Principal Commissioner Of Income Tax (Central) vs. M/S Moira Steel Limited

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. HIGH COURT OF MADHYA PRADESH BENCH AT INDORE ITA No.99/2017 HIGH COURT OF MADHYA PRADESH:BENCH AT INDORE Division Bench: Hon'ble Shri Justice P.K. Jaiswal and Hon'ble Shri Justice Virender Singh ITA No.99/2017 Principal Commissioner of Income Tax (Central) Bhopal Vs. M/s Moira Steel Limited Ms. Veena Mandlik, learned counsel for the appellant. Shri S.C. Bagadiya, learned counsel for the respondent. ------------------------------------------------------------------------- Whether approved for reporting: Yes/No JUDGEMENT (Passed on 18/06/2018) Per: Virender Singh, J. 1. Challenging the order of Income Tax Appellate Tribunal dated 14.03.2017, passed in ITA No.658/IND/2013 whereby the learned Appellate Tribunal confirmed the order of Commissioner, Income Tax (Appeals)-I, Indore, who has reversed and quashed the order of Assessment officer (AO) of imposing penalty on the respondent for not furnishing appropriate and accurate particulars of income. 2. Relevant facts giving rise to the present appeal preferred by the revenue are that the assessee company filed its return of income for the A.Y.2005-2006 declaring net loss of Rs.13,48,849/- which was later finally settled at Rs.6,17,283/-. The assessee company had taken a loan in the form of Cash Credit Limit from State Bank of India (SBI) of Rs.1,52,23,892/- 359

. HIGH COURT OF MADHYA PRADESH BENCH AT INDORE ITA No.99/2017 and had claimed expenditure on account of interest paid on this loan. Later, He (assessee) entered into one time settlement with the SBI. The Bank waived a total sum of Rs.2,54,42,837/- including principal as well as interest on it. He furnished this information to the IT department. His case was reopened under Section 41(1) of the Income Tax Act, 2013 (for short the Act, 2013) to consider this waiver. The Assessment Officer asked the assessee to furnish details of interest amount waived off by the Bank. The assessee submitted that the Bank has clubbed the principal amount with the interest and has settled the account on lump-sum basis without any verification and has not provided any bifurcation of both, therefore, he is not in a position to furnish such information. The assessment officer calculated the interest component on pro rata basis and determined amount of interest waived off by the bank as Rs.1,51,25,582/-. An assessment order under Section 147/143(3) was passed by the AO on 16.12.2010 determining the total income of Rs.1,45,08,299/- after set off the loss incurred of Rs.6,17,283/-. This order was never challenged by respondent. 3. While passing the order of assessment, the A.O. observed that the assessee has not furnished bifurcation of principal and interest amount in the total amount waived off by the bank and has claimed the entire amount as principal amount without giving any details, which tantamount of furnishing of incorrect particulars of income especially in view of Section 41(1) of the Act, 2013. In reply to the Notice issued by the A.O., the assessee claimed that as the bank had not provided the details of break up of the principal and the interest, he is not in a position to furnish the same. The A.O. was of the view that the burden was on the 359

. HIGH COURT OF MADHYA PRADESH BENCH AT INDORE ITA No.99/2017 assessee to furnish the requisite information and to provide evidence in support of its claim. He further noted that all the details available as per record the amount of loan taken by the assessee was Rs.1,52,23,892/- and amount of remission was Rs.2,54,42,837/-, which establishes that the assessee had furnished incorrect particulars of income. As the assessee had not given any particulars of income under Section 41(1) of the Act neither in the return of income filed under Section 139 of the Act nor in the return filed under Section 148 of the Act. In this back drop, the A.O. held that the assessee had committed a fault within the meaning of Section 271(1)(c) of the Act and imposed a penalty of Rs.55,34,753/- vide order dated 30.06.2011. 4. The order was challenged by the respondent before the First Appellate Authority; who was of the view that the assessee had submitted particulars which were provided to him by the bank, he had fully disclosed the fact of waiver of the amount by the bank in its profit and loss account and in no-dues certificate dated 08.08.2005 issued by the bank, the bank has only mentioned the liability of the assessee which stand discharged, but the Bank nowhere mentioned as to whether the payment of Rs.1.21 Crore made by the assessee was adjusted towards the principal amount or towards interest and there was no clarity from such letter as to which amount was waived off by the bank, therefore, the assessee can not be held liable to furnish inaccurate information and set aside the penalty imposed by the AO. The order was confirmed by the ITAT in the appeal preferred by the revenue vide order dated 14.03.2017. 5. Learned counsel appearing for the revenue/appellant has submitted that the question as to whether on the facts and in the 359

. HIGH COURT OF MADHYA PRADESH BENCH AT INDORE ITA No.99/2017 circumstances of the case and in law the ITAT was justified in holding that penalty under Section 271(1)(c) of the I.T. Act is not leviable on the basis of addition made under Section 41(1) of the I.T. Act and the findings recorded in the assessment order is not conclusive for deciding the imposition of penalty and as to whether the ITAT was justified in holding that the assessee has furnished full particulars of income with regard to the waiver of loan by the Bank in its return particularly when the assessee had not given any particulars of its income under Section 41(1) of the Act neither in the Return filed under Section 139 (1) nor in the Return filed in response to the notice under Section 148 of the Act. 6. In support of its contention, the appellant has placed reliance on Commissioner of Income Tax vs. Zoom Communication P. Ltd reported in (2010) 327 ITR 510 (Delhi) where it is held that in case of concealment of income, claim for deduction is not bonafide, therefore, the assessee is liable to pay penalty, but here as held by the learned ITAT there is no concealment of the income on the part of the assessee, therefore, on the facts this judgement is distinguishable. 7. In reply, learned counsel for the respondent placed reliance on Naval Singh Sahakari Shakkar Karkhana Maryadit vs. Assistant Commission of Income Tax passed in M.A.I.T. No.7/2002 and Commissioner of Income Tax, Ahmedabad vs. Reliance Petroproducts Pvt. Ltd. Passed passed in Civil Appeal No.2463/2010 where it is held that in case the appellant had not disclosed correct position with regard to payment of interest and settlement of outstanding dues of financial institute due to bonafide mistake, it cannot be considered as a case where 359

. HIGH COURT OF MADHYA PRADESH BENCH AT INDORE ITA No.99/2017 inaccurate statement was made deliberately or there was deliberate concealment of fact, therefore, penalty u/s 271(1)(c) of the Act, 2013 can not be imposed. Almost similar factual position appears in the present case. The circumstances, in which required particulars could be supplied by the assessee were not under his control, therefore, both the learned authorities CIT (appeals) I as well as the ITAT rightly exonerated the assessee from the impugned liability. 8. Having regard to the aforesaid facts and circumstances of the case, it appears that the dispute between the parties is purely a dispute of facts. We do not find any substantial question of law in the present appeal. Therefore, the same is dismissed hereby. (P.K. JAISWAL) (VIRENDER SINGH) JUDGE JUDGE amit Digitally signed by Amit Kumar Date: 2018.06.21 11:07:46 +05'30'