M/S. S.S. BUILDERS, MUMBAI v. THE ITO 20(3)(3), MUMBAI

ITA 485/MUM/2008 | 2003-2004
Pronouncement Date: 18-03-2011 | Result: Allowed

Appeal Details

RSA Number 48519914 RSA 2008
Assessee PAN AANFS0339F
Bench Mumbai
Appeal Number ITA 485/MUM/2008
Duration Of Justice 3 year(s) 1 month(s) 26 day(s)
Appellant M/S. S.S. BUILDERS, MUMBAI
Respondent THE ITO 20(3)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 18-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted J
Tribunal Order Date 18-03-2011
Date Of Final Hearing 15-02-2011
Next Hearing Date 15-02-2011
Assessment Year 2003-2004
Appeal Filed On 22-01-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'J' BENCH MUMBAI BEFORE SHRI R.V. EASWAR PRESIDENT AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 485/MUM/2008 (ASSESSMENT YEAR: 2003-04) M/S. S.S. BUILDERS INCOME TAX OFFICER - 20(3)(3) 62 LAND MARK 175 CARTER ROAD ROOM NO. 521 PIRAMA L CHAMBERS BANDRA (W) MUMBAI 400050 VS. LALBAUG MUMBAI 400012 PAN - AANFS 0339 F APPELLANT RESPONDENT APPELLANT BY: MS. RENU CHOUDHARI RESPONDENT BY: SHRI K. SINGH O R D E R PER B. RAMAKOTAIAH A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A) XXXII MUMBAI DATED 12.11.2007. 2. ASSESSEE RAISED THREE GROUNDS OF WHICH GROUND NO. 1 IS AS UNDER: - 1. THE LEARNED CIT(A) ERRED IN UPHOLDING THE LEVY OF PENALTY U/S. 271(1)(C) ON DISALLOWANCE OF DEPRECIATION ON CAR O F RS.2 09 972/- WITHOUT APPRECIATING THAT THE ASSESSE E HAS NEITHER CONCEALED THE INCOME NOR FURNISHED INACCURA TE PARTICULARS OF IT INCOME THEREFORE LEVY OF PENALT Y U/S. 721(1)(C) IS NOT JUSTIFIED. THE OTHER GROUNDS ARE ALSO ON THE ABOVE ISSUE OF LE VY OF PENALTY ON CLAIM OF DEPRECIATION. 3. THE FACTS LEADING TO THE PENALTY ARE THAT DURING TH E COURSE OF ASSESSMENT PROCEEDINGS RETURNED LOSS OF ` 4 39 658/- WAS ASSESSED AT TOTAL INCOME OF ` 1 29 100/-. IT WAS NOTICED BY THE A.O. THAT THE ASS ESSEE WHO IS IN THE BUSINESS OF BUILDING CONSTRUCTION WAS CLAIMING HIS PROJECT TO BE INCOMPLETE AND DEBITING VARIOUS EXPENSES IN ITS P & L ACCOUNT ALTHOUGH THE BUILDING HAD ALREADY BEEN COMPLETED IN EARLIER YEAR S. THE FLATS WERE SOLD AND EVEN SOCIETY WAS FORMED. HENCE THE A.O. REJECTED BO OKS OF ACCOUNT AND RETURNED LOSS WAS DISALLOWED. FURTHER MORE AGAINST PROFIT ON SALE OF ` 3 00 000/-ON SALE OF ONE FLAT STATUTORY AND MANDAT ORY EXPENSES OF ITA NO. 485/MUM/2008 M/S. S.S. BUILDERS 2 ` 1 70 899/- WERE ALLOWED AND THE TOTAL INCOME THEREA FTER WAS COMPUTED AT ` 1 29 101/-. THE A.O. SIMULTANEOUSLY INITIATED PENAL TY PROCEEDINGS UNDER SECTION 271(1)(C). ANOTHER FACT NOTICED BY THE A.O. WAS THAT THE ASSESSEE HAD CLAIMED DEPRECIATION OF ` 2 09 972/- ON A CAR WHICH WAS OWNED AND REGISTERED IN THE INDIVIDUAL NAME OF THE PARTNER SM T. NIGAR FATEMA. WHEN THE LEARNED A.R. WAS QUESTIONED IN RESPECT OF THIS DEPRECIATION IT WAS STATED ON BEHALF OF THE ASSESSEE THAT THERE IS NO BAR ON O WNING AN ASSET IN THE NAME OF THE PARTNER FOR CLAIMING DEPRECIATION IN TH E FIRM. AO CONSIDERING THE PROVISIONS OF SECTION 32 OF THE ACT DEPRECIATI ON CLAIMED ON THE CAR WAS NOT ALLOWED SINCE THE CAR IS NOT OWNED BY THE FIRM. AGGREGATE DISALLOWANCE OF LOSS OF ` 4 39 658/- MADE BY THE A.O. IN THE ASSESSMENT ORDER ALSO INCLUDED THE DEPRECIATION ON CAR DISALLOWED AT ` 2 09.972/-. THE BELATED APPEAL FILED BY THE ASSESSEE IN QUANTUM PROCEEDINGS WAS NOT ADMI TTED BY THE CIT(A). THE A.O. LEVIED PENALTY ON DISALLOWANCE OF EXPENSES AND THE DISALLOWANCE OF DEPRECIATION. THE CIT(A) IN HIS ORDER DELETED THE L EVY OF PENALTY ON DISALLOWANCE OF EXPENSES BUT CONFIRMED ON THE DISAL LOWANCE OF DEPRECIATION ON THE REASON THAT ASSESSEE HAS NOT INFORMED THE FA CT THAT THE CAR WAS REGISTERED IN THE NAME OF THE PARTNER. 4. THE LEARNED COUNSEL SUBMITTED THAT THERE IS NO BAR IN OWNING THE ASSET BY THE FIRM EVEN THOUGH THE CAR WAS REGISTERE D IN THE NAME OF THE PARTNER (NOW MANAGING PARTNER) AND RELIED ON THE PR INCIPLES ESTABLISHED BY THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS . SIVAKAMI & OTHER 322 ITR 64 (MAD) THAT THE BENEFICIAL OWNER IS ENTITLED TO CLAIM DEPRECIATION. IT WAS ALSO THE SUBMISSION THATS DEPRECIATION WAS ALL OWED IN EARLIER YEAR WHEN THE CAR WAS PURCHASED BY THE FIRM. IT WAS SUBMITTED THAT THE REGISTRATION OF THE CAR IN THE NAME OF THE PARTNER OF THE FIRM DOES NOT ATTRACT PENALTY UNDER SECTION 271(1)(C) WHEN THE DEPRECIATION ON THE SAME WAS DISALLOWED WITHOUT APPRECIATING THE FACT OF BENEFICIAL OWNERSHIP. LD.C OUNSEL FURTHER RELIED ON THE PRINCIPLES ESTABLISHED BY THE HON'BLE SUPREME C OURT IN THE CASE OF RELIANCE PETRO PRODUCTS 322 ITR 158 THAT CLAIM EVEN THOUGH WRONG COULD NOT ATTRACT PENALTY. 5. THE LEARNED D.R. REITERATED THE FACTS AND SUPPORTED THE ORDER OF PENALTY. ITA NO. 485/MUM/2008 M/S. S.S. BUILDERS 3 6. WE HAVE CONSIDERED THE ISSUE. AS SEEN FROM THE ORDE R OF THE A.O. UNDER SECTION 143(3) THE REASON FOR DISALLOWANCE IS AS UNDER: - . THE AR WAS ALSO ASKED TO SUBMIT THE DETAILS OF THE CAR AND OTHER ASSETS. IN RESPONSE THE AR SUBMITTED COPIES OF THE REGISTRATION CERTIFICATE OF THE CAR. ON PERUSAL OF THE SAME IT WAS NOTICED THAT THE CAR IS REGISTERED IN THE NAME OF MRS. NIGAR KHAN. T HE AR WHEN CONFRONTED WITH THE AFORESAID FACT STATED VIDE ORDE R SHEET ENTRY DATED 24/1/06 THAT THERE IS NO BAR ON OWNING THE ASSET IN THE NAME OF A PARTNER AND IT IS NOT NECESSARY TO OWN THE ASSET ON THE FIRMS NAME FOR CLAIMING DEPRECIATION. THE AFORESAID CONTENTION OF THE AR IS NOT AT ALL ACCEPTABLE FOR THE REASONS THAT THE ASSET HAS T O BE OWNED BY THE ENTITY ITSELF FOR CLAIMING DEPRECIATION. IN THE PRE SENT CASE THE CAR IS REGISTERED IN THE NAME OF MRS. NIGAR KHAN PARTNER OF THE FIRM AND NOT THE FIRM S.S. BUILDERS. EVEN THE PROVISIONS OF THE INCOME-TAX ACT ARE QUITE CLEAR AND WITHOUT ANY AMBIGUITY ON THIS POINT . IN VIEW OF THE ABOVE THE DEPRECIATION CLAIMED ON THE CAR AMOUNTIN G TO RS.2 09 972/- IS NOT ALLOWABLE TO THE ASSESSEE. PEN ALTY PROCEEDINGS U/S 271(1)(C) R/W EXPLANATION 1 THERETO IS BEING IN ITIATED SEPARATELY ON THIS ISSUE. 