NORZA ESTATES & INVESTMENTS P. LTD, MUMBAI v. ITO 7(1)(1), MUMBAI

ITA 5130/MUM/2010 | 2003-2004
Pronouncement Date: 14-09-2011 | Result: Allowed

Appeal Details

RSA Number 513019914 RSA 2010
Assessee PAN AAACN1864G
Bench Mumbai
Appeal Number ITA 5130/MUM/2010
Duration Of Justice 1 year(s) 2 month(s) 23 day(s)
Appellant NORZA ESTATES & INVESTMENTS P. LTD, MUMBAI
Respondent ITO 7(1)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 14-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 14-09-2011
Assessment Year 2003-2004
Appeal Filed On 21-06-2010
Judgment Text
1 ITA NO.5130/MUM/2010 (ASST YEAR 2003-04) IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI B BENCH MUMBAI BENCHES MUMBAI BEFORE SHRI J SUDHAKAR REDDY AM & SHRI VIJAY PA L RAO JM ITA NO.5130/MUM/2010 (ASST YEAR 2003-04) NORAZA ESTATE & INVESTMENTS P LTD 608 REGENT CHAMBER NARIMAN POINT MUMBAI 40 021 VS THE INCOME TAX OFFICER WARD 7(1)(1) MUMBAI (APPELLANT) (RESPONDENT) PAN NO. AAACN1864G ASSESSEE BY NONE REVENUE BY SHRI G Y WAGH DT.OF HEARING 23.8.2011 DT OF PRONOUNCEMENT 14 .09.2011 PER VIJAY PAL RAO JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) DATED 4.2.2001 ARISING FROM THE PENALTY ORDER U/S 271(1)( C) OF THE IT ACT. 2 NONE APPEARED ON BEHALF OF THE ASSESSEE WHEN THIS APPEAL WAS CALLED FOR HEARING. SINCE THE ISSUE IS REGARDING THE LEVY OF P ENALTY U/S 271(1)( C) AGAINST THE ADDITION ON ACCOUNT OF EXPENSES BY ASSESSING RENTAL INCOME ASSESSED AS INCOME FROM HOUSE PROPERTY INSTEAD OF BUSINESS INCOME AS C LAIMED BY THE ASSESSEE. WE PROPOSE TO HEAR AND DISPOSE OF THIS APPEAL EX-PARTE . 3 WE HAVE HEARD LD DR AND CONSIDERED THE RELEVANT M ATERIAL ON RECORD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AS SESSING OFFICER OBSERVED THAT THE ASSESSEE COMPANY HAS SHOWN RENTAL INCOME OF RS. 4 80 000/- FROM A FLAT AT 2 ITA NO.5130/MUM/2010 (ASST YEAR 2003-04) BENEEREZA APARTMENT AS BUSINESS INCOME AND AGAINST THE SAME THE ASSESSEE CLAIMED VARIOUS EXPENSES INCLUDING DEPRECIATION R ESULTING THE INCOME AT A LOSS OF RS. 4 18 345/-. THE ASSESSING OFFICER TREATED THE R ENTAL INCOME AS INCOME FROM HOUSE PROPERTY AND ACCORDINGLY DISALLOWED THE EXPENSES CL AIMED BY THE ASSESSEE. SUBSEQUENTLY PENALTY OF RS. 93 767/- WAS LEVIED AG AINST THE DISALLOWANCE OF EXPENDITURE DUE TO ASSESSMENT OF RENTAL INCOME AS I NCOME FROM HOUSE PROPERTY. 3.1 IT IS PERTINENT TO NOTE THAT THE ASSESSING OFFI CER ASSESSED THE RENTAL INCOME FROM HOUSE PROPERTY BY APPLYING THE PROVISIONS OF S EC. 27(III) OF THE IT ACT IN VIEW OF THE FACT THAT THE ASSESSEE IS HOLDING SHARES OF M/ S BENREEZA ESTATES & INVESTMENTS P LTD WHICH IS A CORPORATIVE SOCIETY AND THE FLAT IN QUESTION WAS TAKEN ON LEASE BY THE ASSESSEE FROM M/S BENREEZA ESTATES & INVESTMENTS P LTD THEREFORE THE ASSESSMENT OF RENTAL INCOME BY THE ASSESSING OFFICER IS BASED ON APPLYING THE DEEMING