ITO 19(3)(2), v. KRISHNA N BHOJWANI, MUMBAI

ITA 2657/MUM/2009 | 2002-2003
Pronouncement Date: 09-07-2010 | Result: Dismissed

Appeal Details

RSA Number 265719914 RSA 2009
Assessee PAN AIMPB4570C
Bench Mumbai
Appeal Number ITA 2657/MUM/2009
Duration Of Justice 1 year(s) 2 month(s) 15 day(s)
Appellant ITO 19(3)(2),
Respondent KRISHNA N BHOJWANI, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-07-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 09-07-2010
Assessment Year 2002-2003
Appeal Filed On 24-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH MUMBAI BEFORE SHRI R.V. EASWAR PRESIDENT AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 2657/MUM /2009 (ASSESSMENT YEAR: 2002-03) INCOME TAX OFFICER - 19(3)(2) MRS. KRISHNA N. BHOJ WANI ROOM NO. 306 3RD FLOOR SAMIR COMPLEX 1ST FLOOR PIRAMAL CHAMBERS PAREL VS. ST. ANDREWS ROAD BANDRA (W) LALBAUG MUMBAI 400012 MUMBAI 400050 PAN - AIMPB 4570 C APPELLANT RESPONDENT APPELLANT BY: SHRI K.K. MAHAJAN RESPONDENT BY: SHRI YOGESH THAR O R D E R PER B. RAMAKOTAIAH A.M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A) XIX MUMBAI DATED 06.02.2009 AGAINST CANCELLATION OF PEN ALTY UNDER SECTION 271(1)(C) LEVIED BY THE A.O. FOR FURNISHING INACCUR ATE PARTICULARS OF INCOME. REVENUE HAS RAISED 6 GROUNDS ON THE ISSUE OF CANCEL LATION OF PENALTY. 2. BRIEFLY STATED THE ASSESSEE HAS FILED RETURN OF IN COME ON 30.07.2002 DECLARING LOSS OF RS.5 59 007/- WHICH WAS ACCEPTED UNDER SECTION 143(1). IT WAS FOUND BY THE A.O. THAT THE ASSESSEE MAIN SOURCE OF INCOME IS FROM LETTING OUT HOUSE PROPERTIES I.E. RESIDENTIAL FLAT S. THE ASSESSEE ALSO HAD INCOME FROM OTHER SOURCES. SINCE THE ASSESSEES REN TAL INCOME DURING THE YEAR WAS TO THE EXTENT OF RS.28 45 600/- AND CLAIME D DEDUCTION OF RS.24 83 965/- TOWARDS EXPENSES INCLUDING DEPRECIAT ION UNDER THE HEAD BUSINESS INCOME THE A.O. REOPENED THE ASSESSMENT AND IN THE SCRUTINY ASSESSMENT HELD THAT LETTING OUT PROPERTY WITH FURN ITURE AND FIXTURES IS NOTHING BUT INCOME FROM HOUSE PROPERTY AND ACCORDIN GLY HE ASSESSED THE INCOME RECEIVED AS INCOME FROM HOUSE PROPERTY. CONS EQUENTLY THE ITA NO. 2657/MUM /2009 MRS. KRISHNA N. BHOJWANI 2 ASSESSEES CLAIM OF VARIOUS EXPENSES WERE RESTRICTE D AND THE CLAIM OF DEPRECIATION ON THE PROPERTY TO AN EXTENT OF RS.24 83 965/- WAS ALSO DISALLOWED. THE A.O. DETERMINED THE TOTAL INCOME AT RS.19 12 197/- AS AGAINST THE LOSS CLAIMED BY THE ASSESSEE. NOTICE UN DER SECTION 271(1)(C) WAS ALSO ISSUED. IN THE QUANTUM PROCEEDINGS THE MATTER WAS TAKEN UP TO THE ITAT AND BEFORE THE ITAT THE RELEVANT GROUND WAS NO T PRESSED IN VIEW OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F SHAMBHU INVESTMENT P. LTD. REPORTED IN 263 ITR 143(SC). SUBSEQUENTLY T HE PROCEEDINGS INITIATED UNDER SECTION 271(1)(C) WERE FINALISED. 3. IN RESPONSE TO THE NOTICE ISSUED UNDER THE PENALTY PROCEEDINGS THE ASSESSEE SUBMITTED THAT SHE HAD A BONA FIDE BELIEF THAT THE INCOME CAN BE CONSIDERED UNDER THE HEAD BUSINESS INCOME FOLLOWI NG THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SULTAN BROTHER S PRIVATE LIMITED VS. CIT 51 ITR 353. IT WAS FURTHER SUBMITTED THAT THE P ROPERTIES WERE GIVEN ON LEAVE AND LICENCE BASIS ALONGWITH FURNITURE AND FIX TURES INCLUDING BEDS TELEVISION DISHWASHERS REFRIGERATORS AIR CONDITI ONERS WASHING MACHINES COOKING RANGES TELEPHONES ETC. SINCE THE AMENITIE S WERE ALSO PROVIDED AND RENT BEING COMPOSITE RENT FOLLOWING THE PRINCIPLES ESTABLISHED BY THE ABOVE DECISION OF THE HON'BLE SUPREME COURT THE ASSESSEE HAS OFFICERED THE INCOME UNDER BUSINESS INCOME AND ALSO CLAIMED DEPRECIATION ON THE BUILDING IN VIEW OF THE PROVISIONS OF SECTION 32. IT WAS HER SU BMISSION THAT A GENUINE CLAIM WAS MADE AND THERE WAS NO CONCEALMENT OF INCO ME OR FURNISHING OF INACCURATE PARTICULARS. THE A.O. HOWEVER DID NOT AGREE WITH THE ASSESSEES CONTENTION AND AFTER DISCUSSING ELABORATELY VARIOUS CASE LAW WHETHER INCOME IS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY OR AS BUSINESS INCOME/OTHER SOURCES CONCLUDED AS UNDER: - 1] THE ASSESSEE HAS FURNISHED INACCURATE PARTICULA RS BY CONSIDERING LICENCE FEES TO BE CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM BUSINESS. THE INTENTION OF THE ASSESSEE WAS TO RED UCE THE INFERENCE OF THE TAX LIABILITY BY CHANGING ONE HEAD AS INCOME TO ANOTHER HEAD OF INCOME BECAUSE INCOME FROM HOUSE PROPERTY ATTRAC TS A FEW DEDUCTION AS AGAINST BUSINESS INCOME WHICH IS COMPU TED AFTER ALLOWING A NUMBER OF EXPENSES. 2] IN THE CASE OF ASSESSEE IT IS VERY CLEAR THAT LI CENCE FEES RECEIVED ARE ASSESSED TO TAX UNDER THE NEED INCOME FROM PROPERT Y BECAUSE THE ITA NO. 2657/MUM /2009 MRS. KRISHNA N. BHOJWANI 3 ASSESSEES PREMISES WAS OF RESIDENTIAL UNITS PROVID ED WITH CERTAIN AMENITIES WOULD CERTAINLY NOT CHANGE ITS CHARACTER AND ACTIVITY OF LETTING OUT OF FLAT ON LEAVE AND LICENCE NOT AMOUNT TO TRADE OR BUSINESS EVEN IF THE LETTING MAY CONTINUOUS IN NATU RE. 3] THE ASSESSEE IS MERELY AN OWNER OF THE PROPERTY AND IS NOT CARRYING OUT ANY BUSINESS AS SUCH. SHE IS RECEIVING RENTAL I NCOME FROM MERE LETTING OUT OF PROPERTY OWNED BY HER AND THIS INCOM E HAS BEEN DERIVED BY THE ASSESSEE BY EXERCISE OF HER PROPERTY AS OWNER OF THE PROPERTY AND NOT ON ACCOUNT OF CARRYING ON ANY BUSI NESS AS SUCH. 4] IN THE CASE OF THE ASSESSEE ONLY TENNENTS HAVE B EEN LET OUT AND NOT THE ITEMS LIKE PLANT MACHINERY & FURNITURE THEREFO RE THE INCOME DERIVED BY THE ASSESSEE IS ONLY FROM LETTING OUT OF THE HOUSE AND NOT FROM LETTING OUT OF PLANT MACHINERY FURNITURE. HE NCE INCOME OF THE ASSESSEE IS NOT CHARGEABLE TO TAX U/S. 56(2)(III) O F THE I.T. ACT. 5] THE FACTS OF THE SULTAN BROS. ARE TOTALLY DIFFER ENT FROM THOSE OF THE ASSESSEE. IN THE CASE OF SULTAN BROS. BUILDING FROM WHICH INCOME WAS BEING DERIVED WAS COMMERCIAL ASSET I.E. A HOTEL THE INCOME FROM WHICH OTHERWISE WOULD HAVE BEEN TAXABLE AS IN COME FROM BUSINESS WHEREAS IN THE CASE OF THE ASSESSEE ONLY RESIDENTIAL APARTMENT AND NOT COMMERCIAL ASSETS HAVE BEEN LET O UT. IN THAT CASE THE INCOME WAS THUS DERIVED BY EXPLANATION OF A COMMERCIAL PROPERTY. THIS