Income Tax Appellate Tribunal - Chandigarh
M/S Grs Health Care Pvt. Ltd., Mohali vs Ito, Chandigarh on 27 October, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH'A', CHANDIGARH
BEFORE SHRI. SANJAY GARG, JUDICIAL MEMBER AND
Dr. B.R.R. KUMAR, ACCOUNTANT MEMBER
ITA No.609/Chd/2016
Assessment Years: 2011-12
M/s GRS Health Care Pvt. Ltd. Vs. The I TO
C/o Grecian Hospital, Sector 69 Ward 4(4)
Mohali Chandigarh
PAN No. AADCG1949E
(Appellant) (Respondent)
Assessee By : Shri. Tej Mohan
Department By : Sm t. Chandrakanta
Date of hearing : 01/08/2017
Date of Pronouncement : 27/10/2017
ORDER
PER DR. B.R.R. KUMAR, A.M
The present appeal have been filed by the assessee against the order of the Ld. CIT(A)-2, Chandigarh dt. 17/03/2016.
2. The assessee has raised the following grounds of appeal:
That the Ld. CIT(A)-2 has failed to appreciate the facts and circumstances of the case and has thereby erred in Sustaining penalty u/s 271(1)(c) of the Income Tax Act, 1961.
There was no furnishing of any inaccurate particulars of income as the disallowance was on account of interest to bank u/s 43B of the Income Tax Act 1961 and disallowance u/s 40(a)(i) on account of non deduction of TDS on part rent. The same does not tantamount of furnishing of any inaccurate particulars of income.
In view of the above, it is prayed that the order u/s 271(1)(c) of the Income Tax Act 1961 may kindly be quashed.
3. Brief facts of the case are that on perusal of the details. Assessing Officer noted that assessee has debited an amount of Rs. 87,12,980/- on account of interest paid to the bank., On verification Assessing Officer found that the interest of Rs. 87,12,980/- debited in P&L account has not been paid and therefore it has been claimed against the provision of Section 43B of the Act.
24. During the assessment proceedings the assessee simply stated that it does have any objection to the disallowance of interest. The Assessing Officer levied penalty under section 271(1)(c) clause B of explanation 1 of Rs. 27,54,110/- for concealing correct particulars of income on the disallowance made under section 43B.
5. During appeal proceeding before the Ld. CIT(A) assessee made submissions that during the under consideration the assessee company had debited interest to bank on loan taken in the P&L account. The interest was debited by the bank during the FY 2010-11 relevant to AY 2011-12. The assessee company while computing the income did not add back the interest payable which was not paid under section 43B of Income Tax Act, 1961. The assessee company had a loss and the addition of unpaid interest would have only reduced the loss. The same was by oversight and not intentional. The interest paid is an allowable deduction in the year of actual payment. There is no furnishing of inaccurate particulars of income as no benefit has been derived by the assessee company. The assessee has placed reliance on various judicial decisions.
6. The Ld. CIT(A) has confirmed the addition relying on the judgment of Hon'ble Delhi High Court in case of M/s Zoom Communications Pvt. Ltd. (327 ITR
510) [2010]
7. Aggrieved the assessee filed appeal before us.
8. The Ld. AR reiterated the arguments taken before the Ld. CIT(A) and the AO while the Ld. DR relied on the penalty order of the Assessing Officer.
9. We have gone through the records available before us. It was found that the penalty was levied on the disallowance under section 43B. The Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Budhwell Cooperative Sugar Mills has held that when assessee made a bonafide claim on the basis of the law laid down by various Courts then penalty would not be levied upon such an assessee merely on the grounds that the claim was disallowed. In the judgment of the Hon'ble Supreme Court in CIT Vs. Reliance Petroproducts P. Ltd. [2010] 322 ITR 158 (SC); [2010] 230 CTR 320, the legal position to this effect has been reiterated. If the assessee has made full disclosure in the return, the claim for deduction cannot be held to be giving of inaccurate particulars. In the case of 3 CIT vs. Brahmaputra Consortium Ltd. 348 ITR 339(2011)(Delhi) the Hon'ble Court held that the explanation of the assessee can be accepted as genuine and bonafide in case of wrong claim of depreciation on earthmoving equipments. Similarly in the case of Price Waterhouse Coopers (P) Ltd. Vs. CIT (2012 025 TAXMANN. COM 400/211 Taxman 40/253 CTR) the Hon'ble Supreme Court held that penalty cannot be levied on a bonafide and inadvertent error. Similarly in the case of CIT Vs. National Institute of Technical Teacher Training of Research [2015] 231 Taxman 657 (P&H High Court). Hon'ble Jurisdictional Court has held that penalty cannot be levied on the disallowances under section 43B. Since full particulars of income were given in the return and the same were not found to be incorrect. The Hon'ble High Court of Madras in the case of CIT Vs. MSK Constructions Pvt. Ltd. 296 ITR 18 (Mad) (2008) clearly held that disallowance of interest under section 43B does not amount to concealment of income when there is no tax payable, penalty could not be levied.
10. Hence, keeping in view the case law cited above and totality of the issue that in the instant case the penalty has been levied on the disallowances made under section 43B, the penalty levied is hereby deleted.
11. In the result, appeal of the assessee is allowed.
Order pronounced in the open court.
Sd/- Sd/- (SANJAY GARG) (Dr. B.R.R. KUMAR) JUDI CI AL MEMBER ACCOUNTANT MEMBER 27/10/2017 AG Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The Departmental Representative