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2016 (10) TMI 317 - ITAT CHENNAI

2016 (10) TMI 317 - ITAT CHENNAI - TMI - Penalty u/s 271(1)(c) - interest claimed on the loan from Shri V.L.Ittiachen - as per asseessee he has received loan from non-resident Indian after obtaining necessary approval from RBI - Held that:- Since the assessee has received the money after getting necessary approval from RBI, it is not correct to say that the identity and creditworthiness of the creditor is not proved. This Tribunal is of the considered opinion that merely because an addition was .....

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te particulars in view of the judgment of the Apex Court in Reliance Petroproducts Pvt. Ltd (2010 (3) TMI 80 - SUPREME COURT ). Similarly, rental receipt was fund to be omitted in the return of income. The CIT(A) found that there was reasonable cause in not disclosing the same in the return of income. This Tribunal do not find any reason to interfere with the order of the CIT(A). - Similarly, for the disallowance of interest and commission and restricting the depreciation to 15% as against t .....

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this Tribunal by an order dated 16.2.2006 directed the assessee to file an affidavit making a categorical statement about the non-receipt of notice u/s 143(2). Even after the expiry of almost ten months, no affidavit was filed. Therefore, this Tribunal is of the considered opinion that the claim of the assessee that no notice was received cannot be accepted at this stage. Therefore, this Tribunal do not find any reason to uphold the contention of the assessee. - Failure of the Assessing Off .....

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n, Shri M.P.Purushothaman. As rightly submitted by the ld. DR, when the notice was received from the Assessing Officer it is for the assessee to appear before the Assessing Officer and if he could not appear in person it is for him to make alternate arrangement. Therefore, at this stage, it may not be proper on the part of the assessee to claim that no proper opportunity was given. The assessment year under consideration is 2001-02. Remanding the matter back to the file of the Assessing Officer .....

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t is obvious that the creditor waived the principal amount without any consideration. Once the principal amount was waived, this Tribunal is of the considered opinion that this would form part of the income of the assessee u/s 41(1) of the Act. Therefore, the CIT(A) has rightly confirmed the addition made by the Assessing Officer. This Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly, the same is confirmed. - Unexplained cash credit - Held that:- Assessi .....

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ion that the CIT(A) has rightly confirmed the addition made by the Assessing Officer. - Addition of rent - whether the property tax paid by the assessee has to be allowed while computing the income from house property? - Held that:- In view of the provisions of sec. 43B of the Act, this Tribunal is of the considered opinion that the taxes has to be allowed while computing the rental income provided the same was paid during the assessment year under consideration or atleast before the due dat .....

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and the issue of addition of ₹ 9 lakhs is remitted back to the file of the Assessing Officer. As admitted by the assessee before the Assessing Officer, the same shall be taken as income from rent. However, the Assessing Officer shall verify whether the assessee has actually paid the property tax and water tax during the year under consideration. If the assessee produce necessary evidence to establish the actual payment of water tax and property tax during the year under consideration or be .....

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fficer perhaps disallowed the claim of the assessee u/s 14A of the Act. The fact remains no details ae available on record with regard to the nature of payment of interest and commission. Since no details are available on record, this Tribunal do not find any reason to interfere with the order of the CIT(A) and accordingly the same is confirmed. - I.T.A. No. 1313/Mds/2008, I.T.A. No. 107/Mds/2006 - Dated:- 5-8-2016 - Shri N.R.S. Ganesan, Judicial Member And Shri A. Mohan Alankamony, Accountant M .....

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peal I.T.A.No. 1313/Mds/2008. 3. Shri P. Radhakrishnan, the learned Departmental Representative submitted that the Assessing Officer levied penalty u/s 271(1)(c) of the Act in respect of the interest claimed on the loan from Shri V.L.Ittiachen. The assessee has also claimed unexplained cash credit to the extent of ₹ 39,62,000/-. The assessee has not disclosed the commission and interest in the return of income. The difference in rates of depreciation to the extent of ₹ 45,933/- was a .....

