Sh. Dharampal Garg, Patiala v. ITO, Patiala

ITA 990/CHANDI/2016 | 2010-2011
Pronouncement Date: 21-10-2016 | Result: Allowed

Appeal Details

RSA Number 99021514 RSA 2016
Assessee PAN ABEPG3401E
Bench Chandigarh
Appeal Number ITA 990/CHANDI/2016
Duration Of Justice 1 month(s) 7 day(s)
Appellant Sh. Dharampal Garg, Patiala
Respondent ITO, Patiala
Appeal Type Income Tax Appeal
Pronouncement Date 21-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 21-10-2016
Assessment Year 2010-2011
Appeal Filed On 14-09-2016
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMC CHANDIGARH BEFORE SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMBER ITA NO. 990/CHD/2016 ASSESSMENT YEAR: 2010-11 M/S DHARAMPAL GARG VS. THE ITO WARD-1 PROP. SHREE GANESH PLY WOOD PATIALA PATIALA PAN NO. ABEPG3401E (APPELLANT) (RESPONDENT) APPELLANT BY : SH. RISHAB KAPOOR RESPONDENT BY : SH. S.K. MITTAL DATE OF HEARING : 18/10/2016 DATE OF PRONOUNCEMENT : 21/10/2016 ORDER THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF CIT(A) PATIALA DATED 28.6.2016. 2. THE ASSESSEE IS AN INDIVIDUAL AND IN THE BUSINES S OF SALE AND PURCHASE OF PLYWOOD AND ALLIED MATERIALS. THE ISSUE ON WHICH PE NALTY WAS LEVIED U/S 271(1)(C) OF THE ACT AND CONFIRMED BY LD. CIT(A) IS AN ADDITION OF RS. 1 17 024/- BEING DISALLOWANCE OF INTEREST EXPENDITURE ON THE LOAN TA KEN FOR PURCHASE OF PLOT ALLEGEDLY FOR CONSTRUCTION OF A GODOWN. THE AMOUNT WAS DISALL OWED ON THE GROUND THAT THE LOAN WAS NOT UTILIZED FOR BUSINESS PURPOSES. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT TH E LOAN WAS TAKEN FOR THE PURPOSE OF PLOT ON WHICH THE ASSESSEE PROPOSED TO C ONSTRUCT GODOWN. HE SUBMITTED THAT AS THE PLOT OF LAND WAS IN RESIDENTIAL AREA T HE ASSESSEE COULD NOT GET A NO OBJECTION CERTIFICATE FROM THE CONCERNED AUTHORITIE S FOR CONSTRUCTION OF A GODOWN. 2 HE PLEADED THAT MERE DISALLOWANCE OF A BONAFIDE CLA IM CANNOT BE HELD AS CONCEALMENT OF INCOME. 4. THE LD. DR ON THE OTHER HAND SUBMITTED THAT BUT FOR THE SCRUTINY OF HIS CASE THE ASSESSEE WOULD HAVE GOT AWAY WITH THIS EXCESS O F CLAIM OF INTEREST. HE SUBMITS THAT THE PLOT OF LAND WAS IN A RESIDENTIAL AREA AND COULD NOT HAVE BEEN PUT TO COMMERCIAL USE DUE TO BUILDING REGULATIONS. HE RELI ED ON THE ORDER OF THE FIRST APPELLATE AUTHORITY. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS I FIND THAT THE ASSESSEE HAS CLAIMED INTEREST EXPENDITURE ON THE TERM LOAN TAKEN WHICH W AS UTILIZED FOR PURCHASE OF A PLOT. THE VIEW OF THE ASSESSING OFFICER IS THAT THE INTER EST ON THE TERM LOAN WAS NOT ALLOWABLE AS A PLOT OF LAND COULD NOT PUT TO COMMER CIAL USE. IT IS WELL SETTLED THAT MERE DISALLOWANCE OF A CLAIM CANNOT LEAD TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE EXPLANATION GIVEN BY THE ASSESSEE IN MY VIEW IS A BONAFIDE EXPLANATION. THE CASE LAWS CITED BY THE LD. DR WOULD NOT SUPPORT TH E LEVY OF PENALTY ON THE FACTS OF THIS CASE. 6. HENCE IN VIEW OF THE ABOVE DISCUSSION I CANCEL THE LEVY OF PENALTY TO THE EXTENT SUSTAINED BY THE LD. CIT(A) AND ALLOW THE AP PEAL OF THE ASSESSEE. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT SD/- [J. SUDHAKAR REDDY] ACCOUNTANT MEMBER DATED : 21 ST OCTOBER 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 3