SAMBHAV TIRTH CO OP HSG SOCIETY LTD, MUMBAI v. ITO WD 16(2)(1), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI BEFORE SHRI B.R.BASKARAN (AM) AND SHRI RAM LAL NEGI ( JM) ITA NO 1989/MUM/2014 ASSESSMENT YEAR: 2002-03 SAMBHAV TIRTH CO - OP. HSG. SOCTY LTD. 2A BHULABHAI DESAI ROAD HAJI ALI MUMBAI- 400 026. PAN:- AAAAS4937M VS. THE ITO WD. 16(2)(1) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. RAKESH JOSHI. RESPONDENT BY : SHRI. CAPTAIN PRADEEP ARYA DATE OF HEARING: 2 7 /09 / 2016 DATE OF PRONOUNCEMENT: 30/09/20 16 O R D E R PER RAM LAL NEGI JM THIS APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST ORDER DATED 27/01/2014 PASSED BY THE LD. CIT(APPEALS)-27 MUMBAI FOR THE ASST. YEAR 2002-03 WHEREBY THE LD. CIT(A) DISMISSED THE APPEA L FILED BY THE ASSESSEE AGAINST PENALTY ORDER PASSED BY THE A.O U/S 271(1)( C) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT/A SSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y. 2002-03 DECLARING THE TOTAL INC OME OF RS. 5 63 885/-. THE ASSESSMENT ORDER U/S 143(3) READ WITH SECTION 147 O F THE ACT WAS COMPLETED BY THE LD. A.O ON 31/12/2008 INTER ALIA MAKING ADDITION OF RS. 16 50 000/- RECEIVED AS COMPENSATION FROM M/S DEESHA LEASE PVT. LTD. IN THE FIRST APPEAL 2 ITA NO 1989/MUM/2014 ASSESSMENT YEAR: 2002-03 AFORESAID ADDITION WAS CONFIRMED BY THE LD. CIT(A) HOWEVER AN AMOUNT OF RS.10 00 000/- WAS DELETED BY THE ITAT IN SECOND AP PEAL. ACCORDINGLY THE AO IMPOSED PENALTY U/S 271(1)(C) OF THE ACT ON THE REM AINING AMOUNT OF RS. 6 50 000/-. THE ASSESSEE CHALLENGED THE PENALTY ORD ER BEFORE THE LD. CIT(A). THE LD. CIT(A) AFTER HEARING THE ASSESSEE CONFIRMED THE PENALTY IMPOSED BY THE AO. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL RAISING THE FOLLOWING GROUND OF APPEAL:- 1. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS. 1 97 470/- LEVIED BY ASSESSING OFFICER UNDER SECTIO N 271(1)(C) OF THE INCOME TAX ACT 1961. 3. BEFORE US THE LD. AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT THE ASSESSEE A CO-OPERATIVE HOUSING SOCIETY FILED ITS RETURN OF INCOME FOR THE A.Y. 2002-03 ON 14/10/2002 AND THE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED DETERMINING THE TOTAL INCOME AT RS. 19 26 106/-. LATER ON THE CASE WAS REOPENED AND ASSESSMENT ORDER U/S 143(3) READ W ITH SECTION 147 OF THE ACT WAS PASSED MAKING VARIOUS ADDITIONS AMOUNTING T O RS. 28 16 750/-. IN APPEAL THE LD. CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. IN SECOND APPEAL THE ITAT VIDE ITS ORDER DATED 22/07/2011 DEL ETED THE AMOUNT RS. 10 00 000/- OUT OF THE ADDITION OF RS. 16 50 000/- CONFIRMED THE CIT(A) ON ACCOUNT OF PAYMENT RECEIVED FROM M/S DEESHA LEASE P VT. LTD. 4. THE LD. A.R. FURTHER SUBMITTED THAT SINCE THE A MOUNT IN QUESTION HAD BEEN SHOWN IN THE ANNUAL ACCOUNTS OF THE ASSESSEE THOUG H CLAIMED AS EXEMPT UNDER MUTUALITY CONCEPT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE PENALTY LEVIED BY THE AO. MOREOVER IN RESPONSE TO NOTICE U /S 148 OF THE ACT THE RETURN OF INCOME WAS FILED