whether the claim for deduction of interest on borrowings can be allowed as deduction u/s 36(I)(iii). The question whether motive for borrowings fund on which interest is paid is relevant or not is still a debatable issue being agitated by the assessee before the Hon'ble High Courts. Besides the above, we find that the assessee in the present case has duly clarified in the Notes to the computation of income the method of computation of interest that can be disallowed u/s 14A of the Act. There has therefore been a complete disclosure of all facts before the assessing officer. The explanation offered by the assessee regarding its claim for interest expenses in our view is bona fide explanation. The assessee has disclosed all facts material for computation of its total income. Even the burden that lays on the assesse under Explanation 1 to section 271(1)(c) in our view has been discharged. On the facts and circumstances of the case we are of the view that learned CIT(A) erred in confirming the order of AO imposing p en alt y. W e a r e o f th e vi ew that th is is not a fi t c a s e f o r im pos ing p ena lty o n th e a ssess ee ."
6. In the year before us Ld. CIT(A) has rightly considered aforesaid judgment of the Tribunal while deleting the penalty levied in this year, by observing as under:-
"3.3 I have duly considered the facts and submissions. It is undisputed that for both these cases disallowances were made u/s 3 6 (1) (iii) as per provisions of section for the reason that assessee had no business activity and then had exempt income in form of dividend. However it is not the case of A.0 that the appellant filed wrong particulars or gave inaccurate particulars or concealed the facts or particulars at all. In a case like this where disallowances were made and upheld also; however there is no case of filing inaccurate/ wrong particulars filed by the appellant and then material facts were duly disclosed, it cannot be said that appellant has concealed or filed wrong particulars and hence provisions of penalty under section. 271(1)(c) are not attracted in such a case. Appellant have further relied upon decision given by Hon'ble ITAT, Mumbai in their own case in ITA 4 No.863/Mum/08 for A.Y 2001-02 where in on these facts penalty levied u/s 271(1)(c) was deleted. After going through the same and having found that facts are identical in this, I am of the considered view for the disallowance made u/s 36(1)(iii) penalty u/s 271(1)(c) is not attracted. It s also as per the ration of the decision given in the case of Reliance Petro products Ltd.322 ITR 158(SC) and hence penalty levied for both the A.Ys being not sustainable are deleted herewith. The ground taken in both these appeals bearing number 212/13-14 are allowed".
7. It is noticed by us that Ld. CIT(A) has rightly considered the judgment of the CIT(A) in deleting the penalty levied in this year since the facts and circumstances and legal position is identical. No distinction has been made in this regard by the Ld. D.R before us. Thus we find that the order by the Ld. CIT(A) is well reasoned and in accordance with the law and facts and no interference is called for therein by us, therefore same is upheld.
As a result appeal filed by the Revenue is dismissed.
8. Now we shall take up appeal for assessment year 2005-06 in I.T.A.No. 5976/Mum/2014. It is noted that the issue involved in this is appeal identical to appeal of assessment year 2004-05. Therefore following our order for assessment year 2004-05, this appeal is also dismissed.
9. As a result both the appeals filed by the Revenue are hereby dismissed.
Order was pronounced in the open court at the conclusion of hearing on 01.03.2017.
Sd/- sd/-
(MAHAVIR SINGH) (ASHWANI TANEJA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai, Dt : 01.03.2017
kt/-
Copy to :
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1. The appellant
2. The respondent
3. The CIT(A)
4. The CIT
5. The Ld. Departmental Representative for the Revenue, "B", Bench (True copy) By order ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES