ACIT, New Delhi v. Sh. Arun Kumar Saraf,, Kolkata

ITA 2859/DEL/2010 | 2002-2003
Pronouncement Date: 07-01-2011 | Result: Dismissed

Appeal Details

RSA Number 285920114 RSA 2010
Assessee PAN ACTPS6880M
Bench Delhi
Appeal Number ITA 2859/DEL/2010
Duration Of Justice 6 month(s) 29 day(s)
Appellant ACIT, New Delhi
Respondent Sh. Arun Kumar Saraf,, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 07-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 07-01-2011
Date Of Final Hearing 03-01-2011
Next Hearing Date 03-01-2011
Assessment Year 2002-2003
Appeal Filed On 08-06-2010
Judgment Text
ITA NO. 2859/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NO. 2859/DEL/2010 A.Y. : 2002-03 ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 46(1) NEW DELHI ROOM NO. 425 A 4 TH FLOOR MAYUR BHAVAN NEW DELHI (PAN/GIR NO. : ACTPS6880M) VS. SHRI ARUN KUMAR SARAF 21/1 JITENDRA MOHAN AVENUE KOLKATTA. (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. R.P. SINGHLA CA DEPARTMENT BY : MRS. ANUSHA KHURANA SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 22/3/2 010 PERTAINING TO ASSESSMENT YEAR 2002-03. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INCO ME TAX (APPEALS) HAS ERRED IN CANCELLING THE PENALTY AMOUNT ING TO ` 2 31 572/- U/S. 271(1)(C) OF THE IT ACT. 3. DURING THE COURSE OF ASSESSMENT ASSESSING OFFICER NOTED THAT ASSESSEE HAD PAID INTERESET AMOUTNING TO ` 756776/-. THIS WAS ADJUSTED AGAINST INTEREST RECEIVED AMOUNTING TO ` 8 47 637/- AND BALANCE INTEREST RECEIVED WAS SHOWN FOR ASSESSMENT Y EAR ` 90 861/-. THE INTEREST RECEIVED AND PAID WERE FROM M/S SEAJULI PROPERTY AND VINIYOG PVT. LTD. ASSESSEE SUBMITTED THAT ASSESSEE W AS CORE PROMOTER ITA NO. 2859/DEL/2010 2 OF M/S SEAJULI PROPERTY AND VINIYOG PVT. LTD. AND PRO VIDED UNSECURED TEMPORARY LOANS FROM TIME TO TIME AS PER THE REQUIR EMENT OF THE COMPANY FOR SETTING UP OF FIVE STAR HOTEL IN MUMBAI. THE IDBI WAS LEAD BANKER AT THE TIME OF THE PROJECT APPRAISAL. IDBI STIPULATED CONDITIONS THAT INTEREST PAID BY THE COMPANY IN EXCE SS OF 12.5% TO THE PROMOTERS TOWARDS THEIR FINANCIAL ASSISTANCE FOR H OTEL SHOULD BE BROUGHT BACK INTO THE COMPANYS ACCOUNT AND THEREFOR E THE INTEREST RECEIVED IN EXCESS OF 12.5% FROM THE COMPANY BY THE ASSESSEE AS UNSECURED LOAN DURING THE YEARS 1998-99 TO 2001-02 WAS REFUNDED TO THE COMPANY AND THE SAME HAD BEEN SET OFF AGAINST T HE INCOME RECEIVED FROM COMPANY FROM THE RELEVANT ASSESSMENT YE AR. IN THIS REGARD THE ASSESSEE ALSO SUBMITTED A LETTER OF ID BI. ASSESSING OFFICER NOTED THAT DESPITE OPPORTUNITIES ASSESSEE HAS NOT FILED DOCUMENTS LIKE STAEMENT OF ACCOUNT OF M/S SEAJULI PROPE RTY AND VINIYOG PVT. LTD. TO PROVE THAT THE FUND FROM THE ASSESSEE HAVE BEEN PUT TO USE IN THE HOTEL CONSTRUCTION FOR WHICH IDBI IS THE MAIN FINANCIER AND ONLY ON THE SATISFACTION OF THIS CONDITION THE CONDITIONS IMPOSED ARE RELEVANT. HENCE HOLDING THAT ASSESSEE FAILED TO PROVE THAT FUND ADVANCED BY THE ASSESSEE WERE UTILIZED TO CONFORM TH E GUIDELINES OF IDBI AND IN THE ABSENCE OF ANY EVIDENCE THE SET OFF OF INTEREST CLAIMED BY THE ASSESSEE OF ` 7 56 776/- WAS ADDED BACK TO THE INCOME OF THE ASSESSEE. 2.1 IN THE PENALTY ORDER THE IT WAS NOTED THAT THOU GH THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED THE ADDITION THE SAME WAS CONFIRMED BY THE ITAT. IN THE PENALTY PROC EEDINGS THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD REQUESTE D TO DROP THE PENALTY PROCEEDINGS STATING THAT ISSUE INVOLVED IS DEBATABLE. ITA NO. 2859/DEL/2010 3 ASSESSING OFFICER DID NOT ACCEPT THE SAME. HE PROC EEDED TO LEVY THE PENALTY OF ` 2 31 572/-. 3. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE PENALTY. HE CONCLUDED AS UND ER:- I HAVE CONSIDERED THE SUBMISSION MADE ON BEHALF OF THE APPELLANT AND ALSO GONE THROUGH THE CASE LAWS Q UOTED BY THE APPELLANT IN SUPPORT OF HIS CONTENTIONS. FACTS IN THIS CASE ARE NOT DISPUTED. THE ONLY ADDITION MADE BY T HE ASSESSING OFFICER IS ON ACCOUNT OF DISALLOWANCE OF REFUND OF EXCESS INTEREST (PAID IN EARLIER YEARS) BY THE APPE LLANT SHRI A.K. SHARAF TO THE COMPANY M/S SEUJULI PROPERTY AND VINIYOG PVT. LTD. AS PER GUIDELINES ISSUED BY THE IDB I. THE APPELLANT HAS CLAIMED IT AS AN EXPENDITURE AND SET I F OFF AGAINST THE INTEREST RECEIVED BY HIM FROM THE COMPANY DURING THE YEAR BUT THE ASSESSING OFFICER DID NOT ALLOW THE CLAIM. I AGREE WITH THE APPELLANT THAT IT WAS NOT A CASE E ITHER OF CONCEALMENT OF FACTS OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT IS A CASE WHERE THE APPEL LANT HAS MADE A CLAIM OF DEDUCTION FOR AN EXPENSE AGAINST AN INCOME UNDER A BONAFIDE BELIEF THAT SUCH A SET OFF IS AN ALLOWABLE EXPENDITURE WHEREAS THE ASSESSING OFFICER HAS NOT ALLOWED THE CLAIM ON THE BASIS OF A DIFFERENCE O F OPINION. ON APPEAL THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) UPHELD THE APPELLANTS INTERPRETATION AND ALLOWED H IS APPEAL WHEREAS ON FURTHER APPEAL THE ITAT HAS REVERSED THE DECISION OF LD. COMMISSIONER OF INCOME TAX (APPEALS) A ND ITA NO. 2859/DEL/2010 4 UPHELD THE VIEW TAKEN BY THE ASSESSING OFFICER. THE APPELLANT IS NOW IN APPEAL BEFORE THE HIGH COURT B ECAUSE ACCORDING TO HIM THE ITAT DECISION IS BASED ON PRESENTATION OF WRONG FACTS BY THE DEPARTMENT. I AM OF THE VIEW THAT THIS IS A CASE OF ADDITION BAS ED ON DIFFERENCE OF OPINION AND FOR INTERPRETATION OF LAW AND LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS NOT JUSTIFIED IN THIS CASE. THE PENALTY OF ` 2 31 572/- IS THEREFORE CANCELLED. 4. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEFO RE US. 5. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. IT IS UNDISPUTED THAT ASSESSEE HAS REPAID AMOUNT OF 7567 76/- AS INTEREST TO THE COMPANY ON ACCOUNT OF INTEREST RECEIVED EARLIER. THIS WAS SAID TO HAVE BEEN DONE PURSUANT TO IDBI DIRECTIONS THAT INT EREST PAID TO PROMOTER IN EXCESS OF 12.5% HAS TO BE REPAID. DISAL LOWANCE IN THIS REGARD WAS MADE BY THE ASSESSING OFFICER ON THE GRO UND THAT IT HAS NOT BEEN PROVED THAT LOAN TAKEN WAS UTILIZED FOR TH E PURPOSE OF HOTEL CONSTRUCTION. WE FIND THAT IT IS NOT DISPUTED THAT INTEREST HAS NOT BEEN PAID. UNDER SUCH CIRCUMSTANCES IT IS ONLY A MATTER OF OPINION AS TO WHETHER THE SAME IS ADJUSTABLE AGAINST THE INTEREST RECEIVED AND WHETHER THE SAME CONFORMS TO THE IDBI GUIDELINES IN TH IS REGARD. WE FIND THAT SECTION 271(1(C) OF THE ACT POSTULATES IMPOSITION O F PENALTY FOR FURNISHING OF INACCURATE PARTICULARS AND CONCEALME NT OF INCOME. IN THIS CASE WE FIND THAT THE ASSESSEE CANNOT BE SAID TO BE GUILTY OF CONTUMACIOUS CONDUCT SO AS TO ATTRACT THE LEVY OF PENALTY U/S 271(1)(C). ITA NO. 2859/DEL/2010 5 5.1 IN THIS REGARD WE PLACE RELIANCE TO THE HONBL E APEX COURT DECISION IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LTD. IN CIVIL APPEAL NO. 2463 OF 2010. IN THIS CASE VIDE ORDER DATED 17.3.2010 IT HAS BEEN H ELD THAT THE LAW LAID DOWN IN THE DILIP SHEROFF CASE 291 ITR 519 (SC) AS TO THE M EANING OF WORD CONCEALMENT AND INACCURATE CONTINUES TO BE A GOOD LAW BECAUS E WHAT WAS OVERRULED IN THE DHARMENDER TEXTILE CASE WAS ONLY THAT PART IN DILI P SHEROFF CASE WHERE IT WAS HELD THAT MENSREA WAS A ESSENTIAL REQUIREMENT OF PE NALTY U/S 271(1)(C). THE HONBLE APEX COURT ALSO OBSERVED THAT IF THE CONTEN TION OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CL AIM IS NOT ACCEPTED BY THE AO FOR ANY REASON THE ASSESSEE WILL INVITE THE PENAL TY U/S 271(1)(C). THIS IS CLEARLY NOT THE INTENDMENT OF LEGISLATURE. 5.2 IN THIS REGARD WE ALSO PLACE RELIANCE FROM THE APEX COURT DECISION RENDERED BY A LARGER BENCH COMPRISING OF THREE OF THEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26 W HEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTO RY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDINGS AND PENALTY WILL NOT OR DINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST OR ACTED IN CONSCIOUS DI SREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDIC IALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENA LTY IS PRESCRIBED THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE P ROVISIONS OF THE ACT OR WHERE ITA NO. 2859/DEL/2010 6 THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OF FENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 6. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENTS WE UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) IN DELETING THE LEVY OF PENALTY. 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7/01/2011. SD/- SD/- [ [[ [RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 7/01/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES