BRINDABAN III CO OPERATIVE HOUSING SOCIETY LIMITED,MUMBAI V. ITO WARD-24(1)(1), MUMBAI

ITA 6064/MUM/2024

AI Insights

The case revolves around the penalty imposed on Brindaban III Co-operative Housing Society Ltd. under section 271(1)(c) for alleged concealment of income. The society had two PANs, the old one being incorrectly registered under the status 'Firm' and the new one under 'AOP'. Income from various sources, including rental income from Loop Mobile India Ltd., was reported under the new PAN. Upon reassessment, discrepancies were noted due to the old PAN's income not being initially considered, leading to a penalty. The Tribunal found that the society had not concealed any income, as all income was eventually reported and accepted in the reassessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 33023 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Other Referred Cases: CIT(A) vs. Hiralal Doshi [2017] 79 taxmann.com 371 (Bom)
• Laws Referred To: Income-tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Revised return; Capital Gains; TDS; FORM 26AS
• Section: 148; 271(1)(c); 139

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 6064/MUM/2024 Assessment Year: 2012-13 Brindaban III Co-operative Housing Society Ltd., Poonam Nagar, Mahakali Caves Road, Andheri East, Mumbai – 400 093 (PAN : AABAB2518A) Vs. Income Tax Officer, Ward- 24(1)(1), Mumbai (Appellant) (Respondent) Present for: Assessee : Shri Kinjal Bhuta, Advocate Revenue : Ms. Monika H. Pande, Sr.DR Date of Hearing : 01.01.2025 Date of Pronouncement : 28.03.2025 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi vide order no. ITBA/NFAC/S/250/2024-25/1068961149(1), dated 23.09.2024 passed against the order by the National Faceless Assessment Centre, Delhi, u/s. 271(1)(c) of the Income-tax Act (hereinafter referred to as the “Act”), dated 16.03.2022 for Assessment Year 2012-13. 2. The only issue raised by the assessee in this appeal is in respect of levy of penalty of Rs.3,48,373/- u/s. 271(1)(c) of the Act. 3. Brief facts of the case are that assessee is a Co-Operative Housing Society formed on 08.05.2000. An application for obtaining PAN was made and a PAN was allotted bearing no. AAEFB0105H 2 ITA No.6064/MUM/2024 Brindaban III Co operative Hsg. Soc. Ltd., AY 2012-13 (hereinafter referred to as 'old PAN'). The said PAN was incorrectly allotted with the status as 'Firm\". Subsequently, assessee applied for a fresh PAN under the status 'AOP'. The new PAN was allotted bearing no. \"AABAB2518A' (hereinafter referred to as 'new PAN') under the status 'AOP'. Assessee filed its first return of income under the status of AOP for AY: 2012-13. Before filing the said return, assessee realised that the old PAN is active and subsequently, filed an application to ITO-20(1)(2), Mumbai on 24.07.2012, for cancellation of the old PAN. Return of income was filed u/s, 139 of the Act on 03.09.2012, declaring total income at Rs. 2,06,350/-. Break-up of gross total income of Rs. 10,63,857/- which was offered to tax in the said return is as under: i. Vodafone India Limited: Rs. 4,50,000/- ii. Bharti Infratel Venture Limited: Rs. 3,13,857/- iii. Loop Mobile India Limited (formerly- BPL Communications): Rs. 3,00,000/- 3.1. The above rental amounts were duly reported in the Audited Financial Statements of the assessee. Rental income from Loop Mobile India Limited (hereinafter referred to as 'Loop Mobile') was received as per the Leave and License agreement dated 13.04.2010. Assessee had loss from principle of mutuality amounting to Rs. 9,79,909/-, which was adjusted against the interest and rental income. Resultantly, total income was reported at Rs. 2,06,350/-. Assessee's case was reopened and a notice u/s. 148 of the Act was issued on 07.03.2019 under the old PAN. The reasons recorded alleged that the following two incomes had escaped assessment: i. Rental income from Loop Mobile amounting to Rs. 9,00,000/-; and ii. Time deposit of Rs. 28,00,000 3 ITA No.6064/MUM/2024 Brindaban III Co operative Hsg. Soc. Ltd., AY 2012-13 3.2. On receipt of notice, assessee filed its return of income on 31.05.2019, reporting total income at Rs. 10,08,774/-. When the notice was received u/s. 148, the reasons recorded were not supplied alongwith it, therefore the assessee presumed that the re-assessment would be because the loss was adjusted against the rental income and interest income. Under that pretext, return was filed reporting rental income as per Form 26AS and not reducing the loss of Rs. 9,79,909/-. Form 26AS was under the new PAN and hence the rental income of only Vodafone India Limited of Rs. 4,50,000 and Bharti Infratel Venture Limited of Rs. 4,50,000/-was reflected. Later, reasons recorded were provided and that is when assessee realised that re- assessment was for the rental income from Loop Mobile, TDS on which was deducted under the old PAN. Assessee therefore, filed another return in response to notice u/s. 148 on 28.11.2019, reporting rental income of Rs. 13,50,000/- including Rs. 4,50,000/- of Loop Mobile. Ld. Assessing Officer accepted the return of income filed by the assessee reporting total income at Rs.13,23,770/- including rental income of Rs.13,50,000/-. 3.3 In the course of penalty proceedings ld. Assessing Officer noted that while passing the impugned assessment order u/s.143(3) r.w.s. 147, dated 11.12.2019, though the assessment was completed by accepting the returned income which was supposed to be at Rs.13,23,770/- but was inadvertently assessed at Rs.10,08,770/-, by adopting the figure from return filed earlier by assessee on 31.05.2019. In order to correct this inadvertent mistake, ld. Assessing Officer invoked provisions contained in section 292B. Based on this and taking into consideration the intent and purpose of the Act, the total assessed income was taken at Rs.13,23,770/- for the purpose of calculation of penalty. Subsequently, penalty u/s. 271(1)(c) of the Act 4 ITA No.6064/MUM/2024 Brindaban III Co operative Hsg. Soc. Ltd., AY 2012-13 was confirmed for alleged concealment of income. Penalty was levied on the difference of tax on total income of Rs. 13,23,770/- and Rs. 2,06,350/-. 4. Case of the assessee is that it had inadvertently adjusted the loss on account of mutuality against the rental and interest income. Further, the income relating to old PAN was already taken into account in the return filed by the assessee on which due taxes were paid. According to the assessee, levy of penalty is not an automatic consequence of an addition being made to the income of the tax payer. In the case of the assessee, the income which were alleged to be escaping assessment were taken into account in the return filed by the assessee in response to notice u/s.148 of the Act and the same is accepted by the ld. Assessing Officer by making assessment at the returned income. Accordingly, there is no occasion of concealment of particulars of income on the part of the assessee. 4.1. Assessee submitted that the reasons of reopening is on account of old PAN which was allotted to the assessee bearing the code status as “Firm” though the status of the assessee is “AOP”. Assessee had duly applied for cancellation of the old PAN as early as on 24.07.2012 and had discharged its onus. The application made by the assessee for cancellation of the old PAN remained pending over a period, reasons for which are best known to the Department. Assessee strongly contended that the basis adopted by the ld. Assessing Officer for imposing penalty as noted in para-5.2 of the impugned penalty order is not tenable. It is stated by the ld. Assessing Officer in the said para that if the case was not reopened and notice u/s.148 was not issued, income of the assessee relating to the old PAN having the status “Firm” would have gone unnoticed, resulting in escapement of income. 5 ITA No.6064/MUM/2024 Brindaban III Co operative Hsg. Soc. Ltd., AY 2012-13 In the same paragraph, ld. Assessing Officer has noted of not having clarity from the records as to why the PAN in the status “Firm” was not cancelled. He, further, mentions that assessee kept quiet for all these years after making application for cancellation of the old PAN. According to him, assessee ought to have included the income shown against the old PAN by including it in the return filed against the correct active PAN. Based on these observations, it is strongly contented by the assessee that there is no concealment of particulars of income the part of the assessee, since it had included the income in the return filed in response u/s. 148, which has been accepted and assessed as such. 4.2. To buttress its contentions, assessee placed reliance on the decisions of Hon'ble Jurisdictional High Court of Bombay in the case of CIT(A) vs. Hiralal Doshi [2017] 79 taxmann.com 371 (Bom). In this case, assessee disclosed long term capital gain on sale of shares and claimed exemption of same under section 10(38). However, following survey proceedings, the assessee filed revised return disclosing gain on sale of shares as business income. The Assessing Officer imposed penalty under section 271(1)(c). The Commissioner (Appeals) and the Tribunal deleted the penalty. Hon'ble Court held that the Commissioner (Appeals) reached a prima facie conclusion that the income could be regarded as long-term capital gain. Once the aforesaid conclusion has been reached coupled with two further facts, viz the authorities have rendered a finding of fact that the respondent- assessee had not concealed its income nor filed inaccurate particulars attributable to capital gains in its regular return of income, the view taken to delete the penalty is a possible view. 6 ITA No.6064/MUM/2024 Brindaban III Co operative Hsg. Soc. Ltd., AY 2012-13 5. Per contra, ld. DR relied on the order of ld. Assessing Officer. He contended that assessee had concealed the particulars of income since, while filing the return in response to notice u/s.148, he did not incorporate the loss on account of mutuality which was earlier claimed in the original return. He thus, asserted that the penalty has been rightfully levied by the ld. Assessing Officer. 6. We have heard both the parties and perused the material on record. We have also gone through the factual matrix of the case and judicial precedents relied upon. Admittedly, it is a fact on record that there were two PANs which were allotted to the assessee. The one which is referred as old PAN, was allotted with the status of “Firm” which was surrendered for cancellation, by making an application as early as on 24.07.2012. Thereafter, assessee had filed its return against the new PAN with the status “AOP”. It is also a fact on record that assessee had included rental income from Loop Mobile India Ltd. (formerly BPL Communications) of Rs.3 lakhs in the original return and was later revised while filing the return in response to notice u/s.148 to Rs.9 lakhs. 6.1. Assessee admitted in its explanation furnished in response to notice for levying penalty on account of concealment of particulars of income that it had inadvertently claimed loss on account of mutuality, which was set off against the rental and interest income, the same was corrected while filing the return in response to the notice u/s.148. Assessee also included interest relating to time deposit in its return filed in response to the notice u/s.148. It is also undisputed fact that the assessment u/s.143(3) r.w.s. 147 was completed by ld. Assessing Officer, accepting the returned income, there being no addition or disallowance. However, penalty proceedings were initiated on the 7 ITA No.6064/MUM/2024 Brindaban III Co operative Hsg. Soc. Ltd., AY 2012-13 income components, which were reported by the assessee in the return filed in response to notice u/s.148, vis-à-vis which were not included in the original return, u/s.139. 6.2. In the given set of facts as discussed above, we find that assessee has duly complied with Explanation 1 to Section 271(1) by offering all the possible explanations substantiating it by documentary evidences to establish that there is no concealment of particulars of income on its part. Having satisfied by the submissions made by the assessee in the course of re-assessment proceedings, ld. Assessing Officer has accepted the income returned by the assessee as such. Considering the overall factual matrix, we hold that there is no concealment of particulars of income on the part of the assessee. We accordingly, delete the penalty so imposed by ld. Assessing Officer. Ground raised by the assessee is allowed. 7. In the result, appeal of the assessee is allowed. Order is pronounced in the open court on 28 March, 2025 Sd/- Sd/- (Sandeep Gosain) (Girish Agrawal) Judicial Member Accountant Member Dated: 28 March, 2025 MP, Sr.P.S. Copy to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. 5. Guard File CIT 8 ITA No.6064/MUM/2024 Brindaban III Co operative Hsg. Soc. Ltd., AY 2012-13 BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai Sr. No. Details Date Initial Designation 1. Draft dictated on 25.03.2025 Sr.PS/PS 2. Draft Placed before author 26.03.2025 Sr.PS/PS 3. Draft proposed & placed before the Second Member JM/AM 4. Draft discussed/approved by Second Member JM/AM 5. Approved Draft comes to the Sr.PS/PS Sr.PS/PS 6. Order pronouncement on 28.03.2025 Sr.PS/PS 7. File sent to the Bench Clerk 01.04.2025 Sr.PS/PS 8. Date on which the file goes to the Head clerk 9. Date on which file goes to the AR 10. Date of Dispatch of order "