DCIT 20(2), MUMBAI v. PRIME CONSTRUCTION, MUMBAI

ITA 5675/MUM/2013 | 2008-2009
Pronouncement Date: 31-07-2015 | Result: Dismissed

Appeal Details

RSA Number 567519914 RSA 2013
Assessee PAN AAEFA4324K
Bench Mumbai
Appeal Number ITA 5675/MUM/2013
Duration Of Justice 1 year(s) 10 month(s) 24 day(s)
Appellant DCIT 20(2), MUMBAI
Respondent PRIME CONSTRUCTION, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 31-07-2015
Date Of Final Hearing 14-07-2015
Next Hearing Date 14-07-2015
Assessment Year 2008-2009
Appeal Filed On 06-09-2013
Judgment Text
M/S PRIME CONSTRUCTION ITA 5675 /M/20 1 3 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI . BEFORE SHRI D KARUNAKARA RAO ACCOUNTANT MEMBER AND SHRI AMIT SHUK LA JUDICIAL MEMBER ITA NO. : 5675 /MUM/20 1 3 (ASSESSMENT YEAR S : 200 8 - 0 9 ) THE DY COMMISSIONER OF INCOME TAX - 20(2) 612 PIRAMAL CHAMBERS LALBAUG MUMBAI - 400 012 VS M/S PRIME CONSTRUCTION B - 33 VEERA INDUSTRIAL ESTATE OFF NEW LINK ROAD OPP. FAME AD LABS ANDHERI (WEST) MUMBAI - 400 053 .: PAN : AA EFA 4324 K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI UDAY BHASKAR JAKKE RESPONDENT BY : NONE WRITTEN SUBMISSION DT 10.7.15 /DATE OF HEARING : 20 - 0 7 - 2015 / DATE OF PRONOUNCEMENT : 31 - 07 - 2015 ORDER PER AMIT SHUKLA J.M. : TH E AFORESAID APPEAL HA S BEEN FILED BY THE REVENUE AGAINST IMPUGNED ORDER DATED 1 9.0 6 .201 3 PASSED BY CIT(A) - 31 MUMBAI IN RELATION TO THE PENALTY PROCE EDINGS U/S 271(1)(C) FOR THE ASSESSMENT YEAR 2008 - 09 ON THE FOLLOWING GROUNDS: THE LD. CIT(A) HAS ERRED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING PENALTY LEVIED AMOUNTING TO RS. 5 09 850/ - WITHOUT APPRECIA TING THE FACTS THAT THE ASSESSEE DURING SURVEY HAD VOLUNTARILY OFFERED RS. 1.50 CRORES AS ADDITIONAL INCOME BUT HAS WILLFULLY SHOWN RS. 50 LACS UNDER THE HEAD INCOME FROM HOUSE PROPERTY WITH THE MALA FIDE INTENTION OF CONCEALING INCOME BY AVAILING THE CLAI M OF DEDUCTION U/S 24(A) WHICH CLAIM THE ASSESSEE HAS WITHDRAWN DURING SCRUTINY ASSESSMENT ONLY WHEN IF WAS POINTED OUT BY THE AO AND M/S PRIME CONSTRUCTION ITA 5675 /M/20 1 3 2 SUBSEQUENTLY TREATED THE ENTIRE INCOME OF RS. 50 LACS AS INCOME FROM OTHER SOURCES. 2. BRIEF FACTS ARE THAT THE ASSESS EE FIRM FILED ITS RETURN OF INCOME ON 29.09.2008 DECLARING TO TAL INCOME OF RS. 1 49 26 320/ - IN THE WAKE OF SURVEY ACTION CONDUCTED U/S 133A ON 21.02.2008 . DURING THE COURSE OF SURVEY THE ASSESSEE DISCLOSED ADDITIONAL INCOME OF RS. 1.5 CRORES. IN THE RETU RN OF INCOME THE ASSESSEE BIFURCATED THE INCOME UNDER TWO HEADS I.E. 1 CRORE UNDER THE HEAD INCOME FROM OTHER SOURCES AND RS. 50 LACS UNDER THE HEAD INCOME FROM HOUSE PROPERTY. REGARDING INCOME SHOWN U N D ER THE HEAD INCOME FROM HOUSE PROPERTY THE ASSES SEE HAD CLAIMED STANDARD DEDUCTION U/S 24(A). DURING THE COURSE OF THE SCRUTINY PROCEEDINGS THE ASSESSEE HOWEVER AGREED FOR DISALLOWANCE OF DEDUCTION CLAIM ED U/S 24(A) AND AGREED FOR ASSESSING THE RENTAL INCOME OF RS. 50 LACS TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES. ACCORDINGLY THE INCOME WAS DETERMINED AT RS. 1 65 40 000/ - AS AGAINST THE RETUR NED INCOME OF RS. 1 4 9 26 320/ - . THE DIFFERENCE BEING SOLELY ON ACCOUNT OF WITHDRAWAL OF DEDUCTION U/S 24(A). 