Dr Ganni Baskara Rao, Rajahmundry v. The ACIT, Circle-1, Rajahmundry

ITA 506/VIZ/2010 | 2003-2004
Pronouncement Date: 30-03-2011 | Result: Allowed

Appeal Details

RSA Number 50625314 RSA 2010
Assessee PAN ABQPG1229E
Bench Visakhapatnam
Appeal Number ITA 506/VIZ/2010
Duration Of Justice 4 month(s) 13 day(s)
Appellant Dr Ganni Baskara Rao, Rajahmundry
Respondent The ACIT, Circle-1, Rajahmundry
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 30-03-2011
Date Of Final Hearing 29-03-2011
Next Hearing Date 29-03-2011
Assessment Year 2003-2004
Appeal Filed On 16-11-2010
Judgment Text
ITA 506 OF 10 GANNI BHASKARA RAO RJY IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO. 506 /VIZAG/ 20 1 0 ASSESSMENT YEAR : 2003 - 04 DR. GANNI BHASKARA RAO RAJAHMUNDRY VS. ACIT CIRCLE - 1 RAJAHMUNDRY (APPELLANT) (RESPONDENT) PAN NO.ABQPG 1229E APPELLANT BY: SHRI C. SUBRAHMANYAM CA RESPONDENT BY: SHRI R.K. SINGH DR ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) CONFIRMING THE PENALTY LEVIED U/S 271(1)(C) OF THE I.T. ACT. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE DOCUMENTS PLACED O N RECORD. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE FACT THAT THE PENALTY U/S 271(1)(C) WAS LEVI ED ON CONFIRMATION OF TWO ADDITIONS; ONE IS DISALLOWANCE OF INTEREST PAID TO UCO BANK AND THE OTHER FOR ESTIMATION FOR AGRICULTURAL INCOME. THE DISALLOWAN CE OF INTEREST PAID TO UCO BANK WAS CONFIRMED FOR THE REASONS THAT THE LOAN BO RROWED BY THE ASSESSEE WAS NOT UTILIZED BY THE ASSESSEE ITSELF BUT IT WAS UTILIZED BY THE EDUCATIONAL SOCIETY TO ACQUIRE FIXED ASSETS FOR SETTING UP OF M EDICAL COLLEGE AND HOSPITAL. THE SOCIETY WAS FORMED BY THE ASSESSEE AND WHATEVER LOAN WAS OBTAINED IN HIS PERSONAL CAPACITY WAS ADVANCED TO THE SOCIETY. THEREFORE ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT THE INTEREST PAID ON T HE LOAN IS AN ALLOWABLE EXPENDITURE IN HIS PERSONAL ACCOUNT BECAUSE THE OBJ ECT OF THE SOCIETY WAS ALSO TO IMPART THE EDUCATION IN MEDICAL FIELD. 3. THE OTHER ADDITION WAS MADE ON ACCOUNT OF ESTIMA TION OF AGRICULTURAL INCOME BY THE ASSESSEE. THIS ADDITION WAS ALSO MAD E AFTER REJECTING ITA 506 OF 10 GANNI BHASKARA RAO RJY 2 ESTIMATION OF THE AGRICULTURAL INCOME BY THE ASSESS EES. THE REVENUE HAS NOT DISPUTED THE AGRICULTURAL INCOME EARNED BY THE ASSE SSEES. THE DISPUTE WAS RAISED ONLY WITH REGARD TO THE ESTIMATION OF THE AG RICULTURAL INCOME IN THE ABSENCE OF PROPER MAINTENANCE OF BOOKS OF ACCOUNTS. THEREFORE THESE ADDITIONS WERE MADE AFTER REJECTING THE EXPLANATION S OF THE ASSESSEES. THUS THE PENALTY U/S 271(1)(C) CANNOT BE LEVIED AS THE C LAIM WAS RAISED BY THE ASSESSEES UNDER A BONAFIDE BELIEF. 4. THE LD. D.R. ON THE OTHER HAND HAS PLACED A HEAV Y RELIANCE UPON THE ORDER OF THE CIT(A). 5. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE R IVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE LOWER A UTHORITIES WE FIND THAT THE ASSESSEES CLAIM OF PAYMENT OF INTEREST ON BORROWED FUNDS TO UCO BANK WAS DISALLOWED BY THE REVENUE ONLY FOR THE REASON THAT THIS BORROWED FUND WAS ADVANCED TO THE SOCIETY OF WHICH ASSESSEE IS A MANA GING TRUSTEE AND THIS BORROWED FUND WAS NOT UTILIZED BY THE ASSESSEE IN H IS MEDICAL PROFESSION. THE OTHER ADDITION WAS MADE BY THE REVENUE ON THE G ROUND THAT ASSESSEE HAS CLAIMED MORE AGRICULTURAL INCOME. NOW THE QUES TION ARISE WHETHER FOR THESE ADDITIONS PENALTY U/S 271(1)(C) CAN BE LEVIE D FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS? TH E ASSESSEE HAS FURNISHED THE COMPLETE DETAILS BEFORE THE REVENUE AUTHORITIES AND HE HAS CLAIMED THE PAYMENT OF INTEREST UNDER A BONAFIDE BELIEF THAT TH E FUND WAS UTILIZED BY A SOCIETY OF WHICH HE IS A MANAGING TRUSTEE TO ACQUIR E THE MEDICAL EQUIPMENTS. SINCE THE ASSESSEE HAS RAISED A CLAIM OF PAYMENT OF INTEREST ON THE BORROWED FUNDS TO UCO BANK UNDER A BONAFIDE BELIEF THE PENA LTY U/S 271(1)(C) SHOULD NOT BE LEVIED. 6. WITH REGARD TO THE OTHER ADDITIONS ON ACCOUNT OF AGRICULTURAL INCOME WE ARE ALSO OF THE VIEW THAT THE ADDITIONS WERE MAD E AFTER REJECTING THE ESTIMATION OF AGRICULTURAL INCOME BY THE ASSESSEES. THEREFORE THE PENALTY U/S 271(1)(C) SHOULD ALSO NOT BE LEVIED FOR THE ADD ITION AFTER REJECTING THE ESTIMATION OF AGRICULTURAL INCOME. WE THEREFORE OF THE VIEW THAT THE ADDITIONS CAN BE MADE AFTER REJECTING THE EXPLANATIONS FURNIS HED BY THE ASSESSEES ITA 506 OF 10 GANNI BHASKARA RAO RJY 3 BEING CONSIDERED TO BE NON-PLAUSIBLE BUT FOR THESE REASONS PENALTY U/S 271(1)(C) SHOULD NOT BE LEVIED. WE THEREFORE OF TH E VIEW THAT IN THE INSTANT CASE THE REVENUE WAS NOT JUSTIFIED IN LEVYING THE PENALTY U/S 271(1)(C) OF THE ACT. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A ) AND DELETE THE PENALTY. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPE N COURT ON 30.3.2011 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 30 TH MARCH 2011 COPY TO 1 DR. GANNI BHASKARA RAO 19 - 5 - 21/ 6 NEAR KAMBALA TANK RAJAHMUNDRY 2 ACIT CIRCLE - 1 RAJAHMUNDRY 3 DCIT CIRCLE - 3(2) HYDERABAD 4 THE CI T RAJAHMUNDRY 5 THE CIT (A) RAJAHMUNDRY 6 THE DR ITAT VISAKHAPATNAM. 7 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM