KISHORI P. TENDOLKAR, MUMBAI v. ITO 26(1)(2), MUMBAI

ITA 5996/MUM/2009 | 2002-2003
Pronouncement Date: 16-07-2010 | Result: Allowed

Appeal Details

RSA Number 599619914 RSA 2009
Bench Mumbai
Appeal Number ITA 5996/MUM/2009
Duration Of Justice 8 month(s) 3 day(s)
Appellant KISHORI P. TENDOLKAR, MUMBAI
Respondent ITO 26(1)(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 16-07-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 16-07-2010
Assessment Year 2002-2003
Appeal Filed On 12-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI R.V. EASWAR (PRESIDENT) AND SHRI R.K. PANDA (ACCOUNTANT MEMBER) I.T.A. NO. 5996/MUM/2009 (ASSESSMENT YEAR : 2002-03) I.T.A. NO. 5997/MUM/2009 (ASSESSMENT YEAR : 2003-04) SMT. KISHORI P. TENDOLKAR A-602 BLDG. NO. 1 RAJASHRI SHAHU MAHARAJ CHS LTD. 90 FEET ROAD MULUND (EAST) MUMBAI-400 081 PAN:AAEPT1882H VS. INCOME TAX OFFICER 26(2)(2) SMT. K.G.MITTAL HOSPITAL BLDG. 6 TH FLOOR CHARNI ROAD (WEST) MUMBAI-400 002 APPELLANT RESPONDENT APPELLANT BY : SHRI RAJKUMAR SINGH RESPONDENT BY : SHRI JITENDRA YADAV ORDER DATE OF HEARING: 07.07.2010 DATE OF ORDER: 16.07.2010 PER R.K.PANDA AM THE ABOVE TWO APPEALS FILED BY THE ASSESSEE ARE DI RECTED AGAINST THE SEPARATE ORDERS DATED 21 ST AUGUST 2009 OF THE CIT(A)-XXVI MUMBAI RELATING T O ASSESSMENT YEARS 2002-03 AND 2003-04 RESPECTIVELY. SINCE IDENTICAL GROUNDS HAVE BEEN TAKEN IN BOTH THE APPEALS THEREFORE THESE WE RE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. I.T.A. NO. 5996/MUM/2009 (A.Y. 2002-03): 2. THE ASSESSEE IN HER GROUNDS OF APPEAL HAS CHALLE NGED THE ORDER OF THE CIT(A) IN CONFIRMING THE LEVY OF PENALTY OF RS.16 4 81 BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE INCOME-TAX ACT 1961 (THE ACT). 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESS EE IS AN EMPLOYEE OF BHARAT PETROLEUM CORPORATION LTD. (BPCL) AND FILED HER RET URN OF INCOME ON 23 TH JULY 2002 DECLARING THE TOTAL INCOME AT RS.3 10 182. THE ASS ESSEE CLAIMED INTEREST PAID ON BORROWED CAPITAL AS LOSS FROM HOUSE PROPERTY. ON T HE BASIS OF THE INFORMATION CALLED FROM BPCL THE ASSESSING OFFICER NOTED THAT THE ASSE SSEE HAS NOT SHOWN RECEIPT OF LEASE RENT AND MAINTENANCE CHARGES OF RS.78 120 AND RS.20 736/- RESPECTIVELY. ITA NOS. 5996 & 5997/MUM/2009 SMR. KISHORI P. TENDOLKAR ========================= 2 THEREFORE THE ASSESSING OFFICER AFTER RECORDING RE ASONS IN THE ORDER SHEET ISSUED NOTICE U/S. 148 OF THE ACT. THE ASSESSEE FILED RET URN IN RESPONSE TO THE NOTICE U/S. 148 ON 3.12.2007 DECLARING TOTAL INCOME OF RS.4 12 344 AS AGAINST THE ORIGINAL RETURN FILED DISCLOSING THE TOTAL INCOME AT RS.3 10 182. THE ASSESSING OFFICER IN THE ORDER PASSED U/S. 143(3)/147 COMPLETED THE ASSESSMENT AT A TOTAL INCOME OF RS.4 12 344. SUBSEQUENTLY THE ASSESSING OFFICER INITIATED PENAL TY PROCEEDINGS U/S. 271(1)(C) OF THE ACT. IT WAS EXPLAINED BY THE ASSESSEE DURING TH E PENALTY PROCEEDINGS THAT SHE WAS PAYING TAX REGULARLY AND FILING THE RETURN OF I NCOME REGULARLY OVER YEARS. IT WAS SUBMITTED THAT THE ASSESSEE HAS PAID TAX @ 16.5% ON THE LEASE RENT AS AGAINST TAX @ 30%. SHE HAS ACCEPTED THE ERROR AND PAID THE BAL ANCE TAX. THIS BEING THE FIRST TIME MISTAKE COMMITTED BY HER SHE REQUESTED THE AS SESSING OFFICER TO WAIVE THE PENALTY. 4. HOWEVER THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE BY OBSERVING AS UNDER: A) THE ASSESSEE IS AN EDUCATED PERSON AND EMPLOYEE OF THE REPUTED COMPANY M/S. BPCL. B) THE ASSESSEE ENTERED INTO A LEASE AGREEMENT WITH THE EMPLOYER AND WAS WELL AWARE OF THE SCHEME INTRODUCE D BY THE EMPLOYER OF M/S. BPCL ABOUT TAKING ASSESSEES OWN F LAT ON LEASE RENT BY THE EMPLOYER AND GIVING THE RENT TO THE ASSESSEE AND RENT FREE ACCOMMODATION. THE ASSESSEE THEREFORE WAS FULLY AWARE ABOUT THE RECEIPTS OF THE LEASE RENT WHICH HELPED HIM TO REPA Y HIS LOAN TAKEN FOR THE ACQUISITION OF HIS PROPERTY. C) THE ASSESSEE CLAIMED THE INTEREST ON BORROWED CA PITAL UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND CLAIMING OF THE REFUND SHOWED THAT THE ASSESSEE HAS WITH DELIBERATE INTENT ION TO DEFRAUD THE REVENUE BY NOT ONLY SHOWING LEASE RENT RECEIVED BUT ALSO CLAIMING THE REFUND. THE ASSESSEE VERIFIED THE CLAIM OF REFUND IN HIS RETURN OF INCOME. D) THE ASSESSEE REGULARLY RECEIVED THE MAINTENANCE CHARGES AFTER SUBMITTING THE REQUIRED DETAILS TO THE EMPLOY ER. THE ASSESSEE FULLY AWARE OF THE RECEIPT OF REIMBURSEMENT OF MAIN TENANCE EXPENDITURE. HOWEVER HE HAS NOT INCLUDED THE SAME IN HIS RETURN OF HIS INCOME. 5. HE ACCORDINGLY LEVIED PENALTY OF RS.16 481 U/S. 271(1)(C) OF THE ACT BY HOLDING THAT THE ASSESSEE HAS CONCEALED HER INCOME TO THE EXTENT OF RS.53 861. 6. IN APPEAL THE LEARNED CIT(A) UPHELD THE PENALTY LEVIED BY THE ASSESSING OFFICER ON ACCOUNT OF ADDITION OF LEASE RENT. AGGR IEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. ITA NOS. 5996 & 5997/MUM/2009 SMR. KISHORI P. TENDOLKAR ========================= 3 7. AFTER HEARING BOTH THE SIDES WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASE OF MAKARAND C. JOSHI VS. ITO A ND THE TRIBUNAL VIDE I.T.A. NO. 3522/ MUM/2008 ORDER DATED 17 TH SEPTEMBER 2009 FOR THE A.Y. 2001-02 HAD DELETED THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT BY HOL DING AS UNDER: 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEA RING FILED A LETTER ADDRESSED BY THE HONBLE MINISTER OF STATE FOR FINA NCE ADDRESSED TO THIRU TAPAN SEN MEMBER OF PARLIAMENT ON THIS ISSUE THE CONTENTS OF WHICH READS AS UNDER: DEAR THIRU TAPAN SEN THIS IS IN REFERENCE TO YOUR LETTER DATED 24 TH OCTOBER 2008 REGARDING REQUEST FOR WAIVER OF PENALTY CHARGED ON THE EMPLOY EES OF BHARAT PETROLEUM CORPORATION LTD. (BPCL) WHO HAD NOT DISCL OSED THE LEASE RENTS AND THE MAINTENANCE CHARGES RECEIVED BY THEM IN THEIR INCOME- TAX RETURNS FOR THE RESPECTIVE ASSESSMENT YEAR. I HAVE GOT THE MATTER EXAMINED. THIS IS TO INFORM YOU THAT THE BPCL HAD INTRODUCED A SCHEME ON SELF LEASING COVERING TH E EMPLOYEES OF BPCL WHO HAD RECEIVED LOAN FROM B PCL ITSELF OR CO ULD TAKE LOAN FROM BANKS TO ACQUIRE HOUSE PROPERTIES. THE PROPERTIES SO ACQUIRED WERE LEASED OUT TO BPCL FOR AN AMOUNT OF LEASE RENT AND MAINTENANCE CHARGES AS LAID DOWN IN THE LEASE AGREEMENTS. THES E PROPERTIES IN TURN WERE GIVEN BACK TO THE SAME EMPLOYEES AS RENT FREE ACCOMMODATION BY BPCL TREATING IT AS A PERQUISITE IN THE HANDS OF T HE EMPLOYEES BEING FURNISHED A RENT FREE ACCOMMODATION. IN MOST OF SUCH CASES IT WAS DETECTED BY THE ASSE SSING OFFICER THAT SUCH LEASE RENTALS AND INCOME ON ACCOUNT OF MAINTEN ANCE CHARGES WERE NOT DISCLOSED BY THE EMPLOYEES OF BPCL AND THE REFORE PROCEEDINGS U/S. 148 WERE INITIATED AGAINST SUCH EM PLOYEES. I MAY ALSO INFORM YOU THAT NO ADDITIONS WERE MADE IN THOSE CASES WHO HAD DECLARED THEIR INCOME CORRECTLY. HOWEVER IN THOSE CASES IN WHICH THE EMPLOYEES OF BPCL HAD NOT DECLARED THEIR INCOME ON ACCOUNT OF RECEIPT OF LEASE RENTAL AND MAINTENANCE CHARGES ADDITIONS WERE MADE DURING ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS WERE ALSO INITIATED. IN THOSE CASES WHERE PENALTY PROCEEDINGS WERE INITIATED NO PENALTIES WERE LEVIED IN 20% OF THE C ASES AFTER TAKING INTO CONSIDERATION OF THE SUBMISSION OF THE EMPLOYEES. UNDER THE INCOME TAX TWO ALTERNATIVE REMEDIES ARE AVAILABLE TO SUCH EMPLOYEES. THE ASSESSEES COULD FILE APPEALS AGAINS T THE ORDER OF THE AO BEFORE APPELLATE COMMISSIONERS. HOWEVER EVEN M ORE EFFECTIVE REMEDY WOULD BE THAT EACH EMPLOYEE OF BPCL CAN ALSO APPROACH THE ADMINISTRATIVE COMMISSIONER CONCERNED FOR WAIVER OF INTEREST AND PENALTY U/S. 273A. SINCE THESE ARE NOT THE CASES F ALLING IN THE CATEGORY OF PRE-PLANNED TAX EVASION AND RATHER APPEAR TO BE CASES OF UNINTENDED ITA NOS. 5996 & 5997/MUM/2009 SMR. KISHORI P. TENDOLKAR ========================= 4 DEFAULT THE COMMISSIONER WOULD NATURALLY CONSIDER SUCH PETITIONS FOR WAIVER SYMPATHETICALLY. WITH REGARDS YOURS SINCERELY SD/- (S. PALANIMANIKKAM) 8. FROM THE ABOVE IT IS SEEN THAT THE HONBLE MINIS TER OF STATE FOR FINANCE HAS OBSERVED THAT THE CASES ARE NOT FALLIN G IN THE CATEGORY OF PRE-PLANNED TAX EVASION AND APPEARS TO BE A CASE OF UNINTENDED DEFAULT. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN VIEW OF THE OBSERVATION OF THE HONBLE MINISTER OF STATE FO R FINANCE AND FINDING SOME MERIT IN THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE WAS UNDER BONAFIDE BELIEF IN NOT OFFERING THE LEASE RENT TO TAX WE ARE OF THE OPINION THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. ACCORDINGLY T HE ORDER OF THE CIT(A) IS SET ASIDE AND THE PENALTY LEVIED BY THE ASSESSING O FFICER IS CANCELLED. 9. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 8. SIMILARLY WE FIND THE TRIBUNAL IN THE CASE OF R AVINDRA LAXMAN SATHE VS. ITO VIDE I.T.A. NO. 2828/MUM/2008 ORDER DATED 22 ND DECEMBER 2009 FOR THE A.Y. 2001- 02 HAS ALSO CANCELLED THE PENALTY LEVIED U/S. 271(1 )(C) OF THE ACT UNDER IDENTICAL FACTS AND CIRCUMSTANCES. RESPECTFULLY FOLLOWING THE ABOV E DECISION OF THE TRIBUNAL CANCELLING THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT IN THE CASE OF EMPLOYEES OF BPCL UNDER IDENTICAL FACTS AND CIRCUMSTANCES AND IN ABSENCE OF ANY DISTINGUISHABLE FEATURES BROUGHT BEFORE US BY THE LEARNED DR WE CA NCEL THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. THE ORDER OF THE CIT(A) IS A CCORDINGLY SET ASIDE AND THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. I.T.A. NO. 5997/MUM/2009 (A.Y. 2003-04): 9. THE GROUND RAISED BY THE ASSESSEE IS AS UNDER: THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND LAW THE LD. ASSESSING OFFICER AS WELL AS LD. CIT(A) BOTH HAVE E RRED IN IMPOSING AND CONFIRMING THE PENALTY U/S. 271(1)(C) AT RS.15 328/- IN RESPECT OF LEASE RENT INCOME RECEIVED FROM LEASED BACK PREMISE S FROM EMPLOYER A GOVERNMENT COMPANY WHICH WAS NOT INCLUDED IN TOT AL INCOME IN THE ORIGINAL RETURN FILED UNDER BONAFIDE BELIEF THAT TH E SAME MUST HAVE BEEN INCLUDED IN SALARY INCOME AND TDS DEDUCTED THE REON BEING SUCH LEASE RENT WAS RECEIVED FROM EMPLOYER ONLY UNDER A STAFF WELFARE SCHEME AND NOT FROM ANY OUTSIDE PARTY. 10. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUND IS IDENTICAL TO GROUNDS OF APPEAL IN I.T.A. NO. 5996/MUM/2009. WE HAVE ALR EADY DECIDED THE ISSUE AND THE GROUND RAISED BY THE ASSESSEE HAS BEEN ALLOWED. FO LLOWING THE SAME RATIO THIS GROUND BY THE ASSESSEE IS ALLOWED. ITA NOS. 5996 & 5997/MUM/2009 SMR. KISHORI P. TENDOLKAR ========================= 5 11. IN THE RESULT BOTH THE APPEALS FILED BY THE AS SESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 16 TH JULY 2010 SD/- (R.V. EASWAR) PRESIDENT SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI DATE 16 TH JULY 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-XXVI MUMBAI 4. THE CIT-26 MUMBAI 5. THE DR D BENCH. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI TPRAO