3. IN THE COURSE OF THE PENALTY PROCEE DINGS IN RESPONSE TO THE SHOW CAUSE NOTICE AS TO WHY THE PENALTY U/S 271(1)(C) SHOULD NOT BE LEVIED ON ACCOUNT OF INCOME SHOWN UNDER THE HEAD INCOME FROM HOUSE PROPERTY INSTEAD OF INCOME FROM OTHER SOURCES THE ASSESSEE SUBMITTED THAT THE ADDITIONAL INCOM E OFFERED WAS DULY MENTIONED IN THE NOTES TO THE COMPUTATION OF INCOME AND THE TREATMENT FOR RS. 50 LAKHS AS RENTAL INCOME WAS CONSISTENT WITH THE DECLARATION MADE DURING THE SURVEY. SINCE NO ADVERSE INFERENCE WAS DRAWN BY THE AUTHORIZED OFFICER AT THAT TI ME THEREFORE NO PENALTY SHOULD BE LEVIED; S ECONDLY IT WAS SUBMITTED THAT THE ASSESSEE HAD AGREED TO SHOW THE RENTAL INCOME AS INCOME FROM OTHER SOURCES ON THE UNDERSTANDING AND WITH A PRAYER THAT NO PENALTY U/S 271(1)(C) SHOULD BE LEVIED. HOWEVER THE A SSESSING OFFICER DID NOT ACCEPT THE ASSESSEES CONTENTION AND HELD THAT THE ASSESSEE HA D NO BASIS FOR M/S PRIME CONSTRUCTION ITA 5675 /M/20 1 3 3 MAKING THE CLAIM OF DEDUCTION U/S 24(A) AND ANY IGNORANCE OF LAW IS NOT A SUFFICIENT GROUND TO GET ABSOLVE FROM PENALTY AND ACCORDINGLY HE PROCEEDED TO L EVY THE PENALTY OF RS. 5 09 850/ - . 4. BEFORE THE CIT(A) THE ASSESSEE GAVE VERY DETAILED SUBMISSION AND EXPLANATION AS TO WHY PENALTY SHOULD NOT BE LEVIED IN THE CASE OF THE ASSESSEE WHICH HAS BEEN DEALT AND INCORPORATED BY THE CIT(A) FROM PAGES 3 TO 9 OF THE APPELLATE ORDER. THE LD. CIT(A) AGREED WITH THE EXPLANATION AND SUBMISSION OF THE ASSESSEE AND OBSERVED THAT EVEN AT THE STAGE OF SURVEY THE ASSESSEE HAD DISCLOSED RS. 1.5 CRORES UNDER TWO HEADS ONE AS RENTAL INCOME AND SECOND AS INCOME FROM OTHER SOURCES. I N PURSUANCE THEREOF THE ASSESSEE HAD DECLARED THE INCOME IN THE RETURN OF INCOME. THERE WAS NO DEVIATION TO WHAT WAS DECLARED AT THE T IME OF SURVEY AND ACCEPTED BY THE DEPARTMENT . AFTER DISCUSSING THE RATIO LAID DOWN BY THE HONBLE SU P REME COURT IN THE CASE OF DCIT VS RELI A NCE PETRO PRODUCTS PVT LTD REPORTED IN 32 2 ITR 158 AND KARNATAKA HIGH COURT DECISION IN THE CASE OF M M GUJAMJADI [2007] 290 ITR 168 (KAR) DELETED THE PENALTY. 5. BEFORE US THE ASSESSEE HAS FILED WRITTEN SUBMISSION IN SUPPOR T OF THE CONTENTION THAT NO PENALTY SHOULD BE LEVIED. 6. ON THE OTHER HAND LD. DR SUBMITTED THAT AT THE TIME OF FILING OF T HE RET URN OF INCOME THE ASSESSEE WAS AWARE THAT IT DOES NOT HAVE ANY PROPER BASIS FOR CLAIMING STANDARD DEDUCTION U/S 24(A) . N O EV IDENCE WAS PRODUCED THAT IT WAS ACTUALLY A RENTAL INCOME. THUS THE PENALTY HAS RIGHTLY BEEN LEVIED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THUS HE STRONGLY RELIED UPON THE ORDER OF THE CIT(A). 7. AFTER CONSIDERING THE RIVAL CONTENTION S AND O N THE PERUSAL OF THE IMPUGNED ORDERS WE FIND THAT O N LY GROUND FOR LEVY OF PENALTY IS THAT THE INCOME OF RS. 50 LACS WHICH WAS SHOWN UNDER THE HEAD INCOME FROM HOUSE PROPERTY AT THE TIME OF FILING OF RETURN OF INCOME SHOULD BE TAXED AS INCOME FROM OTHE R SOURCES AND M/S PRIME CONSTRUCTION ITA 5675 /M/20 1 3 4 ACCORDINGLY THE CLAIM OF STANDARD DEDUCTION U/S 24(A) AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS. FROM THE PERUSAL OF THE STATEMENT GIVEN BY THE ASSESSEE AT THE TIME OF SURVEY IT IS SEEN THAT THE ASSESSEE HAS DECLARED THE RENTAL RECEI PTS RECEIVED FROM LEXI PEN AS RENTAL INCOME AND WAS CATEGORICALLY STATED THAT THE SAME HAS BEEN RECORDED IN THE BOOKS AS RENTAL INCOME ONLY WHICH AT THE TIME OF SURVEY WAS NEITHER REBUTTED NOR DENIED. THE ASSESSEE HAD DECLARED ADDITIONAL INCOME OF RS. 50 LACS BY WAY OF RENT AND RS. 1 CRORES BY WAY OF INCOME FROM OTHER SOURCES AND S UCH AN OFFER MADE BY THE ASSESSEE WAS ACCEPTED BY THE DEPARTMENT. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAD AGREED TO WITHDRAW THE DEDUCTION U/S 24(A) AND SUBMITTED THAT RENTAL INCOME CAN BE TAXED AS INCOME FROM OTHER SOURCES SUBJECT TO NON - INITIATION OF PENALTY PROCEEDINGS PARTICULARLY U/S 271(1)(C). ACCORDINGLY THE ASSESSEE HAS ALSO PAID THE DIFFERENTIAL TAX THEREON. WITHOUT GOING INTO THE ASPECT W HETHER THE OFFER TO BE TAXED AS INCOME FROM OTHER SOURCES INSTEAD OF INCOME FROM HOUSE PROPERTY WAS SUO MOTO /VOLUNTARY OR NOT WE FIND THAT SO FAR AS PARTICULARS OF INCOME IS CONCERNED THE SAME WAS PROPERLY DISCLOSED. THE ONLY DIFFERENCE BEING THAT ASSES SEE HAS MADE A CLAIM OF DEDUCTION U/S 24(A) WHICH HAS BEEN WITHDRAWN NOT BECAUSE THAT SOME ADVERSE MATERIAL HAS BEEN FOUND BUT ASSESSEE COULD NOT CORROBORATE IT. THE ASSESSEE IN FACT HAS DISCLOSED ALL THE PARTICULARS AND DETAILS OF RS. 50 LACS SHOWN AS RENTAL INCOME IN THE RETURN OF INCOME ALONG WITH THE EXPLANATION FOR THE TREATMENT OF INCOME AS INCOME FROM HOUSE PROPERTY IN THE RETURN NOT ONLY THAT S UCH A RETURN WAS IN CONFORMITY WITH THE DECLARATION MADE AT THE TIME OF SURVEY. NOW M ERE WITHDRAWAL OF CLAIM U/S 24(A) CANNOT BE HELD THAT ASSESSEE HAS FURNISHED ANY INACCURATE PARTICULARS OF INCOME. THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS ( SUPRA ) IS SQUARELY APPLICABLE WHEREIN THE HONBLE COURT HELD THAT MER E MAKING OF INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO M/S PRIME CONSTRUCTION ITA 5675 /M/20 1 3 5 FURNISHING OF INACCURATE PARTICULARS. THE RELEVANT OBSERVATION OF THE COURT IN THIS REGARD READS AS UNDER: READING THE WORDS INACCURATE AND PARTICULARS IN CONJUNCTION THEY MUST MEAN THE DETAIL S SUPPLIED IN THE RETURN WHICH ARE NOT ACCURATE NOT EXACT OR CORRECT NO ACCORDING TO TRUTH OR ERRONEOUS. IN THIS CASE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN I8TS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NO T BEING THE CASE THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SEC. 271(1)(C). A MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SU CH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO BE INACCURATE PARTICULARS. THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN WHICH DETAILS IN THEMSELVES WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSES S EE HAD CLAIMED THE EXPENDITURE WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTED TO THE REVENUE THAT BY ITSELF WOULD NOT ATT RACT THE PENALTY UNDER SEC. 271(1)(C). IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY AO FOR ANY REASON THE ASSESSEE WILL INVITE PENALTY UNDER SEC. 271(1)(C). THAT IS CLEARLY NOT THE INTEN DMENT OF THE LEGISLATURE. THE ASSESSEE IN ITS WRITTEN SUBMISSION HAS ALSO RELIED UPON CATENA OF CASE LAWS WHICH ARE BY AND LARGE ON THE SAME PRINCIPLES HOWEVER THE SAME ARE NOT DISCUSSED HEREWITH . THUS THE LD. CIT(A) HAS RIGHTLY DELETED THE PENALTY O N THE FACTS OF THE PRESENT CASE. ACCORDINGLY THE GROUND RAISED BY THE REVENUE IS DISMISSED. M/S PRIME CONSTRUCTION ITA 5675 /M/20 1 3 6 8. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JU LY 2015. SD/ - SD/ - ( . ) ( ) ( D KARUNAKARA RAO ) ( AMIT SHUKLA ) ACCOUNTANT MEMBE R JUDICIAL MEMBER MUMBAI DATE: 31 ST JU LY 2015 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 31 MUMBAI 4 ) THE CIT 2 0 MUMBAI . 5 ) / T HE D.R. E BENCH MUMBAI. 6 ) COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / DY. / ASSTT. REGISTRAR I.T.A.T. MUMBAI * . . *CHAVAN SR.PS