BY THE ADMINISTRATOR APPOINTED BY THE REGISTRAR OF SOCIETY. THEREFORE THE ASSESSEE HAS NEITHER CONCEALED ANY I NCOME NOR FURNISHED ANY 3 ITA NO 1989/MUM/2014 ASSESSMENT YEAR: 2002-03 INCORRECT PARTICULARS THEREOF. RELYING ON THE JUDGM ENT OF THE HONBLE SUPREME COURT IN CIT VS. RELIANCE PETROPRODUCTS (322 ITR 158) THE LD. A.R. SUBMITTED THAT MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAIN ABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. HENCE THE IMPUGNED ORDER IS LIABLE TO BE SET ASIDE. 5. ON THE OTHER HAND THE LD. DEPARTMENTAL REPRESENT ATIVE (DR) RELYING ON THE CONCURRENT FINDING OF THE AUTHORITIES BELOW SUBMITT ED THAT SINCE THE ASSESSEE HAS FURNISHED THE WRONG PARTICULARS OF INCOME THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE PENALTY ORDER PASSED BY THE AO. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE MATERIAL PLACED ON RECORD. THE ONLY ISSUE TO BE ADJUDICATED IN THIS CASE IS WHETHER MAKING OF CLAIM IN QUESTION BY THE ASSESSEE WHICH WAS NOT AC CEPTABLE TO THE TAX AUTHORITIES AMOUNTS TO FURNISHING OF INCORRECT PART ICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT? WE FIND TH AT THE A.O HAS LEVIED PENALTY OF RS.1 97 470/- TREATING THE AMOUNT OF RS. 6 50 00 0/- AS INCOME OF THE ASSESSEE FROM OTHER SOURCES REJECTING THE CONTENT ION OF THE ASSESSEE THAT SINCE THE AMOUNT WAS RECEIVED FROM M/S DEESHA LEASE PVT. LTD. A NOMINAL MEMBER OF THE SOCIETY THEREFORE THE AMOUNT IS EXEM PT UNDER MUTUALITY CONCEPT. THE ASSESSEE DID NOT CHALLENGE THE ASSESSM ENT ORDER. SO THE AO ONLY CHANGED THE HEAD OF INCOME AND ADDED THE AMOUNT IN QUESTION TO THE INCOME OF THE ASSESSEE. NOW THE QUESTION ARISES WHETHER TH IS ATTEMPT OF THE ASSESSEE AMOUNTS TO FURNISHING INCORRECT PARTICULARS SO AS T O IMPOSE PENALTY U/271(1)(C) OF THE ACT? IN RELIANCE PETROPRODUCTS P. LTD.( SUPRA) THE HONBLE SUPREME COURT HAS HELD THAT A MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE P ARTICULARS OF INCOME REGARDING THE INCOME OF THE ASSESSEE. HENCE IN OUR CONSIDERE D OPINION THE CASE OF THE 4 ITA NO 1989/MUM/2014 ASSESSMENT YEAR: 2002-03 ASSESSEE IS SQUARELY COVERED BY THE AFORESAID JUDGM ENT OF THE HONBLE SUPREME COURT. 7. WE THEREFORE RESPECTFULLY FOLLOWING THE RATIO L AID DOWN BY THE HONBLE SUPREME COURT IN AFORESAID CASE HOLD THAT IT IS NO T FIT A FIT CASE WHERE PENALTY U/S 271(1)(C) OF THE ACT CAN BE IMPOSED. IN OUR CON SIDERED OPINION THE IMPUGNED ORDER IS NOT IN ACCORDANCE WITH THE LAW LA ID DOWN BY THE HONBLE SUPREME COURT. WE THEREFORE SET ASIDE THE IMPUGNE D ORDER PASSED BY THE LD. CIT(A) AND ALLOW THE SOLE GROUND OF APPEAL OF THE A SSESSEE. 8. IN THE RESULT APPEAL FILED BY THE ASSESSEE FOR T HE ASST. YEAR 2002-03 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER 2016 SD/- SD/- ( B.R.BASKARAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED:30/09/2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. ! # !$ / DR ITAT MUMBAI 6. %& ' / GUARD FILE. / BY ORDER ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI PRAMILA