DCIT, CHENNAI v. M/s. Viki Hotels Private Limited, CHENNAI

ITA 508/CHNY/2010 | 1998-1999
Pronouncement Date: 08-12-2010 | Result: Dismissed

Appeal Details

RSA Number 50821714 RSA 2010
Assessee PAN AABCV4152G
Bench Chennai
Appeal Number ITA 508/CHNY/2010
Duration Of Justice 7 month(s) 17 day(s)
Appellant DCIT, CHENNAI
Respondent M/s. Viki Hotels Private Limited, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 08-12-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 08-12-2010
Date Of Final Hearing 08-12-2010
Next Hearing Date 08-12-2010
Assessment Year 1998-1999
Appeal Filed On 21-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH A : CHENNAI [BEFORE DR. O.K. NARAYANAN VICE-PRESIDENT AND SHRI HARI OM MARATHA JUDICIAL MEMBER] I.T.A NOS. 508 509 & 510/MDS/2010 ASSESSMENT YEARS : 1998-99 1999-2000 & 2000-0 1 THE DY. CIT COMPANY CIRCLE III94) CHANNAI VS M/S VIKI HOTELS PVT. LTD KENCES ENCLAVE V BLOCK NO.1 RAMAKRISHNA STREET T. NAGAR CHENNAI 600 017 [PAN AABCV4152G] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB RESPONDENT BY : NONE O R D E R PER HARI OM MARATHA JM: THESE APPEALS BY THE REVENUE ARISE OUT OF A CO MMON ORDER OF THE LD. CIT(A)-III CHENNAI DATED 28.1.2010 PERTA INING TO ASSESSMENT YEARS 1998-99 1999-2000 AND 2000-01. 2. IN ALL THESE YEARS ON THE BASIS OF ADDITIONS MA DE BY THE ASSESSING OFFICER PENALTY U/S 271(1)(C) OF THE INC OME-TAX ACT 1961 (HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT) W AS LEVIED. THE FACTS PF THE CASE ARE THAT THE ASSESSEE COMPANY WAS INCORPOR ATED ON 5.8.1988 ITA 508 TO 510/10 :- 2 -: AND FILED ITS RETURN OF INCOME FOR THE FIRST TIME U NDER VDIS 1997 FOR ASSESSMENT YEARS 1996-97 AND 1997-98. NO RETURNS O F INCOME FOR ASSESSMENT YEARS 1998-99 AND 1999-2000 WERE FILED. BUT FROM ASSESSMENT YEAR 2000-01 THE COMPANY FILED RETURN O F INCOME REGULARLY. THE ASSESSING OFFICER ISSUED NOTICE U/S 148 CALLING UPON THE ASSESSEE TO FILE RETURNS OF INCOME FROM ASSESSMENT YEAR 1998-99 TO 2000-01. THE ASSESSEE FILES RETURNS OF INCOME IN R ESPONSE THERETO DECLARING NIL INCOME. DURING ASSESSMENT PROCEEDIN GS IT WAS FOUND THAT WITH EFFECT FROM 1.11.2000 THE COMPANY HAS LE T OUT ITS BUILDING WHICH WAS BEING USED FOR BUSINESS EARLIER AT THE M ONTHLY RENT OF ` 1 60 000/- WITH AN INCREASE OF ` 10 000/- OVER MONTH OVER 11 MONTHS. THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE D ID NOT CARRY ON ANY BUSINESS AND THEREFORE THE BUILDING CANNOT BE SAID TO BE USED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE ASSESSING OFFICER FURTHER HELD THAT THE BUILDING REMAINED VACANT THROUGHOUT T HE PERIOD COMPRISING THE PREVIOUS YEARS RELEVANT TO THE ASSES SMENT YEARS 1998- 99 1999-2000 AND 2000-01. BY TAKING A CLUE FROM R ENTAL AGREEMENT WHEREIN THE RENT HAS BEEN FIXED AT ` 1 60 000/- PER MONTH WITH AN INCREASE OF ` 10 000/- OVER EVERY 11 MONTHS THE ASSESSING OFFICE R APPLIED THE SAME BASIS AND ASSESSED THE GROSS NOTIO NAL RENTAL INCOME AT ` 12 00 000/- ` 13 20 000/- AND ` 14 40 000/- UNDER THE HEAD ITA 508 TO 510/10 :- 3 -: INCOME FROM HOUSE PROPERTY FOR ASSESSMENT