SWAN ENERGY LTD ( FORMELRY KNOWN AS SWAN MILLS LTD), MUMBAI v. DCIT RG 7(2), MUMBAI

ITA 230/MUM/2011 | 2003-2004
Pronouncement Date: 09-10-2013 | Result: Allowed

Appeal Details

RSA Number 23019914 RSA 2011
Assessee PAN AABCS7890Q
Bench Mumbai
Appeal Number ITA 230/MUM/2011
Duration Of Justice 2 year(s) 8 month(s) 30 day(s)
Appellant SWAN ENERGY LTD ( FORMELRY KNOWN AS SWAN MILLS LTD), MUMBAI
Respondent DCIT RG 7(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-10-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 09-10-2013
Date Of Final Hearing 22-08-2013
Next Hearing Date 22-08-2013
Assessment Year 2003-2004
Appeal Filed On 10-01-2011
Judgment Text
E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH MUMBAI .. !'# $ $ $ $ %&. !.'.. $( ) !'# !* BEFORE SHRI P.M. JAGTAP AM AND DR. S.T.M. PAVALAN JM !./ I.T.A. NO. 230/MUM/2011 ( )( $- )( $- )( $- )( $- / / / / ASSESSMENT YEAR : 2003-04 M/S SWAN ENERGY LIMITED (FORMERLY KNOWN AS SWAN MILLS LTD.) 215 2 ND FLOOR FREE PRESS HOUSE NARIMAN POINT MUMBAI 400 021. ( ( ( ( / VS. DY. C.I.T. 7(2) 6 TH FLOOR AAYAKAR BHAVAN MUMBAI 400 020. #. !./ PAN : AABCS 7890 Q ( ./ / // / APPELLANT ) .. ( 01./ / RESPONDENT ) ASSESSEE BY SHRI J.P. BAIRAGRA ASSESSEE BY : SHRI SHISHIR SRIVASTAVA !($ 2 / // / DATE OF HEARING : 22-08-2013 34- 2 / DATE OF PRONOUNCEMENT : 09-10-2013 [ '5 / O R D E R PER P.M. JAGTAP A.M . : .. !'# THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A) 13 MUMBAI DATED 30-08-2010 WHEREBY HE CON FIRMED THE PENALTY OF RS. 16 50 000/- IMPOSED BY THE A.O. U/S 271(1)(C) O F THE INCOME TAX ACT 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF TEXTILE MANUFACTURING. THE RETURN OF IN COME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 18-11-2003 DECLARI NG TOTAL LOSS OF RS. 1 13 12 996/-. IN THE ASSESSMENT COMPLETED U/S 143( 3) OF THE INCOME TAX ITA 230/M/11 2 ACT 1961 VIDE AN ORDER DATED 24-2-2006 READ WITH R ECTIFICATION ORDER PASSED U/S 154 OF THE ACT THE TOTAL INCOME OF THE ASSESSE E WAS DETERMINED BY THE A.O. AT A LOSS OF RS. 1 21 18 311/-. IN THE SAID AS SESSMENT RENTAL INCOME FROM WAREHOUSE AMOUNTING TO RS. 65 01 328/- DECLARE D BY THE ASSESSEE AS ITS BUSINESS INCOME WAS TREATED BY THE A.O. AS INCOME FROM HOUSE PROPERTY AND AFTER ALLOWING DEDUCTION OF RS. 19 50 398/- U/S 24A OF THE ACT BEING 30% OF THE RENTAL INCOME THE NET INCOME OF RS. 45 50 9 32/- WAS BROUGHT TO TAX BY THE A.O. IN THE HANDS OF THE ASSESSEE UNDER THE HEA D INCOME FROM HOUSE PROPERTY. ACCORDING TO THE A.O. THE ASSESSEE WAS GUILTY OF FURNISHING INACCURATE PARTICULARS OF ITS INCOME TO THE EXTENT OF RS. 45 50 932/- INASMUCH AS THE INCOME CHARGEABLE TO THAT EXTENT UN DER THE HEAD INCOME FROM HOUSE PROPERTY