K.M.Re-Rolls Pvt. Ltd.,, Jalna v. ACIT CIR.-1, Aurangabad, Aurangabad

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NO 790/PN/07 (ASSTT. YEAR 2003-04) K.M. REROLLING P.LTD. D-56 ADDL MIDC .. APPELLANT JALNA PAN AABCK2036L VS. ASSTT. COMMISSIONER OF INCOME-TAX CIR.1 AURANGABAD .. RESPON DENT APPELLANT BY :SMT N.M.KULKARNI RESPONDENT BY :SHRI HEMANT KUMAR LEUVA ORDER PER G S PANNU A.M: THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE O RDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I AURANGABAD DATED 28.2.2007 WHICH IN TURN HAS ARISEN FROM A PENALTY ORDER DATED 29.6.20 06 PASSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME-TAX A CT 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2003-04. 2. THE RELEVANT FACTS IN BRIEF ARE THAT THE ASSE SSEE COMPANY IS IN THE BUSINESS OF MANUFACTURING OF M.S. BARS. FOR THE IMP UGNED ASSESSMENT YEAR DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AS SESSING OFFICER MADE AN ADDITION OF 1 98 668/- ON ACCOUNT OF ALLEGED UNPRO VED UNSECURED LOANS AND CONSEQUENTLY INITIATED PENALTY PROCEEDINGS UNDER S ECTION 271(1)(C) OF THE ACT. IN THE PENALTY PROCEEDINGS THE ASSESSEE CONTENDED BEF ORE THE ASSESSING OFFICER THAT THE ADDITION TO THE LOANS WERE FROM OLD CREDIT ORS WHO WERE SHARE-HOLDERS AND RELATIVES OF DIRECTORS AND WHOSE NAMES APPEARED IN THE BALANCE SHEET. NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE THE ASSESSING OFFICER LEVIED A PENALTY OF RS 73 008/- UNDER THE PROVISIONS OF SECT ION 271(1)(C) OF THE ACT. ITA NO 790/PN/07 K.M.RE-ROLLING P LTD. JALNA 2 3. IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) THE ASSESSEE COULD NOT ESTABLISH THE CREDIT-WORTHINESS OF THE PA RTIES WHO LENT MONEY TO THE ASSESSEE. THE COMMISSIONER OF INCOME-TAX (APPEALS) ACCORDINGLY CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER. 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE PENALTY UNDER SECTION 271(1)(C) HAS BEEN LEVIED ON THE BASIS OF AN ADDITION MADE UNDER SECTI ON 68 OF THE ACT. IN OUR OPINION THIS IS NOT A CASE WHERE LEVY OF PENALTY U NDER SECTION 271(1)(C) FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME IS WARRANTED. IN THIS VIEW OF THE MATTER WE SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND DIRECT DELETION OF THE PENALTY OF RS 73 008/- LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT. 5. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON THIS 9TH DAY OF FEB RUARY 2011. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G.S. PA NNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED:9 TH FEBRUARY 2011 COPY TO:- 1) K.M. RE-ROLLS P.LTD. 2) ACIT CIR.1 AURANGABAD 3) THE CIT-(A)-I AURANGABAD. 4) THE CIT-1 AURANGABAD 4) THE DEPARTMENTAL REPRESENTATIVE B BENCH ITAT PUNE BY ORDER TRUE COPY ASST. REGISTRAR I.T.A.T. PUNE B