VORA SAFE VAULTS P. LTD, MUMBAI v. ITO WD 8(3)(4), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F MUMBAI BEFORE SHRI R.S.SYAL AM AND SMT.ASHA VIJAYARAGHAVAN JM ITA NO.2427/MUM/2009 : ASST.YEAR 2005-2006 M/S.VORA SAFE VAULTS PRIVATE LIMITED VORA HOUSE 50 BAJAJ ROAD VILE PARLE (WEST) MUMBAI 400 056. PA NO.AABCV1480B. VS. THE INCOME TAX OFFICER WARD 8(3)(4) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIJAY MEHTA RESPONDENT BY : SHRI VIRENDRA OJHA O R D E R PER R.S.SYAL AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ON 15.1.2009 I N RELATION TO THE ASSESSMENT YEAR 2005-2006 UPHOLDING PENALTY U/S.271(1)(C) OF T HE ACT. 2. FIRST GROUND CHALLENGING THE VALIDITY OF THE ORD ER PASSED BY THE A.O. WAS NOT PRESSED BY THE LEARNED A.R. THE SAME IS DISMISSED. 3. THE ONLY OTHER GROUND IS AGAINST THE CONFIRMATIO N OF PENALTY AMOUNTING TO RS.1 07 582 IMPOSED BY THE A.O. U/S.271(1)(C) OF TH E ACT. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN DECLARING TOTAL INCOME AT RS.NIL. THE ASSESSMENT WAS COMPLETED U/S.143(3) ASSESSING THE I NCOME AT RS.2 94 000 BY CONSIDERING THE FOLLOWING THREE ITEMS OF INCOME AS FALLING UNDER THE HEAD INCOME FROM OTHER SOURCES AS AGAINST THE ASSESSEES CLAIM OF BUSINESS INCOME:- ITA NO.2427/MUM/2009 M/S.VORA SAFE VAULTS PRIVATE LIMITED. 2 (I) DEBENTURE & BOND INTEREST RS. 12 310 (II) FIXED DEPOSIT INTEREST RS.3 22 951 (III) INTEREST ON INCOME TAX REFUND RS. 3 332 -------------- RS.3 38 593 ========= DUE TO THIS TREATMENT GIVEN BY THE ASSESSING OFFIC ER THE INCOME WAS ENHANCED BECAUSE OF NON-AVAILABILITY OF SET OFF OF BROUGHT FORWARD LOSS AGAINST THE BUSINESS INCOME AS WAS CLAIMED BY THE ASSESSEE. THE A.O. IMPOSED PENALTY U/S.271(1)(C) AMOUNTING TO RS.1 07 582 WHICH CAME TO BE APPROVED BY THE LEARNED CIT(A). 4. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD IT IS NOTED THAT THE ASSESSEE CLAIMED THE AB OVE THREE ITEMS OF INCOME AS FALLING UNDER THE HEAD `BUSINESS INCOME BY DISCLOS ING ALL THE NECESSARY PARTICULARS OF INCOME. THE ASSESSING OFFICER DID NOT APPROVE TH E ACTION OF THE ASSESSEE BUT TAXED THESE ITEMS UNDER THE HEAD `INCOME FROM OTHER SOURCES. RECENTLY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. [(2010) 322 ITR 158 (SC)] HAS HELD THAT MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT ATTRACT PENAL TY U/S.271(1)(C). THE HONBLE SUPREME COURT FURTHER HELD THAT WHEN THE ASSESSEE F URNISHED ALL THE MATERIAL IN RETURN WHICH WAS NOT FOUND TO BE INCORRECT IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT BUT THE SAME COULD NOT B E CONSIDERED AS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. IN OUR CONSIDERED OPINION THE RATIO DECIDENDI OF THIS JUDGEMENT IS FULLY APPLICABLE TO THE FACTS OF THE INSTANT CASE. WE THEREFORE OVERTURN THE IMPUGNED ORDER AN D DIRECT THE DELETION OF PENALTY. ITA NO.2427/MUM/2009 M/S.VORA SAFE VAULTS PRIVATE LIMITED. 3 5. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 6 TH DAY OF APRIL 2010. SD/- SD/- ( ASHA VIJAYARAGHAVAN ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT M EMBER MUMBAI : 6 TH APRIL 2010. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENTS. 3. THE CIT CONCERNED 4. THE CIT(A) - XXIX MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI.