Income Tax Appellate Tribunal - Ahmedabad
Arunaben D.Patel, Baroda vs Assessee on 17 July, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
AT AHMEDABAD "D" BENCH
Before: Shri A.K. Garodia, Accountant Member and
Shri Kul Bharat, Judicial Member
I.T.A. No 846/Ahd/2010
A.Y.:-2004-05
Smt. Arunnaben D. Patel The DCIT Circle 2 (i)
Baroda Baroda
(Appellant) Vs. (Respondent)
PAN No. ACPPP3005R
Revenue by : Shri B.L. Yadav, Sr. D.R.
Assessee by : Sri Sunil Talati
Date of hearing : 17-07-2012
Date of pronouncement : 31-08-2012
आदे श/ORDER
PER : KUL BHARAT, JUDICIAL MEMBER:-
The present appeal of the Assessee is directed against the order of CIT(A)-II Baroda dated 28-01-2010.
2. The assessee has raised following effective grounds of appeal:-
1. The order passed by the Honorable Commissioner of Income Tax (Appeals) is bad in law, contrary to legal pronouncement since the and same be quashed.
2. The Hon'ble CIT(A) has erred in confirming the penalty on disallowance of interest expense:ITA No. 846/Ahd/2010 A.Y.:-2004-05 Page No. 2
Smt Arunaben D. Patel vs. the Dy CIT
(i) Rs. 1278474 claimed against property income;
(ii) Rs. 489974 claimed against interest income without appreciating the full facts of the case and legal decisions relied upon by your appellant.
Based on these facts, your appellant has neither concealed the income nor filed any inaccurate particulars of such income and hence, levy of penalty is incorrect, unjust and unwarranted and same be deleted now. It be held so now."
3. The facts in brief are that the assessment under Section 143(3) of the Act was completed to determine upon the income of Rs. 57,70,420/-. The assessee filed an appeal before the CIT(A) who partly allowed the assessee's appeal and revised income of Rs. 61,72,845/- In the quantum proceedings the following disallowances on which penalty proceedings under Section 271(I)(c) were initiated are as under:-
(i) Disallowance of interest expenses of Rs. 12,78,474/-
(ii) Disallowance of interest expenses of Rs. 4,89,974/-
(ii) Disallowance of deduction u/s 24 of the Act Rs. 13,09,390/-
( 30% of Rs. 13,64,635/- + Rs. 30,00000/- treated as income from other sources)
4. The penalty under Section 271(I)(c) of the Act was levied on Rs.30,47,058/- and a minimum penalty a sum of Rs. 10,15,700/- was imposed for furnishing inaccurate particulars of income thereby concealing particulars of income. The Assessee feeling aggrieved by the order of the ITA No. 846/Ahd/2010 A.Y.:-2004-05 Page No. 3 Smt Arunaben D. Patel vs. the Dy CIT Assessing Officer filed an appeal before the Ld. CIT(A) who partly allowed the appeal. The assessee dissatisfied with the order of Ld. CIT(A) has preferred the present appeal.
5. Ld Departmental Representative submitted that out of three additions made by the Assessing Officer, the Hon'ble ITAT in ITA No. 172/Ahd/2008 had deleted the addition made of Rs. 12,87,474/- on account of interest expenses from the rental income and also disallowance of Rs. 13,15,300/- as claimed deduction at rate of 30 per cent under Section 24 of the Income Tax Act. He submitted that only addition remained is with regard to disallowance of interest expenses of Rs. 4,89,974/- He submitted that now for the purpose of present appeal the penalty levied on Rs. 4,89,974 remains. He submitted that the disallowance was made under Section 14 (A) of the Act and placed reliance on the decision of Hon'ble Co-ordinate Bench in the case of ITO Vs. Ankur Motors Pvt Ltd in ITA No. 3053/Ahd/2004 and also on the judgment of the Hon'ble Supreme Court in the case of CIT Vs. Reliance Petro-chemical Products 189 Taxman 322 (2010). The Ld. Authorized Representative placed reliance on the decision in Ankur Motors (supra) in support of his contention that where the Revenue clearly stated that disallowance made only on the basis of absence of nexus between the income earned and expenditure incurred does not amount to concealment of income or furnishing inaccurate particulars of income. He also submitted that in view of the judgment of the Hon'ble Supreme Court in the case of CIT vs. Reliance Petro-chemical Products 189 Taxman 322 (2010) because the assessee had claimed expenditure which the claim was not accepted by Revenue that itself would not attract the penalty under Section 271(I)(c) of ITA No. 846/Ahd/2010 A.Y.:-2004-05 Page No. 4 Smt Arunaben D. Patel vs. the Dy CIT the Act. On the contrary, Ld. Departmental Representative strongly relied upon the orders of the authorities below.
6. We have heard rival submissions perused material available on record. Since in the quantum appeal the Hon'ble Co-ordinate Bench in ITA No. 172/Ah/2008 had deleted the addition of Rs. 12,78,474/- and addition of Rs. 13,15,359/- therefore the penalty levied on this amount is not sustainable and same is directed to be deleted. The penalty levied on interest expenses of Rs. 4,89,974/- is required to be adjudicated in this appeal. We find that the Hon'ble Co-ordinate Bench in the case of Income Tax Officer vs. Ankoor Motor Pvt Ltd (supra) has held that with respect to levy of penalty in regard to disallowance of expenditure of 4,34,943/- due to advancement of interest free loan to sister concern may also be considered to be debatable since the issue involved is the nexus and the commercial connection between both the concerns. Accordingly, the penalty was directed to be deleted. In this case also the Assessing Officer has not proved that interest expenditure was not paid and the Assessing Officer has not brought any material on record as to show that assessee has concealed or furnished inaccurate particular of income and disallowance has been made because the Assessing Officer was of the opinion that there is no nexus between the interest earned and the expenditure claimed. It is held by the Hon'ble Supreme Court in the case of CIT vs. Reliance Petro-chemical (supra) that merely because of the assessee had claimed the expenditure which was not accepted or acceptable to the Revenue that by itself would not attract penalty under Section 271(I)(c) of the Income Tax Act, 1961 Respectfully following the ratio of the Hon'ble Supreme Court in the case of CIT vs. Reliance Petro-chemical Pvt Ltd (supra) the AO is directed to delete the penalty.
ITA No. 846/Ahd/2010 A.Y.:-2004-05 Page No. 5Smt Arunaben D. Patel vs. the Dy CIT
6. In the result, the appeal of the assessee is allowed Sd/- Sd/-
(A.K. GARODIA) (KUL BHARAT)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad : Dated 31 / 08 /2012
A.Kumar, P.S.
आदे श कȧ ूितिलǒप अमेǒषत / Copy of Order Forwarded to:-
1. अपीलाथȸ / Appellant
2. ू×यथȸ / Respondent
3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ- अपील / CIT (A)-III, Baroda
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाइल / Guard file.
By order/आदे श से, उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद Strengthened preparation & delivery of orders in the ITAT
1) Date of taking dictation 27-08-2012
2) Direct dictation by Member straight on N.A. computer/laptop/dragon dictate
3) Date of typing & draft order place before 28-08-2012 Member
4) Date of correction 28-08-2012
5) Date of further correction
6) Date of initial sign by Members
7) Order uploaded on 31-08-2012
8) Original dictation pad has been enclosed in this Yes file
9) Final order and 2nd copy send to Bench Clerk on 31-08-2012 ITA No. 846/Ahd/2010 A.Y.:-2004-05 Page No. 6 Smt Arunaben D. Patel vs. the Dy CIT