SMT. MANJU PANDEY,KOLKATA vs. ITO, WARD-44(1), KOLKATA, KOLKATA

Since all these appeals relate to the same assessee and common identical issues are involved therefore these are heard together and a consolidated order is being passed for the sake of convenience and brevity.

Now we first take up assessee’s appeal in ITA NO.1831/Kol/2016 for A.Y.2008-09 wherein the main grievance of the assessee is that the ld. AO as well as the CIT(A) erred in confirming the penalty imposed u/s 271(1)(c) of the Act.

Aggrieved by the stand so taken by the AO, the assessee carried the matter in appeal before the ld. CIT(A) without any success. The ld. CIT(A) confirmed the penalty u/s 271(1)(c) of the Act by reiterating the facts narrated in the penalty order u/s 271(1)(c) of the Act.

Aggrieved by the order of ld. CIT(A) the assessee is in appeal before us.

The ld. Counsel for the assessee begins by pointing out that the assessment of income of the assessee for the Assessment Year 2008-09 has been completed by AO u/s - 143(3) on 22.12.2010. The Learned Assessing Officer disallowed the claim of interest amounting to Rs. 6,53,402/- paid on borrowed amount to Union Bank of India for construction of building at 118 Raja Dinendra Street, Kolkata – 700004, and Rs 57,000/- by treating deemed interest on the advances made to some parties in connection with construction work. The assessing officer after passing the order U/s 154 of the Act, rectifying some genuine mistake, has complicated the matter and initiated proceeding u/s 271(1)(c) of the Income Tax Act, 1961. The assessee has produced the bank statements regarding loan granted by Union Bank of India, and copy of Balance sheet of Construction Company through whom construction work had been completed. The assessee pointed out during the original proceedings that documents were not available from the Banker because total loan amount has been repaid and the account has been closed by the Banker. Therefore, the assessee was working under bona fide belief and the penalty U/s 271(1) (c ) of the Act should not be levied.

On the other hand, the ld. Departmental Representative for the Revenue has primarily reiterated the stand taken by the ld. AO and the ld. CIT(A), which we have already noted in our earlier para, and is not being repeated for the sake of brevity.

We have given a careful consideration to the rival submissions and perused the materials available on record. It is a settled law that assessment proceedings and penalty proceedings are separate and independent. The assessee may submit more explanation and more documents during the penalty proceedings which he has omitted to submit during the quantum proceedings. We note that during the assessment proceedings/ rectification proceedings, the assessee has produced bank statements regarding loan granted by Union Bank of India and copy of Balance Sheet of Construction Company through whom construction work had been completed. We note that the assessee has proved the bona fide by submitting the bank statement and balance sheet and other documents and there was no mala fide intention to evade the tax.

As we noted in our earlier para that consideration in the assessment proceedings and penalty proceedings are different. The addition can be sustained on preponderance of probabilities but where the assessee has given sufficient evidence with regard to loan, that is, bank statements regarding loan granted by Union Bank of India and copy of Balance Sheet of Construction Company through whom construction work had been completed and these evidences have not been found to be false, merely because the same is not available during the original assessment proceedings and submitted by the assessee in rectification proceedins, as these documents were not available during the original assessment proceedings, the levy of penalty may not be justified. After considering the facts of the case as well as explanation and evidences produced by the assessee, we are of the view that it is not a fit case for levy of penalty U/s 271(1) (c) of the Act. Accordingly, we delete the penalty order U/s 271(1) (c) of the Act.

Now we take up the assessee’s appeal in ITA Nos. 1832/.Kol/2016 for A.Y.2008-09 which is filed by the assessee against the order passed by the CIT(A) which in turn arises out of an order passed by AO u/s 154 of the Act. In this appeal the main grievance of the assessee is that the ld. CIT(A) was wrong and unjustified in confirming the order of the ld. AO for considering the claim u/s 24(b) of the Act disallowing interest of Rs.1,50,000/- u/s 24(b) of the Act in view of the nature and circumstances of the case.

At the outset, the ld. Counsel for the assessee submitted that the bank statements regarding loan granted by Union Bank of India and copy of the balance sheet of Construction of company through whom construction work had been completed as produced by the ld. Counsel before the bench. The ld. Counsel also stated that any other paper is not available from the banker because the total loan has been repaid and the accounts has been closed by the banker but these facts could not be considered by the authorities below.

After hearing the ld. Counsel for the assessee and ld DR for the Revenue, we note that the assessee could not get proper opportunity to represent his case during the assessment proceedings. We note that now the assessee willing to produce copy of the bank statement and copy of the balance sheet of the construction company and the other information before the AO and therefore the ld. Counsel requested the bench to remit the issue back to the file of the AO to adjudicate the issue afresh after taking into account the bank statement and copy of the balance sheet and other information available with the assessee. The ld. Departmental Representative for the Revenue did not object if the issue is remitted back to the file of the AO.

We are of the view that the assessee could not represent his case before the ld. AO, properly. Therefore, we think it proper and appropriate to give one more opportunity to the assessee to represent his case before the AO. Therefore, we set aside the order of the ld. CIT(A) and remit the issue back to the file of the AO to

Now we deal with the assessee’s appeal in ITA NO.1833/Kol/2016 for A.Y.2008-09. This is an appeal directed against an order passed by the CIT(A) which in turn arises out of an order passed by the ld AO under section 143(3) of the Act. The main grievance raised by the assessee are that the ld. CIT(A),was not justified in confirming the order passed by the ld. AO for disallowing the interest on the loan amounting to Rs.6,53,402/- borrowed for purchase, re-construciton and repair of the house property as well as confirming the deemed interest of Rs.57,000/-.

The ld. Counsel for the assessee submitted before us that a correct computation on the basis of income and expenditure account filed by the assessee has been prepared. Such a computation is helpful in ascertaining the quantum u/s 24(b) of the Act and business expenditure. The bifurcation of interest claimed under section 24(b) has also been prepared by the assessee, therefore, ld Counsel prayed the Bench to remit the issue back to the file of the ld AO to examine the computation and bifurcation of interest. The ld. Departmental Representative for the Revenue did not object if the issue is remitted back to the file of the AO.

After hearing the ld. Counsel for the assessee, we note that the assessee could not get proper opportunity to represent his case during the assessment proceedings. We note that now the assessee willing to produce computation and bifurcation of interest claimed under section 24(b) of the Act before the ld AO.

We are of the view that the assessee could not represent his case before the ld. AO, properly. Therefore, we think it proper and appropriate to give one more opportunity to the assessee to represent his case before the AO. Therefore, we set