WAS DECLARED BY HIM AS ITS BUS INESS INCOME. HE THEREFORE IMPOSED PENALTY U/S 271(1)(C) OF THE ACT IN RESPECT OF THE SAID AMOUNT OF RS. 45 50 932/- AS WELL AS ANOTHER DISALL OWANCE MADE BY HIM ON ACCOUNT OF DEPRECIATION WHICH WAS SUSTAINED BY THE LD. CIT(A) TO THE EXTENT OF RS. 80 881/-. THE PENALTY IMPOSED BY THE A.O. U/S 2 71(1)(C) OF THE ACT WAS CHALLENGED BY THE ASSESSEE IN AN APPEAL FILED BEFOR E THE LD. CIT(A) WHO DISMISSED THE SAID APPEAL AND CONFIRMED THE PENALTY IMPOSED BY A.O. FOR THE FOLLOWING REASONS GIVEN IN HIS IMPUGNED ORDER:- THE ASSESSEE HAD FAILED TO I. OFFER ANY SATISFACTORY EXPLANATION REGARDING THE NOT TREATING THE INCOME WHICH HAS DIRECT NEXUS TO THE HOUSE PROPERTY AS INCOME FROM HOUSE PROPERTY. II. CIT VS. VIDYAGAURI NATVERLAL & ORS 238 ITR 91 ( GUJ) HELD THAT PENALTY UNDER S.2871(1)-CONCEALMENT-DISCLOSURE OF RECEIPTS IN PART III OF RETURN- NOT SUFFICIENT TO AVOID PENALTY- MERE FA CT THAT SOME FIGURE OR PARTICULARS HAVE BEEN DISCLOSED BY ITSELF CANNOT TA KE OUT THE CASE FROM THE PURVIEW OF FURNISHING INACCURATE PARTICULARS- W HETHER THE PARTICULARS FURNISHED BY ASSESSEE ARE INACCURATE A ND WHETHER THE PARTICULARS ARE INACCURATE OR INCORRECT TO HIS KNOW LEDGE OR WHETHER THE PARTICULARS FURNISHED ARE TRUE AND CORRECT ARE ALL QUESTIONS WHICH REQUIRE AN INQUIRY INTO THE FACTS AND CONSIDERATION OF MATERIAL ON RECORD BEFORE ARRIVING AT THE CONCLUSION WHETHER THE PENAL TY IS TO BE IMPOSE OR NOT-PROCESS OF INQUIRY INTO THE CORRECTNESS OF PART ICULARS FURNISHED BY ITA 230/M/11 3 ASSESSEE CANNOT BE CLOSED AT THE THRESHOLD BY LOOKI NG AT THE RETURN- THEREFORE SOLELY ON THE GROUND THAT THE ASSESSEE HA S DISCLOSED CERTAIN RECEIPTS IN PART III OF THE RETURN A CONCLUSION CA NNOT BE REACHED THAT ASSESSEE IS NOT GUILTY OF CONCEALING PARTICULARS OF HIS INCOME OR OF FURNISHING INACCURATE PARTICULARS- TRIBUNAL ERRED I N STOPPING AT THAT STAGE AND NOT CONSIDERING THE MATERIAL BEFORE. III). PENALTY UNDER S.27 1 (1)QUANTIFICATION- QUANTIFICATION OF PENALTY HAS TO BE MADE WITH REFER ENCE TO THE AMOUNT OF INCOME IN RESPECT OF WHICH CONCEALMENT OF PARTIC ULARS OR THE FURNISHING OF INACCURATE PARTICULARS HAS ACTUALLY T AKEN PLACE- WHERE THE ASSESSEE RETURNED A LOSS BUT ASSESSMENT WAS MADE ON A POSITIVE FIGURE OF RS.18 460 AND THE INCOME IN RESPECT OF WHICH PAR TICULARS WERE CONCEALED WAS RS. 84 727. PENALTY WAS IMPOSABLE WIT H REFERENCE TO THE FIGURE OF RS.2 84 727 AND NOT RS.18 460- THIS IS AL SO MADE CLEAR BY CL.(A) OF EXPL.4 OF S.271(1)(C) RECENTLY AMENDED. IV) IT WAS A DELIBERATE ATTEMPT ON THE PART OF THE ASSESSEE TO FURNISH INACCURATE PARTICULARS .THE ASSESSEE HAS THEREFORE FURNISHED INACCURATE PARTICULARS OF INCOME WHICH WERE NOT BON AFIDE. IN VIEW OF THE AFORESAID FACTS THE PENALTY LEVIED U/S. 271(1) IS CONFIRMED ON AMOUNT OF RS.45 50 932 @ 100% OF THE TAX. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE ASSES SEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. COU NSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ACTION OF THE A.O. IN TREATING T HE WAREHOUSE RENTAL INCOME AS INCOME FROM HOUSE PROPERTY INSTEAD OF BUSINESS I NCOME ACTUALLY DID NOT RESULT IN ANY ADDITION TO THE TOTAL INCOME. IN THIS REGARD HE INVITED OUR ATTENTION TO THE ASSESSMENT ORDER DATED 24-2-2006 P ASSED BY THE A.O. WHICH CLEARLY SHOWS THAT AS A RESULT OF CHANGE IN HEAD OF INCOME IN RESPECT OF WAREHOUSE RENT SUCH INCOME AMOUNTING TO RS. 65 01 328/- WAS REDUCED FROM THE TOTAL INCOME AND ADDITION ONLY TO THE EXTE NT OF RS. 45 50 932/- WAS INSTEAD MADE TO THE TOTAL INCOME OF THE ASSESSEE IN RESPECT OF THE RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AFTER ALLOWING DEDUCTION U/S 24A OF THE ACT TO THE EXTENT OF RS. 19 50 398/- . THE CHANGE IN THE HEAD ITA 230/M/11 4 OF INCOME IN RESPECT OF WAREHOUSE RENT THUS HAS ACT UALLY RESULTED IN REDUCTION OF THE TOTAL INCOME OF THE ASSESSEE WHICH IS EVIDENT FROM THE FACT THAT THE TOTAL INCOME OF THE ASSESSEE AS FINALLY AS SESSED BY THE A.O. IS A LOSS OF RS. 1 21 18 311/- AS AGAINST THE LOSS OF RS. 1 1 3 12 996/- RETURNED BY THE ASSESSEE AND THIS POSITION HAS NOT BEEN DISPUTED EV EN BY THE LD. D.R. AT THE TIME OF HEARING BEFORE US. IN THE PRESENT CASE TH E INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AS FINALLY ASSESSED BY THE A.O. THUS IS LESS THAN THE INCOME RETURNED BY THE ASSESSEE AND THIS BEING THE UNDISPUTED POSITION WE ARE OF THE VIEW THAT NO PENALTY U/S 271(1)(C) OF THE ACT CAN BE IMPOSED AS IT CANNOT BE SAID THAT THE ASSESSEE HAS SOUGHT TO E VADE ANY TAX BY DECLARING ITS RENTAL INCOME AS BUSINESS INCOME. IN THAT VIEW OF THE MATTER WE CANCEL THE PENALTY IMPOSED AS IT CANNOT BE SAID THAT THE A SSESSEE HAS SOUGHT TO EVADE ANY TAX BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) AND ALLOW THIS APPEAL OF THE ASSESSEE. 4. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH OCTOBER 2013. . '5 2 34- 6'(7 09-10-2013 4 2 SD/- SD/- (DR. S.T.M. PAVALAN) (P.M. JAGTAP ) ) !'# JUDICIAL MEMBER !'# / ACCOUNTANT MEMBER MUMBAI ; 6'( DATED $.)(.!./ RK SR. PS ITA 230/M/11 5 '5 2 0)89 :9- '5 2 0)89 :9- '5 2 0)89 :9- '5 2 0)89 :9-/ COPY OF THE ORDER FORWARDED TO : 1. ./ / THE APPELLANT 2. 01./ / THE RESPONDENT. 3. ; () / THE CIT(A)13 MUMBAI. 4. ; / CIT 7 MUMBAI 5. 9$> 0))( / DR ITAT MUMBAI E BENCH 6. % ? / GUARD FILE. '5(! '5(! '5(! '5(! / BY ORDER !19 0) //TRUE COPY// @ @ @ @/ // /!A !A !A !A ( DY./ASSTT. REGISTRAR) / ITAT MUMBAI