Kaiser Industries Ltd, Samba V. The Dy. Commissioner of Income Tax, Jammu

ITA 114/ASR/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0747 (ITAT-AMRITSAR)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 19-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Bonafide mistake
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO.114(ASR)/2016 ASSESSMENT YEAR: 2008-09 KAISER INDUSTRIES LTD. IND. GROWTH CENTRE SIDCO COMPLEX SAMBA, J&K PAN:AAAFT8118C VS. DY. CIT CIRCLE, 1, JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. R.K. GUPTA (CA.) RESPONDENT BY: SH. UMESH TAKYAR (DR.) DATE OF HEARING:16.05. 2016 DATE OF PRONO UNCEMENT: 01.06.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORD ER OF LEARNED CIT(A), JAMMU, DATED 23.11.2015 FOR ASST. YEAR: 200 8-09. 2. THE ONLY GRIEVANCE RAISED BY ASSESSEE IN THIS AP PEAL IS THE ACTION OF LEARNED CIT(A), BY WHICH HE HAD CONFIRMED THE PENAL TY IMPOSED BY ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE AS NOTED IN THE PENA LTY ORDER ARE THAT THE ASSESSEE HAS A FLAT IN MUMBAI AND THE RENTAL IN COME FROM WHICH WAS DECLARED AS BUSINESS INCOME AND ALSO EXPENSES RELAT ING TO INTEREST ON LOAN RAISED FOR THIS FLAT AND OTHER EXPENSES WERE D EBITED IN THE P & L ACCOUNT. THE ASSESSING OFFICER HELD THAT THE INCOME FROM SUCH FLAT CANNOT BE ASSESSED AS BUSINESS INCOME, THEREFORE, H E TREATED THE INCOME ITA NO.114 (ASR)/2016 ASST. YEAR : 2008-09 2 FROM RENT AS INCOME FROM HOUSE PROPERTY AND MADE AD DITIONS ACCORDINGLY AND ALSO IMPOSED PENALTY U/S 271(1) (C ) OF THE ACT FOR CONCEALMENT OF INCOME. 4. AGGRIEVED WITH THE ORDER THE ASSESSEE FILED APPE AL BEFORE LEARNED CIT(A) AND SUBMITTED THAT MISTAKE WAS AN INADVERTEN T OVERSIGHT ON THE PART OF COUNSEL OF THE ASSESSEE AND ALSO RELIED UPO N A NUMBER OF CASE LAWS INCLUDING THE HONBLE SUPREME COURT JUDGMENT I N THE CASE OF PRICE WATER COOPERS PVT. LTD. VS. CIT 348 ITR 306 (SC) A ND CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. 322 ITR 158(SC). HOWEVER, T HE LEARNED CIT(A) DID NOT AGREE WITH THE CONTENTIONS OF THE ASSESSEE AND CONFIRMED THE PENALTY BY HOLDING AS UNDER. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND I AM O F THE OPINION THAT THIS IS CLEAR CUT CASE OF CONCEALMENT OF INCOME U/S. 271 (1)( C ) OF THE INCOME TAX ACT, 1961 AS THE MISTAKE WAS NOT INADVERTENT BECAUS E THE ASSESSEE IS A COMPANY REGULARLY TO ASSESSEE INCOME TAX FOR LAST S EVERAL YEARS. IT CANNOT BE ACCEPTED THAT THE INCOME FROM HOUSE PROPERTY HAS BEEN SHOWN AS INCOME FROM BUSINESS AND PROFESSION BY MISTAKE. THI S IS NOT A MINOR MISTAKE AND A CLAIM OF WRONG. THE APPELLANT HAS CITED THE CASE LAWS WHICH ARE THE RE FAVOUR ONLY AND THERE ARE VARIOUS DECISION OF DIFFERENT TRIBUNAL AN D COURTS WHERE SUCH MISTAKES HAVE BEEN TREATED AS CONCEALMENT OF INCOME U/S. 271(1)( C ) OF THE INCOME TAX ACT. THE FACT OF THE CASE IS CITED B Y THE APPELLANT ARE DIFFERENT FROM THE INSTANT CASE AND CAN BE DISTINGU ISHED CLEARLY. THUS, THE PENALTY IMPOSE U/S. 271 (1) (C) BY THE AO IS UPHELD . THE APPEAL IS DISMISSED. 5. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 6. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT COU NSEL OF THE ASSESSEE IN THE COMPUTATION OF INCOME BY A BONAFIDE MISTAKE DECLARED THE RENTAL INCOME UNDER FROM THE HOUSE PROPERTY AS BUSINESS INCOME ITA NO.114 (ASR)/2016 ASST. YEAR : 2008-09 3 THEREFORE, KEEPING IN VIEW THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF PRICE WATER COOPERS PVT. LTD. VS. CIT 348 I TR 306, THE LEARNED CIT(A) SHOULD HAVE DELETED THE PENALTY. 7. THE LEARNED AR FURTHER SUBMITTED THAT THE MISTAK E WAS A BONAFIDE MISTAKE ON THE PART OF LEARNED COUNSEL & MOREOVER N O PARTICULARS OF INCOME WERE CONCEALED & ASSESSING OFFICER HAD ONLY CHANGED HEAD OF INCOME FOR WHICH PENALTY CANNOT BE IMPOSED. RELIANC E IN THIS RESPECT WAS PLACED ON THE CASE LAW OF CIT VS. BENNETT COLEM N & CO. LTD., 87 DTR 368, DECIDED BY HONBLE BOMBAY HIGH COURT. 8. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THA T ASSESSEE CLAIMED EVEN EXPENSES AGAINST THE RENTAL INCOME AND DECLARED INCOME AS BUSINESS INCOME AND THEREFORE, THERE IS NO BONAFIDE MISTAKE AND ASSESSEE HAD DELIBERATELY DID IT TO CONCEAL ITS INC OME. 9. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSEE IN THIS CASE FILED A RETURN OF INCOME OF RS.44,93,080/- AFTER CLAIMING D EDUCTION U/S 80IB TO THE TUNE OF RS.3,48,42,650/-. THE DIFFERENCE IN NET INCOME BY CLAIMING INCOME UNDER THE WRONG HEAD AS WORKED OUT IN THE PE NALTY ORDER IS DETAILED AS UNDER. (I) NET ADDITION MADE ON ACCOUNT OF TREATING THE INCOME FROM FLAT AS THE BUSINESS INCOME RS.1,52,892/- (II) NET INCOME SUSTAINABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY RS.54,582/- TOTAL INCOME SOUGHT TO BE EVADED. RS.20,74,74/- ITA NO.114 (ASR)/2016 ASST. YEAR : 2008-09 4 10. WE FURTHER FIND THAT SINCE THE ASSESSEE WAS ELI GIBLE FOR DEDUCTION U/S 80IB AND THEREFORE, THE ADDITION TO THE BUSINES S INCOME WILL INCREASE THE NET INCOME FROM BUSINESS ONLY . HAD THE ASSESSE E RIGHTLY CLAIMED THE INCOME AS INCOME FROM HOUSE PROPERTY THE INCOME OF THE ASSESSEE FROM BUSINESS WOULD HAVE INCREASED BY RS.15,2,892/- WHIC H AGAIN WOULD HAVE BEEN ELIGIBLE FOR DEDUCTION U/S 80IB AND THERE FORE, TAX LIABILITY OF ASSESSEE WOULD HAVE BEEN SAME. THEREFORE, THE NET I NCOME WHICH THE ASSESSEE INTENDED TO CONCEAL WAS RS.54,582/- ONLY. FOR SUCH AN ASSESSEE WHO IS DECLARING A FAIRLY LARGE INCOME, TH E AMOUNT OF CONCEALMENT IS QUITE LOW AND IT CANNOT BE SAID THAT ASSESSEE MUST HAVE CONCEALED THE INCOME DELIBERATELY. FROM THE FACTS I T IS APPARENT THAT THE MISTAKE WAS A BONAFIDE MISTAKE AND THEREFORE, AS PE R THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE PRICE WATER C OOPERATIVE PVT. LTD. VS. CIT 348 ITR 158(SC), THE PENALTY WAS NOT IMPOSA BLE. FURTHER, WE FIND THAT THE ASSESSEE HAD DECLARED THE INCOME UNDER THE HEAD BUSINESS INCOME WHEREAS THE AUTHORITIES BELOW ASSESSED THE INCOME AS INCOME FROM HOUSE PROPERTY. THEREFORE, THERE IS CHANGE OF HEAD OF INCOME ONLY AND ASSESSEE HAD NOT CONCEALED ANY PARTICULARS OF I NCOME. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BENNET COL EMN & CO. LTD. (SUPRA) UNDER SIMILAR FACTS AND CIRCUMSTANCES HAD H ELD AS UNDER: SO FAR AS QUESTION (II) IS CONCERNED, THE RESPONDE NT- ASSESSEE HAD CLAIMED PREMIUM ON REDEMPTION OF DEBEN TURES AS INCOME FROM CAPITAL GAINS. WHEREAS THE ASSESSING OFFICER HELD THAT THE REDEMPTION OF DEBENTURES IS REVENUE R ECEIPT ASSESSABLE TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. ITA NO.114 (ASR)/2016 ASST. YEAR : 2008-09 5 THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFF ICER. THE RESPONDENT-ASSESSEE DID NOT FILE ANY FURTHER APPEAL ON THE QUANTUM PROCEEDINGS. THEREAFTER, THE ASSESSING OFFI CER LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE R ESPONDENT- ASSESSEE. THE CIT(A) ALSO CONFIRMED THE LEVY OF PEN ALTY UPON THE RESPONDENT-ASSESSEE. ON FURTHER APPEAL, THE TRI BUNAL HELD THAT THERE IS NO DISPUTE WITH REGARD TO THE FA CT THAT THE RESPONDENT-ASSESSEE HAD DISCLOSED THAT THE AMOUNT R ECEIVED AS PREMIUM ON REDEMPTION OF DEBENTURES IN ITS COMPU TATION OF INCOME. FURTHER, THE TRIBUNAL RECORDS THAT IT IS NOT THE CASE OF THE DEPARTMENT THAT THE RESPONDENT-ASSESSEE HAD CONCEALED ANY PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF INCOME BY STATING INCORRECT FACTS. T HE ASSESSING OFFICER CONSIDERED THE SAID PREMIUM RECEI VED ON REDEMPTION OF DEBENTURES TO BE TAXABLE UNDER THE HE AD INCOME FROM OTHER SOURCES WHILE THE RESPONDENT-ASSE SSEE CONSIDERED THE SAME TO BE TAXABLE UNDER THE HEAD CA PITAL GAINS. IN VIEW OF THE FACT THAT THERE IS ONLY A CHA NGE OF HEAD OF INCOME AND IN THE ABSENCE OF ANY FACTS THAT THE CLAIM OF THE ASSESSEE WAS NOT BONAFIDE, THE TRIBUNAL DELETED THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. THE REVENUE HAS NOT BEEN ABLE TO POINT OUT THAT THE FIN DING OF THE TRIBUNAL IS PERVERSE. IN THESE CIRCUMSTANCES, WE SE E NO REASON TO ENTERTAIN THE PROPOSED QUESTION (II). IN THE PRESENT CASE ALSO, IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAD DECLARED INCOME IN ITS RETURN OF INCOME. THE ONLY D ISPUTE IS WITH RESPECT TO CHANGE OF HEAD OF INCOME AND FURTHER MORE IN VIE W OF THE ABOVE JUDICIAL PRECEDENTS, WE DELETE THE PENALTY CONFIRME D BY THE LEANED CIT(A). 11. IN VIEW OF THE ABOVE, THE APPEAL FILED BY ASSES SEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST JUNE, 2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 01.06.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: KAISER INDUSTRIES LTD., JAMMU ITA NO.114 (ASR)/2016 ASST. YEAR : 2008-09 6 (2) THE DY. CIT, CIRCLE-1, JAMMU (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY