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

HIGH COURT OF MADHYA PRADESH:BENCH ATINDORE 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 Tribunaldated 14.03.2017, passed in ITA No.658/IND/2013 whereby thelearned Appellate Tribunal confirmed the order of Commissioner,Income Tax (Appeals)-I, Indore, who has reversed and quashedthe order of Assessment officer (AO) of imposing penalty on therespondent for not furnishing appropriate and accurate particularsof income. 2.Relevant facts giving rise to the present appeal preferred bythe revenue are that the assessee company filed its return ofincome for the A.Y.2005-2006 declaring net loss ofRs.13,48,849/- which was later finally settled at Rs.6,17,283/-.The assessee company had taken a loan in the form of CashCredit Limit from State Bank of India (SBI) of Rs.1,52,23,892/- and had claimed expenditure on account of interest paid on thisloan. Later, He (assessee) entered into one time settlement withthe SBI. The Bank waived a total sum of Rs.2,54,42,837/-including principal as well as interest on it. He furnished thisinformation to the IT department. His case was reopened underSection 41(1) of the Income Tax Act, 2013 (for short the Act,2013) to consider this waiver. The Assessment Officer asked theassessee to furnish details of interest amount waived off by theBank. The assessee submitted that the Bank has clubbed theprincipal amount with the interest and has settled the account onlump-sum basis without any verification and has not providedany bifurcation of both, therefore, he is not in a position tofurnish such information. The assessment officer calculated theinterest component on pro rata basis and determined amount ofinterest waived off by the bank as Rs.1,51,25,582/-. Anassessment order under Section 147/143(3) was passed by the AOon 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 wasnever challenged by respondent. 3.While passing the order of assessment, the A.O. observedthat the assessee has not furnished bifurcation of principal andinterest amount in the total amount waived off by the bank andhas claimed the entire amount as principal amount without givingany details, which tantamount of furnishing of incorrectparticulars of income especially in view of Section 41(1) of theAct, 2013. In reply to the Notice issued by the A.O., the assesseeclaimed that as the bank had not provided the details of break upof the principal and the interest, he is not in a position to furnishthe same. The A.O. was of the view that the burden was on the assessee to furnish the requisite information and to provideevidence in support of its claim. He further noted that all thedetails available as per record the amount of loan taken by theassessee was Rs.1,52,23,892/- and amount of remission wasRs.2,54,42,837/-, which establishes that the assessee hadfurnished incorrect particulars of income. As the assessee had notgiven any particulars of income under Section 41(1) of the Actneither in the return of income filed under Section 139 of the Actnor in the return filed under Section 148 of the Act. In this backdrop, the A.O. held that the assessee had committed a fault withinthe meaning of Section 271(1)(c) of the Act and imposed apenalty of Rs.55,34,753/- vide order dated 30.06.2011. assessee to furnish the requisite information and to provideevidence in support of its claim. He further noted that all thedetails available as per record the amount of loan taken by theassessee was Rs.1,52,23,892/- and amount of remission wasRs.2,54,42,837/-, which establishes that the assessee hadfurnished incorrect particulars of income. As the assessee had notgiven any particulars of income under Section 41(1) of the Actneither in the return of income filed under Section 139 of the Actnor in the return filed under Section 148 of the Act. In this backdrop, the A.O. held that the assessee had committed a fault withinthe meaning of Section 271(1)(c) of the Act and imposed apenalty of Rs.55,34,753/- vide order dated 30.06.2011. 4.The order was challenged by the respondent before the FirstAppellate Authority; who was of the view that the assessee hadsubmitted particulars which were provided to him by the bank, hehad fully disclosed the fact of waiver of the amount by the bankin its profit and loss account and in no-dues certificate dated08.08.2005 issued by the bank, the bank has only mentioned theliability of the assessee which stand discharged, but the Banknowhere mentioned as to whether the payment of Rs.1.21 Croremade by the assessee was adjusted towards the principal amountor towards interest and there was no clarity from such letter as towhich amount was waived off by the bank, therefore, the assesseecan not be held liable to furnish inaccurate information and setaside the penalty imposed by the AO. The order was confirmedby the ITAT in the appeal preferred by the revenue vide orderdated 14.03.2017. 5.Learned counsel appearing for the revenue/appellant hassubmitted that the question as to whether on the facts and in the circumstances of the case and in law the ITAT was justified inholding that penalty under Section 271(1)(c) of the I.T. Act is notleviable on the basis of addition made under Section 41(1) of theI.T. Act and the findings recorded in the assessment order is notconclusive for deciding the imposition of penalty and as towhether the ITAT was justified in holding that the assessee hasfurnished full particulars of income with regard to the waiver ofloan by the Bank in its return particularly when the assessee hadnot given any particulars of its income under Section 41(1) of theAct neither in the Return filed under Section 139 (1) nor in theReturn filed in response to the notice under Section 148 of theAct. 6.In support of its contention, the appellant has placedreliance on Commissioner of Income Tax vs. ZoomCommunication P. Ltd reported in (2010) 327 ITR 510 (Delhi)where it is held that in case of concealment of income, claim fordeduction is not bonafide, therefore, the assessee is liable to paypenalty, but here as held by the learned ITAT there is noconcealment 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 relianceon 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 CivilAppeal No.2463/2010 where it is held that in case the appellanthad not disclosed correct position with regard to payment ofinterest and settlement of outstanding dues of financial institutedue to bonafide mistake, it cannot be considered as a case where inaccurate statement was made deliberately or there wasdeliberate concealment of fact, therefore, penalty u/s 271(1)(c) ofthe Act, 2013 can not be imposed. Almost similar factual positionappears in the present case. The circumstances, in which requiredparticulars could be supplied by the assessee were not under hiscontrol, therefore, both the learned authorities CIT (appeals) I aswell as the ITAT rightly exonerated the assessee from theimpugned liability. inaccurate statement was made deliberately or there wasdeliberate concealment of fact, therefore, penalty u/s 271(1)(c) ofthe Act, 2013 can not be imposed. Almost similar factual positionappears in the present case. The circumstances, in which requiredparticulars could be supplied by the assessee were not under hiscontrol, therefore, both the learned authorities CIT (appeals) I aswell as the ITAT rightly exonerated the assessee from theimpugned liability. 8.Having regard to the aforesaid facts and circumstances ofthe case, it appears that the dispute between the parties is purely adispute of facts. We do not find any substantial question of law inthe present appeal. Therefore, the same is dismissed hereby. amit (P.K. JAISWAL) JUDGE (VIRENDER SINGH) JUDGE Digitally signed by Amit Kumar Date: 2018.06.21 11:07:46 +05'30'