PROVISIONS OF SEC. 27(III) WHEREBY THE ASSESSEE WAS TREATED AS DEEMED OWNER OF THE PROPERTY. THIS IS NOT A CASE FOR CLAIMING OF BOGUS EXPENDITUR E OR INHERENTLY IMPOSSIBLE CLAIM MADE BY THE ASSESSEE FO R ADMITTING THE INCOME FROM LETTING OUT OF THE PROPERTY AS AS INCO ME FROM BUSINESS. THE ASSESSEE PRIMARILY DISCLOSED AND EXPLAINED ALL THE MATERIAL FACTS THOUGH THE AO DID NOT AGREE WITH THE CLAIM OF THE A SSESSEE AND TREATED THE INCOME FROM LETTING OUT OF THE PROPERTY UNDER THE HEAD INCOME FROM HOUSE PROPERTY BY APPLYING DEEMING PR OVISIONS INSTEAD OF INCOME FROM BUSINESS. IT IS NOT THE CASE OF T HE REVENUE THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE WAS FALSE OR BO GUS OR WAS NOT ACTUALLY INCURRED BY THE ASSESSEE BUT THE CLAIM OF EXPENDITURE WAS AGAINST THE INCOME ADMITTED UNDER THE HEAD INCOME FROM BUSINESS WHICH WAS DISALLOWED BECAUSE OF THE ASSESSMENT OF I NCOME UNDER A 3 ITA NO.5130/MUM/2010 (ASST YEAR 2003-04) DIFFERENT HEAD. THEREFORE IT CANNOT BE SAID THAT THE ASSESSEE HAS CONCEALED THE INCOME ASSESSABLE TO TAX OR FURNISHED IN ACCURATE PARTICULARS OF INCOME. WHEN ALL THE PARTICULARS AND DETAILS AS WELL AS FACTS WERE DISCLOSED AND AVAILABLE BEFORE THE ASS ESSING OFFICER THEN PENALTY CANNOT BE LEVIED MERELY BECAUSE THE CLAIM OF THE ASSESSEE UNDER THE HEAD BUSINESS INCOME WAS NOT ACCEPTABL E TO THE ASSESSING OFFICER AND IT WAS ASSESSED UNDER THE HE AD INCOME FROM HOUSE PROPERTY RESULTING THE DISALLOWANCE OF CERT AIN EXPENDITURES. THE ASSESSMENT OF INCOME UNDER THE DIFFERENT HEAD D OES NOT IPSO FACTO WARRANT LEVY OF PENALTY EVEN IF THAT RESULTED AN A DDITIONAL TAX LIABILITY TO THE ASSESSEE UNLESS THE ADDITION IS DUE TO CONCE ALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE PENALTY IS NOT AUTOMATIC BUT THE BURDEN TO PROVE IN PENALTY PROCEE DING VARIES FROM THAT IN ASSESSMENT PROCEEDINGS. DISALLOWANCE OF EXP ENDITURE DUE TO CHANGE IN THE HEAD OF INCOME BY VIRTUE OF DEEMING P ROVISION WOULD NOT AUTOMATICALLY LEAD TO THE CONCLUSION THAT THE A SSESSEE CONCEALED THE INCOME ASSESSABLE TO TAX THAT WARRANTS PENALTY. 3.2 EVEN OTHERWISE THE CLAIM OF THE ASSESSEE FOR A DMITTING THE INCOME UNDER THE HEAD INCOME FROM BUSINESS IS NOT I NHERENTLY IMPOSABLE BUT IS A BONAFIDE CLAIM OF THE ASSESSEE A LTHOUGH NOT ACCEPTED BY THE REVENUE. THUS THE DISALLOWANCE OF BONAFIDE CLAIM CANNOT RESULT IN LEVY OF PENALTY. IN VIEW OF THE F ACTS AND CIRCUMSTANCES OF THE PRESENT CASE WE ARE OF THE CONSIDERED OPINI ON THAT LOWER AUTHORITIES ARE NOT JUSTIFIED IN LEVYING THE PENALT Y AND ACCORDINGLY WE DELETE THE PENALTY. 4 ITA NO.5130/MUM/2010 (ASST YEAR 2003-04) 4. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON THE 14 TH DAY OF SEPT 2011. SD/ SD/- ( J SUDHAKAR REDDY ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 14 TH SEPT 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR ITAT MUMBAI