YEARS 1998-99 1999- 2000 AND 2000-01 RESPECTIVELY. SUBSEQUENTLY THE A SSESSING OFFICER VIDE SEPARATE ORDERS DATED 25.3.2008 LEVIED PENALT Y U/S 271(1)(C) OF THE ACT OF ` 3 15 000/- ` 3 43 006/- AND ` 4 11 958/- FOR ASSESSMENT YEARS 1998-99 1999-2000 AND ` 2000-01 RESPECTIVELY. AGAINST THESE PENALTY ORDERS THE ASSESSEE SENT IN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) BY FOLLOWING THE DIRECTION OF THE ITAT C BENCH IN I.T.A.NOS. 1071 TO 1073/MDS/2007 ORDER DATED 7.11. 2008 IN WHICH IT WAS HELD THAT THE ASSESSEE WAS TO BE ASSESSED F OR THE ANNUAL VALUE OF THE BUILDING IN TERMS OF SECTION 23(1)(A) OF THE ACT REMITTED THE ISSUE REGARDING FIXATION OF ANNUAL VALUE TO THE FIL E OF THE ASSESSING OFFICER WITH A DIRECTION TO FIX THE ANNUAL VALUE ON THE BASIS OF THE VALUE FIXED BY THE MUNICIPAL AUTHORITIES. ACCORDINGLY T HE ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORDER DATED 15.12.2009 U/ S 143(3) R.W.S 254 OF THE ACT ON THE FOLLOWING BASIS: A.Y ANNUAL VALUE INCOME TAX AS PER THE ORDER 143(3) R.W.S 254 1998-1999 12 00 000 55 692 14 620 1999-2000 13 20 000 55 692 11 127 2000-2001 14 40 000 55 692 11 127 3. THE LD. CIT(A) HAS DIRECTED THE ASSESSING OFFICER T O LEVY PENALTY ON THE REVISED INCOME BY OBSERVING AS UNDER: ITA 508 TO 510/10 :- 4 -: 5. I HAVE CONSIDERED THE FACTS OF THE CASE AND TH E RIVAL SUBMISSIONS. IN THIS CASE PENALTY HAS BEEN LEVIED O N THE GROUND THAT THE APPELLANT FAILED TO DISCLOSE NOTIONAL RENT AL INCOME ON THE BUILDING OWNED BY IT AND THAT RETURNS OF INCOME FOR THE RELEVANT ASSESSMENT YEARS WERE NOT FILED. THE APPELLANT IS A CORPORATE ENTITY HAVING ITS OWN OFFICE IN THE BUILDING OWNED BY IT. IT IS WELL KNOWN THAT ONLY 2 TO 3% OF THE TOTAL RETURNS FILED BY THE ASSESSES ARE TAKEN UP FOR SCRUTINY. THE POSSIBILITY OF SCRUTINY ASSESSMENT IS VERY LESS WHICH PLAYS ON THE MIND OF MANY ASSESSES AND MIGHT HAVE INFLUENCED THE APPELLANT A LSO. BUT THIS IS ALSO NOT REALLY MATERIAL SINCE WILLFUL CONCEALM ENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY LIKE PENALTY IN THE INSTANT CASE AS HELD BY THE HON'BLE SUPREME COURT IN UOI V. DHARMENDRA TEXTILES PROCESSORS [307 ITR 277(SC)]. I N THE CASE OF DHARMENDRA TEXTILES (SUPRA) THE DECISION WAS RE NDERED BY A LARGER BENCH ON A REFERENCE BY A DIVISION BENCH. TH E HON'BLE SUPREME COURT (IN DHARMENDRA TEXTILES (SUPRA) HELD AS UNDER: ' THE EXPLANATIONS APPENDED TO 271(L)(C) OF THE INCOM E TAX ACT ENTIRELY INDICATE THE ELEMENT OF STRICT LIABILITY O N THE ASSESSEE FOR CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS WH ILE FILING THE RETURN. THE JUDGEMENT IN DILIP N. SHROFF'S CASE (20 07) 8 SCALE 304 (SC) HAS NOT CONSIDERED THE EFFECT AND RELEVANC E OF SECTION 276 C OF THE INCOME-TAX ACT. THE OBJECT BEHIND THE ENACTMENT OF SECTION 271(L)(C) READ WITH THE EXPLANATIONS IND ICATES THAT THE SAID SECTION HAS BEEN ENACTED TO PROVIDE FOR A REME DY FOR LOSS OF REVENUE. THE PENALTY UNDER THAT PROVISION IS A CIVIL LIABILITY. WILFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT F OR ATTRACTING CIVIL LIABILITY AS IS THE CASE IN THE MATTER OF PRO SECUTION U/ S 276 C OF THE INCOME TAX ACT.' 5. 1 T HE V IEW OF T HE HO N 'BLE S UPRE M E C OU RT - HAS B E EN S UBSEQUENTLY CON F IRM E D BY T H E HON'B LE C O URT AG AIN IN TH E CASE OF CI T V S ATUL MOHAN BIND AL 3 1 7 I TR 1 (SC). TH E HON'BLE S U PREME COURT HAS OB SE RVED THAT TH E PENALTY SPOKEN O F IN 271(1)(C) I S N E I TH E R C RI MINA L N O R Q U AS I CRIMIN AL BUT A C IVIL LIABILI T Y ; A L BEIT A STRICT LI ABILIT Y . SUCH L I A BI L ITY BEING CIVIL IN NATURE MENS REA IS NOT ESSENTIAL. IT ALSO DISCUSSED THE INTERPRETATION OF DHARMENDRA TEXTILES PROCESSORS (S UPRA) BY ITS SUBSEQUENT DECISION IN UOI VS RAJASTHAN SPINNING & WVG. MILLS LTD. THE HON'BLE COURT FINALLY HELD AS UNDER: ' THE DECISION IN DHARMENDRA TEXTILE MUST THEREFOR E BE UNDERSTOOD TO MEAN THAT THOUGH THE APPLICATION OF SECTION 11 AC WOULD DEPEND UPON THE EXISTENCE OR OTHERWISE OF THE CONDITIONS E XPRESSLY STATED IN THE SECTION ONCE THE SECTION IS APPLICABLE IN A CASE THE CONCERNED AUTHORITY WOULD HAVE NO DISCRETION IN QUANTIFYING T HE AMOUNT AND PENALTY MUST BE IMPOSED EQUAL TO THE DUTY DETERMINED UNDER SUB- ITA 508 TO 510/10 :- 5 -: SECTION(2) OF SECTION 11 A. THAT IS WHAT DHARMENDRA TEXTILE DECIDES. IT GOES WITHOUT SAYING THAT FOR APPLICABILITY OF SE CTION 271(1)(C) THE CONDITIONS STATED THEREIN MUST EXIST. IN THE PRESENT CASE CONCEALMENT OF INCOME HAS BEEN DULY ESTABLISHED BY THE AO AND HENCE HE HAS CORRECTLY LE VIED PENALTY U/S 271(L)(C) OF THE ACT. HOWEVER SINCE THE QUANTU M OF ADDITION HAS BEEN REVISED BY THE A.O. IN HIS ORDERS U/S 143( 3) R.W.S. 254 OF THE ACT DATED 15.12.2009 THE AO IS DIRECTED TO LEVY' PENALTY ON THE REVISED INCOME IN ACCORDANCE WITH LAW. THE G ROUND OF APPEAL IS ACCORDINGLY PARTLY ALLOWED. 4. NOW THE REVENUE IS IN APPEAL BEFORE US BY RAISING F OLLOWING COMMON GROUNDS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) IS CONTRARY TO THE LAW AND FACTS OF THE C ASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO LEV Y PENALTY ON THE REVISED INCOME. 3. IT IS SUBMITTED THAT THE ISSUE HAS NOT BECOME FI NAL AS THE APPEAL HAS BEEN PREFERRED BEFORE THE HON'BLE HI GH COURT AGAINST THE ORDER RELIED ON BY THE CIT (A). 4. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCE D AT THE TIME OF HEARING IT IS PRAYED THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED . 5. AFTER CONSIDERING THE SUBMISSIONS OF THE LD.DR AND GOING THROUGH THE RECORDS AVAILABLE BEFORE US WE HAVE FO UND THAT WHEN THE ADDITIONS MADE ON SUBSTANTIVE BASIS HAVE BEEN REDUC ED OR DELETED THE PENALTY PROCEEDINGS HAVE TO BE IN CONSONANCE TH EREWITH. THE ITA 508 TO 510/10 :- 6 -: FACTS OF THE CASE MENTIONED ABOVE HAVE NOT BEEN DIS PUTED BY ANY OF THE PARTIES BEFORE US. THEREFORE WE DO NOT FIND A NY ERROR IN THE APPELLATE ORDER AND CONFIRM THE SAME. 6. IN THE RESULT ALL THE APPEAL FILED BY THE REVEN UE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 .12.2010. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (HARI OM MARATHA) JUDICIAL MEMBER DATED: 8 TH DECEMBER 10 RD : COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR