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Income Tax Appellate Tribunal, BENCH “I”, MUMBAI
Before: SHRI B.R.BASKARAN & SHRI PAWAN SINGHShri V. Justin (DR) Shri Vinay Sinha (AR) PER PAWAN SINGH:
Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by Revenue under section 253 of Income Tax Act is directed against the order of Ld. Commissioner of Income-Tax (Appeals)-52, Mumbai, [for short the ld. CIT(A)] dated 29.06.2016 for Assessment Year 2009-2010. The sole ground of appeal raised by Revenue is that the Ld. CIT(A) erred in deleting the penalty levied under section 271(1)(c) of the I.T. Act.
2. At the outset of hearing, the Ld. Authorised Representative (AR) of the assessee submits that the addition/disallowance on which the penalty under section 271(1)(c) was levied by Assessing Officer, has already been deleted by the Tribunal in dated 09.08.2017.
Therefore, the penalty order passed by assessing officer would not survive.
M/s Saryu Properties and Hotels Pvt. Ltd. On going through the order of Tribunal, the Ld. AR of the assessee fairly conceded that the addition in the assessment order made by assessing officer on account of unsecured loan of Rs. 60,00,000/- has been deleted by the Tribunal.
We have considered the submission of both the parties and have gone through the orders of authorities below and the order passed by co-ordinate bench of Tribunal in appeal on the quantum assessment in dated 09.08.2017. The relevant part of order passed by Tribunal in appeal on quantum assessment is extracted below.
We have heard the rival submissions and perused the material before us. We find that WFPL had advanced loan of Rs.60 lakhs to the assessee in the AY.1998-99,that the assessee did not pay any interest to WFPL, that during the year under consideration WFPL had written off the amount in its book of account as irrecoverable, that the AO held that liability ceased to exist and that by adopting colourable device the assessee had avoided payment of tax for the disputed amount, that FAA confirmed the order of the AO, that both the entities are of same Group-i.e. Raheja Group, that even after four years of writing off of the disputed amount by WFPL the assessee had not paid the amount/interest to the lender.
We find that while deciding the issue the AO and FAA had not invoked the provisions of section 41(1)or section 28.In other words in their opinion, it is not cessation of liability. The writing of loan by the lender can be result of many a factors. The assessee is owning its liability. The AO or the FAA has not brought on record any fact that could prove the coming in of an item to the pocket of the assessee i.e. occurance of income. The assessee is not denying its liability, so, it cannot be assessed as income from other sources (u/s.56 of the Act). We agree there are certain factors that create some suspicion about the transaction, but no suspicion can take place of evidence. In the case before us, there is evidence to prove that amount in question can be termed as income. The AO from AY.1998-99 was accepting the genuineness of the transaction. In the year of writing off of the amount by the lender would not automatically turn the loan into income. He has alleged that it was a colourable device, but it is a mere allegation. It has not been 2 M/s Saryu Properties and Hotels Pvt. Ltd. proved. The case laws relied upon by the AR support the view taken by us. Considering the peculiar facts and circumstances of the case, we are of the opinion that the order of the FAA cannot be endorsed. So, reversing the same, we decide effective ground of appeal in favour of the assessee.
4. Considering the decision of Tribunal in appeal on quantum assessment in dated 09.08.2017, wherein the addition of unsecured loan has already been deleted. Hence, in our view, once the addition, on the basis of which the penalty was levied, has been deleted, the penalty order would not survive.
5. In the result, appeal filed by Revenue is dismissed on the basis of order on quantum assessment proceeding in dated 09.08.2017. Order pronounced in the open court on 8th day of March 2018.