IS NOT CASE OVER HERE IN THE CASE OF THE ASSESSEE. THE RATIO OF THE DECISION OF SULTAN BROS. THEREFORE DOE S NOT APPLY TO THE FACTS OF THE CASE OF THE ASSESSEE. FROM THE ABOVE DISCUSSION IT IS VERY CLEAR THAT T HE INCOME DERIVED BY THE ASSESSEE IS CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM PROPERTY ONLY. THUS THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HERE INCOME SHOWING RECEIPTS LICENCE FEES UNDER THE HEAD INCOME FROM BUSINESS WHICH RESULTED IN CONCEAL MENT OF INCOME TO THE EXTENT OF RS.24 71 204/-. 4. ACCORDINGLY HE LEVIED PENALTY ON THE INCOME TO THE EXTENT OF RS.24 71 204/- AT RS.7 29 668/- IE.100% OF THE TAX SOUGHT TO BE EVADED. 5. BEFORE THE CIT(A) THE SAME SUBMISSIONS WERE REITERA TED WITH SUPPORT OF VARIOUS JUDICIAL PRINCIPLES. THE CIT(A) AFTER C ONSIDERING THE FACTS OF THE CASE AND RELYING ON VARIOUS CASE LAWS DELETED THE PENALTY BY STATING AS UNDER: - 5.6 TO SUM UP THE APPELLANT LET OUT FULLY FURNISH ED FLATS WITH AIR- CONDITIONED BEDS WARDROBE T.V. WASHING MACHINE DISH WASHER PLASTER OF PARIS ETC. THE FURNISHINGS WERE AS PER T HE SPECIFICATIONS OF THE LICENCE. THE LICENCE FEE WAS A COMPOSITE AMOUNT. TH E AO IN HIS ORDER HAS ACCEPTED ALL THESE FACTS AND EVEN CONCEDED THAT PRO VIDING THESE ITEMS WOULD INCREASE THE RENTALS OF THE FLAT. HOWEVER HE ASSESSED THE ENTIRE RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROP ERTY. THE ITA NO. 2657/MUM /2009 MRS. KRISHNA N. BHOJWANI 4 APPELLANT ALONGWITH THE RETURN OF INCOME HAD FILE D DETAILED NOTE EXPLAINING THE STAND TAKEN BY HER AND THE AO HAD NO T FOUND ANY OF THE DETAILS FURNISHED SO FURNISHED TO BE INCORRECT. NO ADDITIONAL INCOME HAS BEEN CHARGED TO TAX. NONE OF THE EXPENSES CLAIMED B Y THE APPELLANT HAVE BEEN FOUND TO BE NON-GENUINE. THE DIFFERENCE BETWEE N A RETURNED INCOME AND THE ASSESSED INCOME IS ONLY BECAUSE THE APPELLA NT HAD SHOWN THIS INCOME UNDER THE HEAD BUSINESS BUT WAS ASSESSED B Y THE AO UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 5.7 AS STATED EARLIER CONCEALMENT CAN BE OF FACTS AND NOT OF LEGAL PROVISIONS. LEGAL PROVISIONS HAVE TO BE APPLIED TO A GIVEN SET OF FACTS. WHETHER COMPOSITE RENT IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY OR INCOME FROM BUSINESS IS UNDOUBTEDLY A D EBATABLE ISSUE AND THE STAND TAKEN BY THE APPELLANT RELYING ON JUDICIA L DECISIONS INCLUDING ORDERS OF THE JURISDICTIONAL ITAT CAN NOT BE SAID T O BE CONCEALMENT. TAKING ALL THE ABOVE FACTS AND CIRCUMSTANCES MORE PARTICULARLY THE ORDER OF THE MUMBAI ITAT IN THE CASE OF VAZIR GLASS WORKS LIMITED QUOTED SUPRA THE PENALTY SO LEVIED IS DELETED. HENCE THE REVENUE IS AGGRIEVED. 6. THE LEARNED D.R. SUBMITTED THAT MAKING A WRONG CLAI M KNOWING VERY WELL THAT INCOME HAS TO BE OFFERED UNDER HOUSE PROP ERTY AND THAT TOO WHEN TDS CLAIM WAS MADE AND THE TDS UNDER 194(1) WAS DED UCTED THE ASSESSEE WAS NOT CORRECT IN MAKING THE CLAIM UNDER INCOME FR OM BUSINESS AND ARRIVING AT A LOSS AND THE ASSESSEE WAS SUPPOSED TO OFFER INCOME AS WAS DONE BY THE A.O. HE REFERRED TO THE FACTS OF THE CA SE AND RELIED ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CAS E OF CIT VS. ECS LIMITED 2010-TIOL-287-HC-DEL-IT WHEREIN THE HON'BLE DELHI HIGH COURT HELD AS UNDER: - IT WAS WORTH NOTING THAT THE APPELLANT HAS RELIED UPON THE CASE LAWS OF OTHER HIGH COURT IGNORING THE JUDGEMENT OF THE HON' BLE SUPREME COURT/ JURISDICTIONAL DELHI HIGH COURT WHICH IS NOT IN ORD ER AND IN FACT BY DOING SO THE APPELLANT HAS PROVED ITS GUILTY MIND OF DEL IBERATELY FURNISHING INACCURATE PARTICULARS OF INCOME TO CLAIM HIGHER DE DUCTION AND THUS ESCAPING THE CORRECT IMPOSITION OF TAXES. IT IS SET TLED NOW THAT CLAIMING EXCESSIVE DEDUCTIONS ALSO AMOUNT TO CONCEALMENT OF INCOME. FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FORMS: EITHE R AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY OR AN ITEM OF EXPEN DITURE MAY BE FALSELY CLAIMED. BOTH TYPES ATTEMPT TO REDUCE THE T AXABLE INCOME. BOTH TYPES AMOUNT TO CONCEALMENT OF PARTICULARS OF ONES INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. PEN ALTY MAY BE IMPOSED FOR EITHER OR BOTH SUCH ATTEMPTS. ITA NO. 2657/MUM /2009 MRS. KRISHNA N. BHOJWANI 5 7. IN REPLY THE LEARNED COUNSEL SUBMITTED THAT THE ASS ESSEE WAS FILING RETURNS UNDER THE SAME HEAD IN EARLIER YEARS WHICH WERE BEING ACCEPTED BUT THERE WAS NO SCRUTINY IN EARLIER YEARS. FOR THE FIRST TIME ASSESSEES RETURN WAS TAKEN UP FOR SCRUTINY. HE REFERRED TO TH E COPY OF THE COMPUTATION STATEMENT PLACED ON RECORD TO SUBMIT THAT THE ASSES SEE HAS MADE DISCLOSURE IN THE RETURN OF THE ENTIRE RENTAL RECEIPTS AND THE RE IS NO OTHER SIGNIFICANT INCOME EXCEPT RECEIVING RENTAL INCOME. HE ALSO REFE RRED TO THE FACTUAL FINDINGS GIVEN BY THE A.O. THAT THE BUILDING AS WEL L AS FURNITURE AND FIXTURES WAS GIVEN ON A INSEPARABLE COMPOSITE LETTING AND TH E INCOMES COULD BE TAXED EITHER UNDER THE HEAD BUSINESS OR UNDER THE HEAD OTHER SOURCES. THERE IS ALSO NO NEW INFORMATION AND ON THE BASIS O F THE SAME PARTICULARS FURNISHED THE A.O. REOPENED THE ASSESSMENT AND CHAN GED THE HEAD OF INCOME. IT WAS SUBMITTED THAT THE ASSESSEE MADE BON A FIDE CLAIM AND THE PRINCIPLES ESTABLISHED BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD 322 ITR 158 WILL AP PLY WHEN THE ASSESSEE MAKES A GENUINE CLAIM BUT WAS NOT ACCEPTED BY THE A .O. THERE IS NO CASE FOR LEVY OF PENALTY. HE ALSO FURTHER RELIED ON THE FOLLOWING DECISIONS OF THE ITAT WHEREIN IT WAS HELD THAT PENALTY CANNOT BE LEV IED MERELY BECAUSE INCOME HAS BEEN ASSESSED ON A DIFFERENT HEAD: I) ACIT VS. SMT. NEERJA BIRLA ITA NO. 3259/MUM/1997 DA TED 09.07.2003 II) ACIT VS. VAZIR GLASS WORKS LTD. ITA NO. 332/MUM/200 7 III) VINAIK INVESTORS LTD. VS. ITO 5 SOT 591 (DEL) 8. IT WAS FURTHER SUBMITTED THAT THE DECISION OF THE H ON'BLE SUPREME COURT IN THE CASE OF SHAMBHU INVESTMENT P. LTD. WAS PRONOUNCED IN JANUARY 2003 AND BY THAT TIME THE ASSESSEE HAS ALRE ADY FILED THE RETURN OF INCOME FOR A.Y. 2002-03 AND SUBSEQUENT TO THAT DECI SION THE INCOMES WERE OFFERED AS HOUSE PROPERTY INCOME ALONE. HE PLACED O N RECORD THE COMPUTATION OF INCOME STATEMENTS IN SUBSEQUENT YEAR S. 9. WITH REFERENCE TO MERITS OF THE CASE THAT ASSESSEE HAD BONAFIDE BELIEF IT WAS SUBMITTED THAT THE HON'BLE SUPREME COURT IN THE CASE OF SULTAN BROTHERS PRIVATE LIMITED VS. CIT 51 ITR 353 HELD TH AT ONCE IT IS A ITA NO. 2657/MUM /2009 MRS. KRISHNA N. BHOJWANI 6 COMMERCIAL ASSET AND THERE WAS INSEPARABLE LETTING OF BUILDING AND MACHINERY THE INCOME IS TO BE ASSESSED AS INCOME FR OM BUSINESS AND ASSESSEE WAS OF THE OPINION AND BONA FIDE BELIEF TH AT SINCE THE LEAVE AND LICENCE IS A COMPOSITE LETTING OF BUILDING AS WELL AS FIXTURES AND FURNISHINGS IT WAS BUSINESS INCOME. 10. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE WAS FILI NG RETURNS IN EARLIER YEARS IN SIMILAR MANNER AND FOR THE FIRST TIME DEPR ECIATION CLAIM WAS MADE IN THIS YEAR. SINCE THE ASSESSEE WAS INVOLVED IN SY STEMATIC AND ORGANISED ACTIVITY OF LETTING OUT THE PROPERTIES AND FINDING OF TENANTS WITH CREDENTIALS INVOLVES LOT OF EFFORT THE ASSESSEE WAS UNDER THE IMPRESSION THAT THE INCOME IS CORRECTLY OFFERED AS BUSINESS INCOME. THE LEARNE D COUNSEL ALSO RELIED ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NATH BROS. EXIM INTERNATIONAL LTD. 288 ITR 670 WHEREIN I T WAS HELD THAT ONCE THE FACTS ARE DISCLOSED BUT WRONG CLAIM WAS MADE FOR SP ECIAL DEDUCTION THERE IS NO CONCEALMENT OF INCOME AND PENALTY COULD NOT BE I MPOSED. HE ALSO RELIED ON ANOTHER DELHI HIGH COURT JUDGEMENT IN THE CASE O F CIT VS. INTERNATIONAL AUDIO VISUAL CO. 288 ITR 570 WHICH WAS ALSO ON THE SAME PROPOSITION THAT ONCE THE FACTS ARE DISCLOSED BUT CLAIM FOR DEDUCTIO N WAS FOUND ERRONEOUS THERE IS NO CONCEALMENT OF INCOME AND PENALTY CANNO T BE IMPOSED. HE ALSO PLACED ON RECORD DECISION OF THE ITAT J BENCH MUM BAI IN THE CASE OF M/S. EFFICIENT BUILDERS LTD. VS. ACIT ITA NO. 4112/MUM/ 2008 DATED 09.07.2009 WHEREIN ON SIMILAR FACTS PENALTY LEVIED WAS CANCELL ED. THE LEARNED COUNSEL ALSO PLACED ON RECORD ANOTHER ORDER OF THE ITAT F BENCH MUMBAI IN THE CASE OF NATIONAL LEADING LIMITED VS. ACIT ITA NO. 7 316/MUN/2008 DATED 27.10.2009 WHEREIN ON SIMILAR FACTS OF CHANGE OF IN COME FROM BUSINESS HEAD TO INCOME FROM HOUSE PROPERTY THE PENALTY WAS CANCELLED. 11. THE LEARNED COUNSEL ALSO DISTINGUISHED THE JUDGEMEN T OF HON'BLE DELHI COURT IN THE CASE OF ECS LIMITED 2010-TIOL-287-HC-D EL-IT RELIED UPON BY THE REVENUE TO SUBMIT THAT IN THAT CASE THERE IS AL READY AN ESTABLISHED LAW OF THE JURISDICTIONAL HIGH COURT WHICH THE ASSESSE E HAS NOT FOLLOWED AND IN THOSE CIRCUMSTANCE IT WAS HELD THAT THERE WAS GUILT Y OF MIND OF DELIBERATELY FURNISHING INACCURATE PARTICULARS WHEREAS IN THE PR ESENT CASE THE JUDGEMENT ITA NO. 2657/MUM /2009 MRS. KRISHNA N. BHOJWANI 7 OF THE HON'BLE SUPREME COURT IN THE CASE SHAMBHU IN VESTMENT P. LTD. HAS COME SUBSEQUENT TO THE FILING OF RETURN AND THE ASS ESSEE HAS CHANGED FILING OF RETURN FROM BUSINESS HEAD TO HOUSE PROPERTY INCO ME SUBSEQUENTLY AND ALSO FAIRLY CONCEDED WHEN THE MATTER CAME BEFORE TH E ITAT. NOT ONLY THAT THE HON'BLE DELHI HIGH COURT