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the Assessing Officer has rightly levied penalty, therefore, the CIT(A) is not justified in deleting the penalty levied by the Assessing Officer. 4. On the contrary, Shri S. Sridhar, ld. Counsel for the assessee submitted that the assessee has received a sum of ₹ 50 lakhs as loan under the Special Scheme of RBI with approval of the RBI from Shri V.L.Ittiachen, a non-resident Indian during the assessment year 1988- 89. During the assessment year 2000-01, a sum of ₹ 40,60,000/- was con .....

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loan was converted into gift to the extent of ₹ 40,60,000/-. Therefore, it is not correct to say that the assessee has not furnished correct address of the creditor. Referring to the unexplained cash credit to the extent of ₹ 39,62,000/-, the ld. Counsel submitted that this loan was treated as unexplained only on the ground that the assessee has not paid interest to the loan creditor. The loan is reflected in the opening balance. Out of ₹ 39,62,000/-, a sum of ₹ 20 lakhs .....

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ssessee in not disclosing the rental income in the return. Therefore, according to the ld. Counsel, the CIT(A) has rightly deleted the penalty. 6. Referring to the payment of interest of ₹ 2,04,225/- and commission of ₹ 30,900/-, the ld. Counsel submitted that the Assessing Officer disallowed the claim of the assessee on the ground that the interest was paid for earning dividend income. The fact that the interest was paid is not in dispute and the payment of commission is also not in .....

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ction and merely because the Assessing Officer restricted the rate of depreciation that cannot be reason to levy penalty. According to the ld. Counsel, this cannot be treated as furnishing inaccurate particulars of income. 8. We have considered the rival submissions on either side and also perused the material available on record. As rightly submitted by the ld. Counsel for the assessee, the assessee has received loan from non-resident Indian after obtaining necessary approval from RBI. A sum of .....

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s 271(1)(c) of the Act. The Assessing Officer has to reappreciate the material available on record. This Tribunal is of the considered opinion that there was a justification in claiming the loan amount as gift. Merely because the claim of the assessee was disallowed in the assessment proceedings, this Tribunal is of the considered opinion that it cannot be construed that the assessee has furnished inaccurate particulars in view of the judgment of the Apex Court in Reliance Petroproducts Pvt. Ltd .....

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e above, this Tribunal is of the considered opinion that the CIT(A) has rightly deleted the penalty levied by the Assessing Officer u/s 271(1)(c) of the Act. Therefore, this Tribunal do not find any reason to interfere with the order of the CIT(A) and accordingly the same is confirmed. 10. In the result, the Revenue s appeal is dismissed. 11. Now coming to assessee s appeal I.T.A.No. 107/Mds/2006, the first ground of appeal is with regard to limitation. 12. Shri S.Sridhar, ld. Counsel for the as .....

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e, the assessee cannot content that notice u/s 132(2) was not received by him. 14. We have considered the rival submissions on either side and also perused the material available on record. From the material available on record it appears that this Tribunal by an order dated 16.2.2006 directed the assessee to file an affidavit making a categorical statement about the non-receipt of notice u/s 143(2). Even after the expiry of almost ten months, no affidavit was filed. Therefore, this Tribunal is .....

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, the assessee could not participate and produce necessary material properly. Therefore, the entire assessment is vitiated. 17. On the contrary, Shri P. Radhakrishnan, ld. DR submitted that after receipt of notice u/s 142(1), the Authorized Representative was appeared before the Assessing Officer. However, the ld. Representative for the assessee has not filed any power of authorization. When the same was questioned by the Assessing Officer, he simply submitted that he was a loyal employee of M/s .....

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d. Admittedly, the assessee received the notice issued by the Assessing Officer u/s 142(1) and one Shri G. Palanidas, Dy. G.M(Taxation) of M/s Empee Group of companies appeared before the Assessing Officer. However, he has not filed any authorization to appear on behalf of the assessee. He simply claimed that he was a loyal employee of M/s Empee Distilleries Ltd, therefore, he is appearing on behalf of his Managing Director-cum-Chairman, Shri M.P.Purushothaman. As rightly submitted by the ld. DR .....

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herefore, this Tribunal do not find any reason to uphold the contention of the ld. Counsel for the assessee. 19. The next ground of appeal is with regard to addition of ₹ 40,80,000/-. 20. Shri S.Sridhar, ld. Counsel for the assessee submitted that the assessee received a loan of ₹ 50 lakhs from Shri V.L.Ittiachen, a non-resident Indian. According to the ld. Counsel, the assessee obtained permission from RBI for receiving the loan of ₹ 50 lakhs. Subsequently, the said loan was c .....

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prior approval was obtained from RBI. Subsequently, the assessee claims that the outstanding amount of ₹ 40,60,000/- was converted into gift. However, no material was produced before the Assessing Officer to prove the conversion of loan into gift. Since the assessee claims that the loan was converted into gift, it would amount to waiver of the loan. The RBI by letter dated 7.10.1987 granted permission for availing loan of ₹ 50 lakhs on payment of interest @ 8% per annum for a period .....

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earlier assessment year. During the year under consideration, the assessee by way of book entry showing the outstanding amount of ₹ 40,60,000/- as gift, therefore, Assessing Officer found that this constitutes cessation of liability towards the principal amount hence, it has to be assessed as income of the assessee u/s 41(1) of the Act. 22. We have considered the rival submissions on either side and also perused the material available on record. Admittedly, the assessee received a loan of .....

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rightly confirmed the addition made by the Assessing Officer. This Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly, the same is confirmed. 23. The next ground of appeal is with regard to addition of ₹ 39,62,212/-. 24. Shri S.Sridhar, ld. Counsel for the assessee submitted that as on 31.3.2001 the unsecured loan outstanding was ₹ 39,62,212/-. The assessee has not filed any confirmation letter from the creditors. Referring to the assessment order .....

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in the account of the assessee was to the extent of ₹ 1,51,49,487/-. The assessee was asked to explain why the outstanding loan amount should not be treated as income of the assessee. The assessee could not furnish any explanation and no confirmation letter was also filed from the creditor. The assessee also has not paid any interest actually. The payment of interest claimed by the assessee for assessment years 1994-95 and 1995-96 was in fact disallowed by the Assessing Officer and the sam .....

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neness of the transaction and creditworthiness of the creditor. In this case, the assessee has not filed any confirmation letter. Moreover, the details and mode of payment are not available on record. In the absence of any material to substantiate the claim of unsecured loan, this Tribunal is of the considered opinion that the CIT(A) has rightly confirmed the addition made by the Assessing Officer. 27. The next ground of appeal is with regard to addition of ₹ 9 lakhs towards rent. 28. Shri .....

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laimed the property tax and water tax paid as deduction while computing the rental income. In the absence of any material to suggest that the assessee has actually paid the property tax and water tax during the year under consideration, the claim of the assessee cannot be allowed. 30. We have considered the rival submissions on either side and also perused the material available on record. As rightly submitted by the ld. Counsel for the assessee and the ld. DR, the assessee clearly stated before .....

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the considered opinion that the taxes has to be allowed while computing the rental income provided the same was paid during the assessment year under consideration or atleast before the due date for filing the return of income for the year under consideration. This Tribunal is of the considered opinion that property tax and water tax is allowable deduction while computing the income from house property. However, it is for the assessee to establish that the payment has actually been made. Therefo .....

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water tax during the year under consideration. If the assessee produce necessary evidence to establish the actual payment of water tax and property tax during the year under consideration or before the due date for filing the return of income, the same has to be allowed. 31. The next ground of appeal is with regard to disallowance of interest payment to the extent of ₹ 2,04,225/- and payment of commission to the extent of ₹ 30,900/-. 32. Shri S. Sridhar, ld. Counsel for the assessee .....

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