RAMA ENTERPRISES, MUMBAI v. ITO WD 12(3)(2), MUMBAI

ITA 1184/MUM/2012 | 1999-2000
Pronouncement Date: 23-10-2013 | Result: Allowed

Appeal Details

RSA Number 118419914 RSA 2012
Assessee PAN AAAFR1740C
Bench Mumbai
Appeal Number ITA 1184/MUM/2012
Duration Of Justice 1 year(s) 8 month(s) 2 day(s)
Appellant RAMA ENTERPRISES, MUMBAI
Respondent ITO WD 12(3)(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-10-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 23-10-2013
Date Of Final Hearing 15-10-2013
Next Hearing Date 15-10-2013
Assessment Year 1999-2000
Appeal Filed On 21-02-2012
Judgment Text
INCOME TAX APPELLATE TRIBUNAL MUMBAI - D BENCH. . .. . . .. . !'# !'# !'# !'# ' ' ' ' BEFORE S/SH. I.P. BANSAL JUDICIAL MEMBER & RAJENDRA ACCOUNTANT MEMBER /. ITA NO.1184/MUM/2012 $ $ $ $ % % % % / ASSESSMENT YEAR-1999-2000 M/S RAMA ENTERPRISES 51-52 FREE PRESS HOUSE 215 NARIMAN POINT MUMBAI- 400021 VS. ITO WARD 12(3)(2) AAYAKAR BHAVAN M.K.MARG MUMBAI-400020 PAN:AAAFR1740C ( &' / APPELLANT) ( ()&' / RESPONDENT) &' &' &' &' * * * * ' '' ' / APPELLANT BY : SHRI J.D.MISTRI ()&' + * ' / RESPONDENT BY : SHRI D.PRABHAKAR REDDY $ $ $ $ + ++ + / DATE OF HEARING : 15-10-2013 -.% + / DATE OF PRONOUNCEMENT : 23-10-2013 $ $ $ $ + ++ + ( ) ' '' ' / / / / '0 '0 '0 '0 ORDER U/S.254(1)OF THE INCOME-TAX ACT 1961(ACT) PER RAJENDRA AM CHALLENGING THE ORDER DATED 08-12-2011 OF THE CIT(A )-21 MUMBAI ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME TAX (APPEALS )-23 MUMBAI ERRED IN DISMISSING THE GROUND THAT THE RELE VANT ASSESSMENT ORDER U/S 143(3) R.W.S 254 ON THE B ASIS OF WHICH THE PENALTY WAS LEVIED ON 25-8-20 10 WAS BARR ED BY LIMITATION AS PER THE PROVISO TO SECTION 275 (1) (A) AS THE CIT (A)S ORDER REGARDING THE ABOVE ASSESSMENT HAD ALREADY BEEN RECEIVED ON 21.08.2007. 2.WITHOUT PREJUDICE TO THE ABOVE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE COM MISSIONER OF INCOME TAX (APPEALS)-23 MUMBAI ERRED IN NOT CONSID ERING THE FACT THAT PENALTY PROCEEDINGS WHICH WERE BASED ON THE RELEVANT ASSESSMENT ORDER U/S 143(3) DATED 19-0 3-2002 WAS BARRED BY LIMITATION AS PER THE PROVISIO NS OF SECTION 275 (1)(A). 3.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME TAX (APPEALS )-23 MUMBAI ERRED IN DISMISSING THE GROUND THAT THE ISSU E OF TAXING RENT INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY INSTEAD OF AS BUSINESS INCOME FOR WHICH THE PENALTY WAS LEVIED WAS NEVER BEFORE THE ASSESS ING OFFICER IN HIS PROCEEDINGS U/S 143(3) R.W.S. 254. HENCE TH E LEVY OF PENALTY IS WITHOUT APPLICATION OF MIND AN D NEEDS TO BE DELETED. 4.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME TAX (APPEALS )-23 MUMBAI ERRED IN DISMISSING THE GROUND THAT THE SPEC IFIC GROUNDS FOR WHICH THE PENALTY PROCEEDINGS HAD BEEN INITIATED WAS NOT STATED IN THE SHOW-CAUSE NOTICE. THE APPELLANT WAS THEREFORE PREVENTED FROM A PROPER OPPORTUNITY TO REBUTT THE ALLEGATIONS AGAINST HIM. HENCE THE ORDER LEVYING THE PENALTY IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHER ER RED IN STATING THAT THERE WAS ONLY ONE ISSUE ON WHI CH PENALTY COULD HAVE BEEN LEVIED I.E. CHARGING OF INCOME FRO M BUSINESS UNDER THE HEAD INCOME FROM HOUSE PROPE RTY. 2 ITA NO.1184/MUM/2012 M/S RAMA ENTERPRISES . THE ASSESSING OFFICER IN HIS ORDER U/S 143(3) R.W.S . 254 HAD MADE AN ADDITION OF RS. 26 94 380/-TO THE ANNUAL VALUE OF THE PROPERTY. THIS WAS THE ONLY ISSUE BEFORE HIM WHILE INITIATING PENALTY PROCEEDINGS. 5.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME TAX (APPEALS )-23 MUMBAI ERRED IN NOT DECIDING THE GROUND REGARDING A SSESSING OFFICER LEVYING PENALTY WITHOUT CONSIDERIN G YOUR APPELLANTS REPLY DATED 25.06.2002. 6.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME TAX (APPEALS )-23 MUMBAI ERRED IN CONFIRMING THE LEVY OF PENALTY IN R ESPECT OF AN ADDITION WHICH WAS HIGHLY DISPUTABLE. SINCE THE APPELLANT WAS RENDERING SERVICES ALONG WI TH RENTING OF PREMISES WHETHER THE INCOME SHOULD B E TAXED AS BUSINESS INCOME OR AS INCOME FROM HOUSE PROPERTY IS A HIGHLY DISPUTABLE LEGAL ISSUE. NO PENALTY CA N BE LEVIED FOR ADDITIONS MADE ON DISPUTABLE LEGAL GROUNDS. 7. THE ABOVE GROUNDS ARE INDEPENDENT AND WITHOUT PR EJUDICE TO ONE ANOTHER. 8. YOUR APPELLANT CRAVES LEAVE TO ADD ALTER AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL. BRIEF FACTS OF THE CASE. 2. ASSESSEE FILED ITS RETURN OF INCOME ON 24.08.1999 D ECLARING LOSS OF RS.1.39 LACS.ASSESSING OFFICER (AO)FINALISING THE ASSESSMENT U/S. 143(3) OF THE AC T ON 19.03.2002 DETERMINING THE INCOME AT RS. 73. 29 LACS.DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT ASSESSEE HAD SHOWN RENTAL INCOME FROM THE OFFICE PREMISES LET OUT AT INDORE AND MUMBAI AT RS. 21.44 LACS UNDER THE HEAD BUSINESS INCOME.AO WAS OF THE OPINION THAT RENTAL INCOME HAD TO BE ASSESSE D UNDER THE HEAD INCOME FROM HOUSE PROPERTY (IFHP)AT ANNUAL LETTING VALUE (ALV) OF RS. 95.4 LAC S.HE ALLOWED DEDUCTIONS AS PER THE PROVISIONS OF THE ACT AND ASSESSED SUCH INCOME AT RS. 71.15 LACS. ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLAT E AUTHORITY(FAA).WHILE FINALISING THE APPEAL FAA UPHE LD THE ACTION OF THE AO ABOUT HEAD OF THE INCOME-HE ALSO HELD THAT RENTAL INCOME SHOULD BE AS SESSED UNDER THE HEAD IFHP. HE FURTHER HELD THAT RENTAL INCOME SHOULD BE ASSESSEE AT RS.21.44 LACS A ND NOT AT THE ALV OF RS.95.4 LACS.CROSS APPEALS WERE FILED BY THE AO AND THE ASSESSEE BEFORE THE TR IBUNAL.ON 31.01.2006 TRIBUNAL FOLLOWING ITS ORDER FOR THE AY 1998-99 HELD THAT RENTAL INCOME RECEIVED BY THE ASSESSEE WAS REQUIRED TO BE ASSESSED UNDER THE HEAD IFHP.IN RESPECT OF ANOTHER ISSUE AS TO WHE THER IFHP SHOULD BE ASSESSED AT RS. 21.44 LACS OR A T 95.4 LACS TRIBUNAL SET ASIDE THE ISSUE TO THE FILE OF THE AO TO DETERMINE THE ALV AND TO GIVE THE FIND ING AS TO WHETHER THE PROPERTY INCOME WAS TO BE ASSESSE D U/S. 23(1)(A) OR 23(1)(B) OF THE ACT. 2.A. AS PER THE DIRECTION OF THE TRIBUNAL AO PASSED ORDE R U/S.143(3) R.W.S.254 OF THE ACT AND DETERMIN - ED THE IFHP AT RS.36.28 LAC{RS.26.94 U/S. 23(1)(A)+ 21.44 LACS U/S.23(1)(B)}.HE ALLOWED 1/4 TH REPAIRS WHILE CALCULATING THE HOUSE-PROPERTY-INCOME.AO ALSO INITIATED THE PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT.ASSESSEE AGAIN PREFERRED AN APPEAL BEFOR E THE FAA.VIDE HIS ORDER DATED 23.08.2007 HE DIRECTED THE AO NOT TO COMPUTE ALV FOR THE VACANT P ORTION OF THE PROPERTY.CHALLENGING THE ORDER OF THE FAA AO FILED AN APPEAL BEFORE THE TRIBUNAL. ITA VIDE ITS ORDER DATED 20.01.2010 UPHELD THE ORDER OF THE FAA HOLDING THAT RENTAL INCOME OF RS. 21.44 LACS WAS ASSESSABLE U/S. 23(1)(B) OF THE ACT. 2.B. MEANWHILE AO PASSED ORDER U/S. 271(1)(C) OF THE ACT ON 25.08.2010 LEVYING A PENALTY OF RS.6 58 794/-.PENALTY WAS LEVIED ON THE ISSUE THAT RENTA L INCOME OF RS.21.44 LACS WAS ASSESSABLE UNDER THE HEAD OF IFHP WHEREAS IT HAD OFFERED THE SAME UNDER THE HEAD BUSINESS INCOME.ASSESSEE PREFERRED AN APPEAL BEFORE THE FAA RAISING VARIOUS GROUNDS OF AP PEAL INCLUDING GROUND THAT THE PENALTY WAS TIME BARRED. 2.1. BEFORE US AUTHORISED REPRESENTATIVE(AR) SUBMITTED T HAT EFFECTIVE GROUND OF APPEAL WAS ABOUT LEVY OF PENALTY ONLY.HE FURTHER SUBMITTED THAT THE TRIBU NAL HAD DECIDED THE HEAD OF INCOME UNDER WHICH RENTAL INCOME HAD TO BE ASSESSED ON 21.01.2003 ONLY THAT APPEAL FOR THE AY 1998-99 WAS DECIDED AFTER THE RETURN OF INCOME WAS FILED FOR THE YEAR UNDER C ONSIDERATION THAT UP TO THE AY 1998-99 RENTAL INCOM E WAS SHOWN BY THE ASSESSEE UNDER THE HEAD INCOME FRO M BUSINESS THAT DEPARTMENT HAD ACCEPTED THE STAND TAKEN BY THE ASSESSEE THAT ASSESSEE HAD ACCE PTED THE ORDER OF THE TRIBUNAL WITH REGARD TO THE HEAD OF INCOME THAT IT DID NOT FILE ANY APPEAL BEFO RE THE HIGH COURT THAT THERE WAS NO CONCEALMENT OF 3 ITA NO.1184/MUM/2012 M/S RAMA ENTERPRISES . INCOME THAT NO INACCURATE PARTICULARS WERE FILED T HAT FACT OF RECEIVING OF RENTAL INCOME WAS APPARENT FROM THE RETURN OF INCOME FILED THAT THE DETAILS O F LET OUT PROPERTY AT VARIOUS PLACES WAS DISCLOSED TO THE AO THAT DURING THE SECOND ROUND OF APPEAL THE L IMITED ISSUE WAS DETERMINING THE INCOME U/S.23(1)(A)/23(1)(B) OF THE ACT THAT ISSUE OF HEA D OF THE RENTAL INCOME WAS NOT BEFORE THE AO THAT AO SHOULD NOT HAVE LEVIED THE PENALTY U/S. 271(1)(C) O F THE ACT. HE RELIED UPON THE ORDER OF THE RELIANCE PETRO CHEMICALS LTD.(328 ITR 180).DR SUPPORTED THE ORDER OF THE FAA. 2.2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT TILL THE AY. 1998-99 RENTAL INCOME FROM THE INDORE AND MUMBAI OF FICES OF THE ASSESSEE WAS BEING SHOWN UNDER THE HEAD BUSINESS INCOME AND SAME WAS ASSESSED BY THE A O UNDER THE SAME HEAD.IN THE YEAR 1998-99 AO ASSESSED THE INCOME FORM LET OUT PROPERTIES AS IFHP AND STAND TAKEN BY THE AO WAS CONFIRMED BY THE ITAT VIDE ITS ORDER DATED 21.02.2003.AS THE ASSESSE E DID NOT CHALLENGED THE ORDER OF THE TRIBUNAL BEFORE THE JURISDICTIONAL HIGH COURT SO AS FAR AS T HE THE ISSUE OF HEAD OF INCOME IS CONCERNED IT ATTA INED FINALITY.FROM THE RECORDS IT IS FOUND THAT RETURN O F INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED ON 24.08.1999 MUCH MUCH BEFORE THE ORDER OF THE TRIBUN AL.TILL THAT TIME ISSUE HAD NOT BECOME FINAL. AO HIMSELF HAD ACCEPTED THE RENTAL INCOME AS BUSINESS INCOME TILL AY.1997-98 THEREFORE ASSESSEE COULD NOT HAVE IMAGINED THAT HEAD OF INCOME WOULD CHANGE IN SUCCEEDING AY.THUS THERE WAS REASONABLE AND JUSTIFIABLE BASIS FOR THE ASSESSEE TO SHOW THE INCO ME UNDER THE HEAD BUSINESS INCOME.IN OUR OPINION CHANGE OF HEAD OR CONFIRMATION OF AN ADDITION IN QU ANTUM PROCEEDINGS DOES NOT RESULT IN AUTOMATIC LEVY OF CONCEALMENT OF INCOME.IN THE CASE BEFORE US ALL THE FACTS - LOCATION OF THE PROPERTIES INCOME RECEIVED FROM THE PROPERTIES DURING THE AY UNDER CO NSIDERATION -WERE AVAILABLE ON FILE.IT IS SAID THAT FOR LEVYING PENALTY U/S.271(1)(C)TWO FACTS SHOULD C O-EXIT-FIRST THAT AMOUNT IN QUESTION SHOULD FORM PA RT AND PARCEL OF THE INCOME OF THE ASSESSEE.SECONDLY THE ASSESSEE SHOULD HAVE FILED INACCURATE PARTICULA RS OR CONCEALED PARTICULARS OF SUCH INCOME.BUT BOTH TH E CONDITIONS ARE MISSING IN THE CASE UNDER CONSI - DERATION.CONSIDERING THE PECULIAR FACTS AND CIRCUMS TANCES OF THE CASE WE ARE OF THE OPINION THAT PENAL TY U/S.271(1)(C) WAS NOT LEVIABLE AS IT IS A CASE OF C HANGE OF HEAD OF INCOME ONLY AND ASSESSEE AS WELL A S AO WERE TREATING A PARTICULAR HEAD OF INCOME AS COR RECT HEAD OF INCOME IN EARLIER YEARS.THEREFORE THE EFFECTIVE GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE.ALL OTHER GROUNDS OF APPEAL ARE ALLOW ED FOR STATISTICAL PURPOSES. AS A RESULT APPEAL FILED BY THE ASSESSEE S TANDS ALLOWED. 1 2 $1 3 4 !5 + ! 67. ORDER PRONOUNCED IN THE OP EN COURT ON 23 RD OCTOBER 2013. '0 + -.% ' 8 9: 5 9: 5 9: 5 9: 5 23 2013 . + /. SD/- SD/- ( . .. . . .. . / I.P.BANSAL ) ( !'# !'# !'# !'# / RAJENDRA) / JUDICIAL MEMBER ' ' ' ' /ACCOUNTANT MEMBER / MUMBAI ;$ /DATE: 23.10 .2013 SK '0 '0 '0 '0 + ++ + ( < ( < ( < ( < ='<% ='<% ='<% ='<% / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / &' 2. RESPONDENT / ()&' 3. THE CONCERNED CIT(A)/ > ? 4. THE CONCERNED CIT / > ? 5. DR D BENCH ITAT MUMBAI / <@/ ( $ . . . . 4 ITA NO.1184/MUM/2012 M/S RAMA ENTERPRISES . 6. GUARD FILE/ / A )< ( //TRUE COPY// '0$ / BY ORDER B / 6 ! DY./ASST. REGISTRAR /ITAT MUMBAI