Mps Merchandisers P.Ltd, Mumbai vs Assessee

MPS Merchandisers Pvt Ltd., बनाम/ Income Tax Officer 5(2)(3), Patel Building, Ground Floor, Vs. Aayakar Bhavan, M K Road, 266, Raja Rammohan Roy Mumbai-400020. Road, Charni Road, Mumbi- 400004 (अपीलाथ /Appellant) .. ( यथ / Respondent)

थायी ले ख ा सं . /जीआइआर सं . /PAN/GIR No. :AAACM6103D

अपीलाथ ओर से / Assessee by: None

यथ क$ ओर से/ Revenue by:: Shri Vivek Batra

सन ु वाई क$ तार(ख / Date of Hearing :6.1.2015 घोषणा क$ तार(ख /Date of Pronouncement : 18.2.2015

आदे श / O R D E R

Per B.R.BASKARAN, Accountant Member:

The assessee has filed this appeal challenging the penalty of

Rs.1,31,643/- levied by the AO under section 271 (1)(c) of the Income

Tax Act, 1961.

2. None appeared on behalf of the Assessee and hence we proceed to

dispose of the appeal ex-parte, without presence of the assessee.

3. We have heard the ld DR and perused the record. We notice that

the AO has levied penalty in respect of the following four additions made

by him:

ITA No.3085/M/12 2

a) Interest disallowed Rs.67,008/- b) Loss on share trading-invoking explanation to section 73 Rs.2,96,051; c) Difference in valuation of closing stock Rs.3,238/-; and d) Payment of STT in cash Rs.9,825.

4. The first disallowance relates to interest expenditure claimed by the

assessee. The AO noticed that the assessee has received funds from

Shashi Khandelwal (HUF) and also paid funds to it. The net effect of the

transactions showed that the assessee has to receive a sum of Rs.5 lakhs

from Shashi Khandelwal (HUF). However, the assessee had claimed a sum

of Rs.67,008/- as interest payment to Shashi Khandelwal (HUF). Hence,

the AO took the view that the assessee was not right in claiming interest

expenditure of Rs.67,008/- and accordingly disallowed the same. We

notice that the assessee has submitted before the AO that the netting of

interest made by AO was not correct, since the amount received back from

Shashi Khandelwal-HUF pertains to a separate transaction. Thus, we

notice that the assessee has offered an explanation for claiming the

interest and the AO has rejected the same on some presumptions without

actually examining the explanation. In view of this, we are of the view that

the AO is not justified in levying penalty on the interest disallowance of

Rs.67,008/- and the Ld CIT(A) was also not correct in confirming the

same.

5. The next issue relates to loss claimed on share trading. The loss

claimed by the assessee was disallowed by the AO by invoking explanation ITA No.3085/M/12 3

to section 73 of the Act. It is well settled law that the claim made by the

assessee, which is not sustainable in law, will not give rise to the charge of

furnishing inaccurate particulars of income. In this regard, a gainful

reference may be made to the decision of Hon'ble Apex Court in the case

of CIT V/s Reliance Petroproduct Pvt Ltd (322 ITR 158) (SC).

Accordingly, we are of the view that the AO was not justified in levying the

penalty on this disallowance and the Ld CIT(A) was not justified in

confirming the same.

6. The other two additions relate to difference in valuation of stock and

payment of STT in cash. We notice that the difference in valuation of

closing stock has occurred due to some clerical mistake. Similarly the

amount of Rs.9,825/- disallowed out of security transaction tax pertains to

the expenditure which was wrongly debited to the security transaction tax

account due to clerical mistake. During the course of assessment

proceedings, the assessee has accepted both the additions and has also

explained the same to be a clerical mistake. In our view the said

explanation appears to be bonafide one and hence the penalty levied u/s

271(1)(c) shall not lie on these additions. In this view of the matter, we

hold that the AO was not justified in levying the penalty in respect of

above said two additions and the ld CIT(A) was also not justified in

confirming the same.

7. Accordingly, we set aside the order of ld. CIT(A) and direct the AO

to delete the penalty levied u/s 271(1)(c) of the Act. ITA No.3085/M/12 4

8. In the result, the appeal of the assessee is allowed.

The above order was pronounced in the open court on 18th Feb,

2015.

घोषणा खल ु े यायालय म+ ,दनांकः 18th Feb, 2015 को क$ गई ।

sd sd

(आय.पी. बंसल/I.P. BANSAL) (बी.आर. बा करन,/ B.R. BASKARAN) या यक सद य / Judicial Member लेखा सद य/Accountant Member

मुंबई Mumbai:18th Feb,2015.

व. न.स./ SRL , Sr. PS

आदे श क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. आयकर आय2 ु त(अपील) / The CIT(A)- concerned 4. आयकर आय2 ु त / CIT concerned 5. 3वभागीय त न5ध, आयकर अपील(य अ5धकरण, मंब ु ई/ DR, ITAT, Mumbai concerned 6. गाड फाईल / Guard file.

आदे शानुसार/ BY ORDER, true copy सहायक पंजीकार (Asstt. Registrar) आयकर अपील(य अ5धकरण, मुंबई /ITAT, Mumbai