7. THERE IS NO EXAMINATION OF SOURCE OF FUNDS FOR PUR CHASE OF CAR AND BENEFICIAL OWNERSHIP OF CAR BY THE FIRM. IT IS ALSO NOTICED THAT THE CAR MAINTENANCE EXPENSES WERE ALLOWED AND NO DISALLOWAN CE WAS MADE ON THAT. THAT MEANS USE OF CAR BY THE FIRM WAS NOT DOUBTED. THE REASON ON WHICH CIT(A) CONFIRMED THE PENALTY WAS ALSO NOT PROPER AS THE ASSET WAS PURCHASED IN EARLIER YEAR AND DEPRECIATION WAS ALLO WED IN THAT YEAR. THERE IS NO NEED TO SPECIFICALLY MENTION THAT CAR WAS REGIST ERED IN PARTNERS NAME IN THE RETURN OF INCOME. IN VIEW OF THESE WE ARE OF T HE OPINION THAT THE DISALLOWANCE OF DEPRECIATION ON CAR IN THE ASSESSEE CASE DOES NOT ATTRACT PENALTY UNDER SECTION 271(1)(C) AS THERE IS NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS. 8. THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE P ETRO PRODUCTS (SUPRA) HELD AS UNDER: - A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME- TAX ACT 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT T HERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MA DE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCO RRECT OR INACCURATE THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING IN ACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PE NALTY UNLESS THE ITA NO. 485/MUM/2008 M/S. S.S. BUILDERS 4 CASE IS STRICTLY COVERED BY THE PROVISION THE PENA LTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKIN G AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULA RS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RE TURN FILED BY THE ASSESSEE BECAUSE THAT IS THE ONLY DOCUMENT WHERE T HE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PA RTICULARS ARE FOUND TO BE INACCURATE THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCU RATE NOT EXACT OR CORRECT NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOU S OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271( 1)(C). A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANN OT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 9. RESPECTFULLY FOLLOWING THE PRINCIPLES LAID DOWN IN THIS REGARD WE CANCEL THE PENALTY. 10. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH 2011. SD/- SD/- (R.V. EASWAR) (B. RAMAKOTAIAH) PRESIDENT ACCOUNTANT MEMBER MUMBAI DATED: 18 TH MARCH 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXXII MUMBAI 4. THE CIT XX MUMBAI CITY 5. THE DR J BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.