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Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI
Before: SHRI R.S. SYAL & SMT SUCHITRA KAMBLE
This appeal is filed by the assessee against the order dated 16/11/2011 passed by CIT(A)-Rohtak for the Assessment Year 2007-08.
The grounds of appeal
are as under:-
1. That on the facts and in the circumstances of the case & in Law, the CIT (A) has erred in confirming the imposition of penalty u/s 271(1)(c) of Rs 1,19,26,437/-. As such, the penalty imposed of Rs 1,19,26,437/- may please be deleted.
2. That on the facts and in the circumstances of the case & in Law, the CIT (A) & Ld AO, while confirming/ imposing the penalty
respectively, have overlooked the fact that the appellant, being an entity registered u/s 12A, was having bonafide belief as to the taxability of the amounts subjected to penalty. As such, the penalty of Rs 1,19,26,437/- u/s 271 (1 )(c) may please be deleted.
That on the facts & in the circumstances of the case & in Law, the issue being capable of more than one interpretation & quantum appeal being pending with Hon’ble High Court of Punjab & Haryana, the penalty u/s 271 (1 )(c) of Rs 1,19,26,437/-. may please be deleted.
We crave to add, alter, delete or modify or withdraw any of above grounds of appeal at the time hearing.
3. Assessment in this case was completed u/s 143(3) at the income of Rs.4,38,66,920/- vide order dated 30.11.2009. During the course of assessment proceedings addition of Rs. 11,02,500/- was made on account of interest accrued on FDR with HVPNL which the assessee has not declared as income in its income & expenditure account as per A.O. Thus, expenditure of Rs. 84,34,535/- on account of repair and construction of rural roads, were disallowed by A.O. In the computation of total income the assessee claimed repayment of liability of Rs. 2,81,33,700/- as application of income, though the same was the payment of loan taken from HSAMB Board for construction of rural roads and development of mandis. The assessee claimed application of income in respect of expenditure incurred on construction of mandis and rural roads on regular basis in the relevant assessment year. The A.O held that the expenditure on construction and repair of rural roads out of loan taken from Board was allowed to the assessee as application of income, therefore discharge of liability of loan was not allowed for application of fund to the assessee. Hence repayment of loan of Rs. 2,81,33,700/- was not allowed to the assessee.
4. The assessee went in appeal before the CIT(A) Rohtak. The CIT(A) Rohtak partly allowed the quantum appeal of the assessee. The CIT(A) allowed the expenditure construction and repair of rural roads amounting to Rs. 84,34,535/- and further treated the repayment of loan of Rs. 2,81,33,700/- as application of income of the assessee.
5. The Department preferred further appeal to the Tribunal against the order of CIT(A) Rohtak. The Tribunal held that the CIT(A) has misunderstood the case of the A.O. The case of the Assessing Officer is that when the loan was obtained by the assessee market committee and used for spending on repair works of mandis, constructions and repairs of various rural roads, developments of mandis in the year of such incurring of expenditure, it was claimed by the assessee that there is application of income to the extent of such construction or rural rods and development of mandis and it was allowed in that year although such expenses were incurred not out of own funds of the assessee Market Committee but out of borrowed funds. The Tribunal further held that the assessee is making repayment of such borrowed funds and claiming deduction as application of income and hence this is like claiming of double deduction for the same expenditure. Once at the time of incurring expenditure out of borrowed funds and now at the time of repayment of such borrowed funds. The Tribunal reversed the order of CIT(A) and restored the order of A.O.
6. Penalty proceedings u/s 271(i)(c) of the I.T. Act were initiated for furnishing of wrong particulars of its income by the Assessing Officer and passed penalty vide order dated 28.03.2011. Aggrieved by the same, the assessee filed appeal before CIT(A) which was dismissed.
The assessee filed adjournment application at the time of hearing. The same is rejected.
The Ld. DR submitted that the Assessing Officer has correctly passed the penalty order as the double deduction claimed by the assessee amounts to filing of inaccurate particulars.
We have heard the Ld. DR and perused the relevant records. The assessee made claim for application of income once while incurring expenditure on construction of rural roads and Mandis from the loan taken from HSAMB & again on account of repayment of loan to HSAMB. Though it is a mistake, the same does not amount to filing of inaccurate particulars. All the relevant particulars were present before the Assessing Officer during the Assessment Proceedings. Thus, this is not a valid reason for passing the penalty order when the same was properly disallowed by the Assessing Officer after verifying the relevant records. Thus, the assessee has not furnished any inaccurate particulars. The Assessing Officer as well as the CIT(A) was incorrect in holding that there was inaccurate particulars furnished by the assessee.
In the result, the appeal of the assessee is allowed.
The order is pronounced in the open court on 28th of March, 2017.