GULSHAN HARESH BAKHTIANI,MUMBAI vs. ACIT 21(1), MUMBAI

सुनवधई की तधयीख /Date of Hearing : 4.1.2017 घोषणध की तधयीख /Date of Pronouncement : 18.1.2017 आदेश / O R D E R PER RAJESH KUMAR, A. M: This is an appeal filed by the assessee challenging the order dated 28.3.2016 passed by the ld. CIT(A)-32, Mumbai for the assessment year 2009-10. 2 2. Only issue raised in the various grounds of appeal is against the upholding the levy of penalty of Rs.6,55,900/- by the ld.CIT(A) as imposed by the AO.

3. Brief facts of the case are that the assessment was completed under section 143(3) of the Act on 28.2.2011 assessing the income at Rs.1,74,65,060/- after making various additions as against the declared income of Rs.42,64,593/-. In the quantum proceedings, the FAA vide its order dated 25.4.2012 deleted the majority of additions and only addition sustained was on account of interest free advances which was reduced to Rs.5,62,204/- from Rs.9,90,877/- and disallowance of expenses which was reduced from Rs.13,67,182/- from Rs.17,40,882/-. The said quantum additions as sustained by the FAA was not challenged by the assessee before the higher forum. The AO on the basis of the partial confirmation of the Assessment order by the FAA came to the conclusion that the assessee’s case is covered under explanation 1 to section 271(1)( c ) of the Act and held that the assessee has committed default within the meaning of section 271(1)(c ) of the Act of concealment by filing inaccurate particulars of income amounting to Rs.19,29,386/- and levied the penalty equal to 100% of the tax sought to be evaded amounting to Rs.6,55,800/-. Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A) who also dismissed the appeal of the assessee after considering the 3 contentions and submission by the assessee before him. Aggrieved by the said order of FAA, the assessee is in second appeal before this Tribunal.

4. The ld. Counsel of the assessee on the first issue submitted that the assessee did not charge any interest advances given out of interest free funds available with the assessee and as a result the ld CIT(A) sustained the additions to the tune of Rs.5,62,204/- and on the second issue the ld.counsel submitted that the interest expenses of Rs.17,40,782/- which claimed by the appellant from the income under the head income from other sources which was reduced to Rs.3,73,700/- on the basis of revised computation of income filed by assessee by accepting the interest expenses as such after instead of Rs.17,40,782/-. The ld.CIT(A) held that it was on account of double disallowance. The ld.CIT(A) held that it was not a case of wrong claim of interest expenses but the appellant was not able to prove the claim with cogent evidences and was forced to surrender the same. The appellant only filed revised computation after mistake was pointed out by the AO and therefore the explanation of the assessee that there was no concealment of income was not proper and accepted and the AO after making the inquiries in detailed was able to detect the wrong claim of the assessee. Aggrieved by the order of the ld.CIT(A), the assessee has filed this appeal before this Tribunal.

5. We have carefully considered the rival contentions and perused the material placed before us including the orders of the lower authorities on the 4 issue. We find that the assessee advanced interest free advances out of funds available with him and the addition by the AO on notional basis was reduced from Rs.9,90,877/- to Rs.5,62,204/- by the ld FAA and similarly wrong claim of interest expenses of Rs.17,40,782 under the head “income from other sources” by the assessee was reduced by Rs.13,67,182. After considering all the facts on record and rival contentions, we find that the assessee has fully disclosed all relevant facts and figures qua interest free advances out of interest bearing funds and claim of interest and expenses under the head “income from other sources” and was accordingly explained before the revenue authorities below. The AO made addition of Rs.27,31,759/- under both these head which was reduced to Rs.19,29,386/-. In our opinion, it was a case of wrong claim by the assessee in which the assessee has fully disclosed in the return of income and therefore cannot be covered under explanation 1 to Section 271(1)( c ) of the Act. The case of the assessee finds strong support the decision of Hon’ble Apex Court in the case of CIT vs. Reliance Petroproducts Ltd (Supreme Court). (2010)322 ITR 158 (SC), wherein it has been held by the Hon’ble Supreme Court that the “claim which may be wrong or not accepted or was not acceptable to revenue by itself would not attract penalty under section 271(1)(c) of the Act.” In view of the above precedent laid down by the Hon’ble Supreme Court in the case of Reliance Petroproducts Ltd (supra), we find that the assessee’s case stands covered by this decision. Therefore, respectfully