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TMI Blog2016 (10) TMI 317X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the claim of 25% by the Assessing Officer cannot be construed as furnishing inaccurate particulars of income. In view of the 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. Absence of notice - Held that:- 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 of the considered opinion that the claim of the assessee that no notice was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor. 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. 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 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. Therefore, this Tribunal is of the considered opinion that the Assessing Officer shall verify the payment of property tax and water tax. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 also considered for levy of penalty. According to the ld. Representative, the assessee claimed to have received loan from a non-resident Indian. However, no confirmation letter was filed. The correct address of the creditor was not furnished to the Assessing Officer. Therefore, the Assessing Officer found that the assessee has furnished inaccurate particulars. Referring to the penalty order, the ld. DR submitted that since the assessee has not established the claim in the assessment proceedings, 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 converted as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer allowed depreciation only @ 15%. When the assessee claims a statutory deduction 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 ₹ 40,60,000/- was converted into gift subsequently. From the very same person, the assessee has received a cash credit of ₹ 39,62,000/-. 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 made in the assessment proceedings that will not result automatically in levy of penalty u/s 271(1)(c) of the Act. The Assessing Officer has to reappreciate the material available on record. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his 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. 15. The next ground of appeal is with regard to failure of the Assessing Officer to give adequate opportunity to the assessee. 16. Shri S.Sridhar, ld. Counsel for the assessee submitted that the Assessing Officer has not provided adequate opportunity during assessment proceedings, therefore, 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 Empee Distilleries Ltd and appearing on behalf of his Managing Director-cum-Chairman, Shri M.P.Purushothaman, the present assessee. Therefore, it is for the assessee to appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee 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 of ten years. The Assessing Officer has reproduced the conditions laid down by RBI for granting permission. The assessee has also accepted the stand of the Department that interest payable to Shri V.L. Ittiachen and Others was not allowable for the assessment year 1994-95 to 1995-96 and the assessee paid taxes on the so called interest under Kar Vivadh Samadhan Scheme, 1998 (KVSS). The ld. DR further pointed out that the assessee received gift of ₹ 91,59,000/- from the same person in the 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 am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer. 26. We have considered the rival submissions on either side and also perused the material available on record. As on 31.3.2001, the Assessing Officer found an unsecured loan of ₹ 39,62,212/-. When there is a credit in the books of account, the assessee has to necessarily establish the identity of the creditor, genuineness 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 S.Sridhar, ld. Counsel for the assessee submitted that the assessee has no objection to treat the sum of ₹ 9 lakhs as income from rent. However, the property tax paid by the assessee has to be allowed while computing the income from house property. 29. On the other hand, Shri P. Radhakrishnan, ld. DR submitted that the asse by let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 submitted that the Assessing Officer disallowed the payment of interest and commission as it was disallowed for assessment years 1999-2000 and 2000-01. The Assessing Officer found that the assessee has not shown any income relatable to payment of interest and commission. According to the ld. Counsel, when the assessee actually incurred expenditure towards payment of interest and commission, the Assessing Officer ought to have allowed the same. 33. On the contrary, Shri P. Radhakrishnan, ld. DR submitted that the assessee has not furnished any details for the reasons for payment of interest and commission. The CIT(A) found that the interest payment may be for earning the exempted income, therefore, it was disallowed u/s 14A. In the absence of any details with regard to the nature of payment of interest and commission and the purpose for which it was paid, according to the ld. DR, the CIT(A) has rightly confirmed th ..... 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