JUDGEMENT WAS RENDERED BEF ORE THE HON'BLE SUPREME COURT JUDGEMENT IN THE CASE OF RELIANCE PET ROPRODUCTS PVT. LTD 322 ITR 158 WHEREIN THE HON'BLE SUPREME COURT HAS H ELD THAT A MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LA W BY ITSELF WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGA RDING INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN DOES NOT AM OUNT TO INACCURATE PARTICULARS. THE LEARNED COUNSEL RELIED UPON THE JU DGEMENT OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. GANESAN BU ILDERS LTD. 299 ITR 403 WHEREIN EVEN AFTER HOLDING THAT THE ASSESSEES CLA IM OF BUSINESS LOSSES HAD BEEN DECIDED AGAINST THE ASSESSEE IT COULD NOT BE CONCLUDED THAT THE ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME BECAUSE THE ASSESSEE HAD DULY DISCLOSED IT IN THE AUDIT STATEMENT FILED BEFORE THE A.O. IT WAS THE LEARNED COUNSELS SUBMISSION THAT WHEN THE FACTS AR E DISCLOSED BUT THE CLAIM IS FOUND ERRONEOUS THERE IS NO CONCEALMENT O F INCOME. HE RELIED ON THE ORDERS OF THE CIT(A) WHO DELETED THE PENALTY. 12. WE HAVE CONSIDERED THE ISSUE AND PERUSED THE FACTS AND VARIOUS PROPOSITIONS/CASE LAW RELIED UPON IN THE ARGUMENTS. THERE IS NO DISPUTE THAT THE ASSESSEE IS AN INDIVIDUAL AND WAS OFFERING INCOMES UNDER THE HEAD HOUSE PROPERTY IN THE EARLIER YEARS AND THESE RETUR NS WERE ACCEPTED UNDER SECTION 143(1). ONLY IN THIS YEAR IN ADDITION TO T HE EXPENDITURE SHE WAS CLAIMING AGAINST RENTAL RECEIPT THE ASSESSEE ALSO F OR THE FIRST TIME CLAIMED DEPRECIATION UNDER SECTION 32 TO THE EXTENT OF RS.2 4 83 965/-. IT WAS SUBMITTED BEFORE US IN THE WORKING THAT EXPECT THE CLAIM OF DEPRECIATION THE CLAIM OF EXPENDITURE MADE IN THE P & L ACCOUNT AND THE ALLOWANCES OTHERWISE ALLOWED BY THE A.O. WHILE WORKING OUT THE HOUSE PROPERTY INCOME WAS ALSO SAME. IT WAS SUBMITTED THAT THE EXPENSES C LAIMED IN THE P & L ACCOUNT WERE TO THE EXTENT OF RS.11 60 861/- WHEREA S THE MUNICIPAL TAXES AND DEDUCTION AT 30% OF ALV ALLOWED TOWARDS REPAIRS WERE TO THE EXTENT OF RS.11 25 543/-.THUS THERE IS NOT MUCH OF VARIATION IN THE EXPENDITURE ITA NO. 2657/MUM /2009 MRS. KRISHNA N. BHOJWANI 8 CLAIMS EXCEPT DEPRECIATION CLAIM MADE FOR THE FIRST TIME IN THIS YEARS RETURN. HOWEVER IT IS NOT THE CASE OF THE A.O. THAT THE AS SESSEE MADE A BOGUS CLAIM OF DEPRECIATION OR INCORRECT CLAIM OF DEPRECIATION. THE ASSESSING OFFICERS BASIS FOR LEVY OF PENALTY WAS THAT THE INCOME WHICH WAS TO BE OFFERED UNDER THE HEAD HOUSE PROPERTY WAS WRONGLY CLAIMED AS IN COME FROM BUSINESS THEREBY MAKING IT A LOSS. IT IS NOT THE CASE OF CON CEALMENT OF INCOME BUT CASE OF FURNISHING INACCURATE PARTICULARS AND THE A .O. LEVIED PENALTY ON THE PRETEXT OF FURNISHING INACCURATE PARTICULARS THEREB Y CONCEALING THE INCOME. AS RIGHTLY CONSIDERED BY THE CIT(A) THE FACT OF SH OWING INCOME UNDER THE HEAD BUSINESS OR PROFESSION WAS DISCLOSED IN THE P & L ACCOUNT. THE A.O. IN THE ASSESSMENT ORDER CAME TO A DIFFERENT CONCLUSION BASED ON SAME FACTS ON WHICH THERE WERE DIVERSE VIEWS UNTIL IT WAS SETTLED BY THE JUDGEMENT IN THE CASE OF SHAMBHU INVESTMENTS (SUPRA). THE CLAIM OF T HE ASSESSEE WAS BASED ON A NUMBER OF JUDICIAL DECISIONS THEN AVAILABLE AN D EVEN IF IT IS MISPLACED IT CANNOT LEAD TO AN INFERENCE THAT THE ASSESSEE HA S FURNISHED INACCURATE PARTICULARS OF INCOME UNLESS THE VIEW TAKEN BY THE TAX PAYER IS AN ABSURD VIEW OR TOTALLY UNTENABLE IN LAW. 13. THE PRINCIPLES ESTABLISHED BY THE HON'BLE DELHI HIG H COURT IN THE CASE OF CIT VS. INTERNATIONAL AUDIO VISUAL CO. 288 ITR 5 70 ARE APPLICABLE. THE FACTS IN THAT CASE WAS FOR A.Y. 1989-90 THE ASSESSE E CLAIMED DEDUCTION UNDER SECTION 80HHC OF THE I.T. ACT IN RESPECT OF D UBBING RIGHTS OF HINDI FILMS WHICH IT HAD SOLD TO SOME FOREIGN COMPANY. T HE A.O. DID NOT AGREE THAT IT WAS A SALE BY THE ASSESSEE AND CONCLUDED TH AT IT WAS NOT A SALE OF GOODS OR MERCHANDISE BUT A RECEIPT OF ROYALTY FOR T RANSFER OF DUBBING RIGHTS. HE DISALLOWED THE CLAIM UNDER SECTION 80HHC OF THE ACT. THE PENALTY LEVIED UNDER SECTION 271(1)(C) WAS DELETED BY THE ITAT AND ON APPEAL THE HON'BLE HIGH COURT OF DELHI DISMISSING HELD THAT THE ASSESSEE HAD A BONA FIDE BELIEF THAT BY SELLING DUBBING RIGHTS TO A FOREIGN COMPANY IT WAS SELLING GOODS OF MERCHANDISE WITHIN THE MEANING OF 80HHC. UNDER THE CIRCUMSTANCES SINCE THERE IS NO CONCEALMENT OF PRIMARY FACTS PENALTY C OULD NOT BE IMPOSED . SIMILAR VIEW WAS ALSO TAKEN BY THE HON'BLE MADRAS H IGH COURT IN THE CASE OF CIT VS. GANESAN BUILDERS LTD. 299 ITR 403 WHEREIN E VEN THE CLAIM IS PRIMA FACIE NOT ADMISSIBLE AND ULTIMATELY WAS NOT ALLOWED TO THE ASSESSEE IN THE ITA NO. 2657/MUM /2009 MRS. KRISHNA N. BHOJWANI 9 QUANTUM APPEAL THE HON'BLE MADRAS HIGH COURT HELD THAT IT WAS NOT IN DISPUTE THAT THE ASSESSEE ACQUIRED SHARES WHEN THER E WAS A DIMINUTION IN VALUE OF THE SHARES. IT WAS ALSO NOT DISPUTED THAT THE ASSESSEE HAD DEBITED THE EQUAL AMOUNT OF DIMINUTION IN THE VALUE OF SHAR ES IN THE P & L ACCOUNT. BUT IT WAS THE CONCURRENT FINDING OF BOTH THE AUTHO RITIES THAT SINCE THE ISSUE WHETHER IT WAS A BUSINESS LOSS OR NOT HAD BEEN DECI DED AGAINST ASSESSEE IT COULD NOT BE CONCLUDED THAT THE ASSESSEE HAD FILED INACCURATE PARTICULARS OF INCOME BECAUSE THE ASSESSEE HAD DULY DISCLOSED IT IN THE AUDIT STATEMENTS FILED BEFORE THE A.O. ACCORDINGLY BOTH AUTHORITIES HELD THAT THE CASE WAS NOT ONE OF FURNISHING OF INACCURATE PARTICULARS OF INCO ME AS THE ASSESSEE HAD DISCLOSED THE WRITING OFF OF THE INVESTMENTS IN THE AUDIT STATEMENT FOR BOTH THE ASSESSMENT YEARS AND HENCE THE LEVY OF PENALTY WAS NOT WARRANTED . 14. IN THE FACTS OF ASSESSEES CASE THE VIEW TAKEN BY THE ASSESSEE IN CONSIDERING THE INCOME UNDER THE HEAD BUSINESS INCO ME WAS BASED ON THE PRINCIPLES OF THE HON'BLE SUPREME COURT JUDGEMENT I N THE CASE OF SULTAN BROTHERS. THE ONLY REASON WHY THE A.O. HAD NOT ACCE PTED THIS VIEW WAS THAT IN THE CASE BEFORE THE COURT THE ASSESSEE WAS DEAL ING IN HOTEL BUSINESS WHERE AS THE ASSESSEE WAS LETTING OUT RESIDENTIAL P ROPERTY. EVENTHOUGH THERE IS DISTINCTION BETWEEN A RESIDENTIAL PROPERTY AND A COMMERCIAL PROPERTY ONE CAN NOT MAKE OUT THE DISTINCTION UNDER THE PROVISIO NS OF THE HEAD INCOME FROM HOUSE PROPERTY AND THE STAND TAKEN BY THE ASSE SSEE IS CERTAINLY NOT ABSURD OR PERVASIVE WHICH IS UNTENABLE IN LAW. SUBS EQUENT TO THE JUDGEMENT IN THE CASE OF SHAMBHU INVESTMENT P. LTD. WHICH WA S PRONOUNCED AFTER THE ASSESSEE HAD FILED THE RETURN THE ASSESSEE CONCEDE D THE ISSUE BEFORE THE ITAT AND ALSO MODIFIED FILING OF THE RETURNS IN LAT ER YEARS FROM THE HEAD BUSINESS INCOME TO HOUSE PROPERTY INCOME. IN VIEW O F THIS IT IS TO BE CONCLUDED THAT THE ASSESSEE HAD A BONA FIDE REASON IN MAKING THE CLAIM UNDER THE HEAD BUSINESS INCOME AND IT WAS ONLY A CH ANGE OF HEAD OF INCOME WHICH RESULTED IN BRINING TO TAX WHILE NOT ALLOWING THE CLAIMS OF THE ASSESSEE FULLY. IN THESE CIRCUMSTANCES WE ARE OF THE OPINIO N THAT PENALTY IS NOT WARRANTED. ITA NO. 2657/MUM /2009 MRS. KRISHNA N. BHOJWANI 10 15. THE LEARNED D.R. HAS RELIED UPON THE JUDGEMENT OF T HE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ECS LTD. (SUPRA). AS THE FACT OF THE CASE IS THAT THE ASSESSEE FOR CLAIMING DEDUCTION UNDER SEC TION 80-O OF THE ACT WANTED THE SAME AT 50% OF THE GROSS INCOME RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE PROVIDED BY IT TO FOREIGN CLIENTS. THE A.O . HOWEVER WAS OF THE VIEW THAT ON CORRECT INTERPRETATION UNDER SECTION 80-O T HE DEDUCTION IS TO BE RESTRICTED TO THE NET INCOME AND THEREFORE EXPEND ITURE INCURRED IN INDIA FOR EARNING FOREIGN EXCHANGE HAD TO BE DEDUCTED. IN THE SE FACTS OF THE CASE THE HON'BLE HIGH COURT UPHELD THE LEVY OF PENALTY AS TH E ASSESSEES CLAIM WAS MADE IGNORING THE JUDGMENT OF THE HON'BLE SUPREME C OURT AND THE JURISDICTIONAL HIGH COURT AND ACCORDINGLY IT WAS OP INED THAT THE ASSESSEE HAD GUILTY MIND OF DELIBERATELY FURNISHING INACCURA TE PARTICULARS OF INCOME TO CLAIM HIGHER DEDUCTION THUS ESCAPING CORRECT IM POSITION OF TAXES. ON THOSE SET OF FACTS THE HON'BLE DELHI HIGH COURT UPH ELD THE LEVY OF PENALTY WHEREAS IN ASSESSEES CASE THERE WAS A BONA FIDE BE LIEF OF CLAIMING RENTAL INCOME AS BUSINESS INCOME FOLLOWING THE EARLIER JUD GEMENT OF THE HON'BLE SUPREME COURT GIVEN IN THE CASE OF SULTAN BROTHERS EVEN THOUGH MISPLACED. ACCORDINGLY WE ARE OF THE VIEW THAT THE RELIANCE O N THE HON'BLE DELHI HIGH COURT JUDGMENT BY THE REVENUE IS NOT CORRECT AS THE FACTS ARE DIFFERENT. CONSIDERING THE FACTS OF THE CASE AND VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE IN THE COURSE OF SUBMISSION WE ARE OF THE OPINION THAT THE CIT(A) HAS COME TO THE CORRECT CONCLUSION IN DELETING THE PENALTY. ACCORDINGLY WE UPHOLD THE ORDER OF THE CIT(A). REVENUES GROUNDS A RE REJECTED. 16. IN THE RESULT APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH JULY 2010. SD/- SD/- (R.V. EASWAR) (B. RAMAKOTAIAH) PRESIDENT ACCOUNTANT MEMBER MUMBAI DATED: 9 TH JULY 2010 ITA NO. 2657/MUM /2009 MRS. KRISHNA N. BHOJWANI 11 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XIX MUMBAI 4. THE CIT XIX MUMBAI CITY 5. THE DR A BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.