ITO 3(3)(1), MUMBAI V. RAK CONSTRUCITON PROJECT P.LTD, MUMBAI

ITA 1247/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6674 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 22-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Keywords: Capital receipt; Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL D BENCH MUMB AI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.1247/MUM/2017 (ASSESSMENT YEAR 2012-13 ) ITO-3(3)(1 ), MUMBAI. VS. M/S RAK CONSTRUCTION PROJECT PVT. LTD. 113-A, MITTAL TOWER, NARIMAN POINT, MUMBAI-400021. PAN: AACCK8147P APPELLANT RESPONDENT APPELLANT BY : SHRI RAM TIWARI (DR) RESPONDENT BY : SHRI BHUPENDRA SHAH (AR) DATE OF HEARING : 28.06.2018 DATE OF PRONOUNCEMENT : 28.06.2018 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY REVENUE UNDER SECTION 253 OF THE ACT IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEAL S)-8, MUMBAI [LD. CIT(A)] DATED 28.11.2016 WHICH ARISES AGAINST THE PENALTY ORDER LEVIED BY ASSESSING OFFICER UNDER SECTION 271(1)(C) DATED 28. 09.2015. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: '1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A) WAS RIGHT IN DELETING THE PENALTY OF RS. 12,25, 630/- LEVIED U/S.271(L)(C) OF THE I. T. ACT, 1961 WITHOUT APPREC IATING THE FACT THAT THE ASSESSEE HAD UNDERSTATED ITS INCOME BY NOT DISCLOSI NG ITS RENTAL RECEIPTS FROM M/S. NATIONAL TEXTILE CORPORATION LTD. IN THE RETUR N OF INCOME UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY', WHICH WAS DETECTED ON LY AFTER THE INITIATION OF ASSESSMENT PROCEEDINGS AND THEREFORE PROVISIONS OF SECTION 271 (1) (C) ARE CLEARLY ATTRACTED IN THIS CASE. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) WAS RIGHT IN DELETING THE PENALTY OF RS. 12,25, 630/- LEVIED U/S.271(L)(C) OF THE I. T. ACT, 1961 WITHOUT APPREC IATING THE FACT THAT THE ASSESSEE HAS FAILED TO DECLARE ITS TRUE INCOME AND THE CLAIM MADE IS NOT ONLY INCORRECT IN LAW BUT IS ALSO WHOLLY WITHOUT ANY BAS IS AND THE EXPLANATION FURNISHED BY HIM FOR MAKING SUCH A CLAIM IS NOT FOU ND TO BE BONA FIDE; ITA NO. 1247 MUM 2017-MS RAK CONSTRUCTION PROJECT P VT. LTD. 2 TRIGGERING EXPLANATION 1 TO SECTION 271(L)(C) OF TH E I.T. ACT, 1961 AS HELD BY HON'BLE SUPREME COURT IN THE CASE OF MAK DATA PVT. LTD. V/S. CIT (2013),358 ITR 593 (SC) AND HON'BLE DELHI HIGH COURT IN THE CA SE OF ZOOM COMMUNICATIONS PVT. LTD., 40 DTR 249 (2010). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2012-13 ON 29.09.2012 DECLARING TOT AL INCOME OF RS. NIL. THE ASSESSMENT WAS COMPLETED ON 05.10.2015 UND ER SECTION 143(3) DETERMINING THE TOTAL INCOME AT RS. 33,07,090/-. TH E ASSESSING OFFICER MADE ADDITION UNDER THE HEAD INCOME FROM HOUSE PRO PERTY OF RS. 33,60,000/-. AND AFTER SETTING OFF OF BUSINESS LOS S OF RS. 52,914 THE INCOME WAS ASSESSED AT RS. 33,07,090/-. THE ASSESSI NG OFFICER MADE ADDITION ON HIS OBSERVATION THAT THE ASSESSEE HAS N OT DISCLOSED RENT RECEIVED OF RS. 48,00,000/- FOR IT HAS CLAIMED TDS OF RS. 12,49,768/-. 3. THE ASSESSING OFFICER ALSO INITIATED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. SHOW CAUSE NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) WAS ISSUED ON 05.03.2015 TO THE ASSESSEE SEEKING EXPLAN ATION AS TO WHY PENALTY PRESCRIBED UNDER SECTION 271(1)(C) BE NOT L EVIED. IN RESPONSE TO THE SHOW-CAUSE NOTICE, THE ASSESSEE CONTENDED THAT THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY WAS RECEIVED WAS ADJUS TED IN WORK-IN- PROGRESS ACCOUNT. IT WAS FURTHER CONTENDED THAT M/S NATIONAL TEXTILE CORPORATION WAS MAKING THE PAYMENT ON ACCOUNT OF CO MPENSATION AS PER SMALL CAUSE COURT ORDER. THE ASSESSEE HAS NO CONTRA CT WITH NATIONAL TEXTILE CORPORATION WHO HAD MADE PAYMENT OF SUCH CO MPENSATION( RENT) THE ASSESSEE COMPANY HAS PURCHASED THE LAND FOR DEV ELOPMENT. THE ITA NO. 1247 MUM 2017-MS RAK CONSTRUCTION PROJECT P VT. LTD. 3 ASSESSEE HAS NEITHER CONCEALED INCOME NOR FURNISHED INACCURATE PARTICULARS THEREOF. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTE D BY ASSESSING OFFICER. THE ASSESSING OFFICER CONCLUDED THAT THE DISPUTED P ROPERTY FOR WHICH THE COMPENSATION IS PAID BY NTC OWNED BY ASSESSEE. THE MONTHLY COMPENSATION IS PAID FOR USE AND OCCUPATION OF THE PROPERTY BY NTC. THE COPY OF ORDER OF SMALL CAUSE COURT ORDER DATED 19.0 7.2007 CLEARLY STATED THAT TENANT (NTC) IS LIABLE TO PAY MESNE PROFIT OR COMPENSATION FOR THE USE AND OCCUPATION OF PREMISES AT THE SAME RATE AT WHIC H THE LANDLORD ABLE TO LET OUT THE PREMISES. THE ASSESSEE HAS NEITHER DISC LOSED THE MONTHLY RENTAL INCOME OF RS. 40,00,000/- NOR REVISED THE RETURN OF INCOME DURING THE COURSE OF ASSESSMENT PROCEEDING. THE ASSESSING OFFI CER LEVIED THE PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED VIDE ITS ORDE R DATED 28.09.2015. ON APPEAL BEFORE THE LD. CIT(A), THE PENALTY WAS DE LETED. THEREFORE, AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE H AS FILED THE PRESENT APPEAL BEFORE US. 4. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE ( DR) FOR THE REVENUE AND LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSES SEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. DR FOR THE RE VENUE SUPPORTED THE ORDER OF ASSESSING OFFICER. THE LD. DR FURTHER CONT ENDED THAT THE ASSESSEE CLAIMED CREDIT OF TDS OF RS. 12,49,786/- FOR THE IN COME RECEIVED AGAINST THE RENTAL INCOME. AS PER THE AIR DETAILS AND IN FO RM-26AS, THE ASSESSEE RECEIVED RENTAL INCOME OF RS. 48,00,000/- AND INTER EST ON INCOME-TAX ITA NO. 1247 MUM 2017-MS RAK CONSTRUCTION PROJECT P VT. LTD. 4 REFUND. THE ASSESSEE HAS NOT OFFERED THE SAME IN TH E RETURN OF INCOME NOR FILED ANY REVISED RETURN OF INCOME. THUS, THE ASSES SEE HAS WILLFULLY FURNISHED INACCURATE PARTICULAR OF INCOME LEADING C ONCEALMENT OF INCOME TO THE EXTENT OF RS. 33,60,000/-. THE PENALTY WAS D ELETED BY LD. CIT(A) IS LIABLE TO BE RESTORED. THIS WAS A CLEAR CASE WHERE THE ASSESSEE WILLFULLY FURNISHED INACCURATE PARTICULAR LEADING TO CONCEALM ENT OF INCOME. THE LD DR FURTHER SUBMITS THAT IN SUBSEQUENT YEARS THE ASS ESSEE HAS SHOWN THE SIMILAR RECEIPT AS RENTAL INCOME. 5. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SUPPO RTED THE ORDER OF LD. CIT(A). THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT BY FILING RETURN OF INCOME, THE ASSESSEE DISCLOSED ALL THE PARTICULARS. THE ASSESSEE RECEIVED HE MESNE PROFIT AGAINST THE USE AND OCCUPATION OF PROP ERTY WHICH WAS IN THE NATURE OF CAPITAL RECEIPT. HOWEVER, THE ASSESSEE AD JUSTED THE SAME IN WORK-IN-PROGRESS. THE ASSESSING OFFICER DID NOT ACC EPT THE CONTENTION OF THE ASSESSEE AND MADE THE ADDITION OF RS. 48,00,000 /- AND AFTER GRANTING STATUTORY DEDUCTION UNDER THE HEAD INCOME FROM HOU SE PROPERTY. THE ADDITION OF RS. 33,60,000/- WAS ADDED ON WHICH THE ASSESSING OFFICER LEVIED THE PENALTY. THE LD. AR FURTHER SUBMITS THAT ASSESSEE NEITHER CONCEALED THE PARTICULAR OF INCOME NOR FURNISHED IN ACCURATE PARTICULARS THEREOF. THE ASSESSEE HAS NOT FILED ANY APPEAL AGAI NST THE QUANTUM ASSESSMENT. THE LD. AR FURTHER SUBMITTED THAT MEREL Y NO FILING APPEAL AGAINST THE QUANTUM ASSESSMENT IS NOT FETAL TO THE ASSESSEE. MERELY THE ITA NO. 1247 MUM 2017-MS RAK CONSTRUCTION PROJECT P VT. LTD. 5 TREATMENT OF RECEIPT ON ACCOUNT OF USE AND OCCUPATI ON OF PROPERTY WAS NOT ACCEPTED BY THE ASSESSING OFFICER THAT WOULD NOT BE TREATED AS FURNISHING INCORRECT PARTICULARS. THE ASSESSEE HAS MADE A BONA FIDE CLAIM AND MERELY THE CLAIM WAS NOT ACCEPTED BY ASSESSING OFFICER WOU LD NOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULAR OR FOR CONCEALING INCOME AND NO PENALTY CAN BE LEVIED ON THE ASSESSEE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THERE IS N O DISPUTE THAT ASSESSEE RECEIVED RS. 48,00,000/- AS COMPUTATION AS PER THE ORDER OF SMALL CAUSE COURT, DURING THE RELEVANT FINANCIAL YEAR FROM NATI ONAL TEXTILE CORPORATION. WE HAVE NOTED THAT THE ADDITION IN TH E INCOME FROM HOUSE PROPERTY HAVE BEEN MADE BY THE ASSESSING OFFICER O N HIS VIEW THAT THE PAYMENT OF COMPENSATION IS ON ACCOUNT OF USE AND OC CUPATION OF PROPERTY IS LIABLE TO BE TREATED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THUS, THE ASSESSING OFFICER GAVE A DIFFERENT TREATMENT. T HE ASSESSEE HAS SHOWN THE SAID AMOUNT IN WORK-IN-PROGRESS. IT IS SETTLED LEGAL POSITION THAT MERE MAKING A CLAIM, WHICH IS NOT ACCEPTED BY ASSESSING OFFICER OR SUSTAINABLE IN LAW BY ITSELF, WILL NOT AMOUNT TO FURNISHING INA CCURATE PARTICULARS REGARDING THE INCOME OF ASSESSEE. THE HONBLE APEX COURT IN CASE OF CIT VS. RELIANCE PETROPRODUCTS LTD. 322 ITR 158 HELD TH AT WHEN DISALLOWANCE/ADDITION MADE BY ASSESSING OFFICER WHI LE PASSING ASSESSMENT ORDER SOLELY ON ACCOUNT OF DIFFERENT VIE W TAKEN ON THE SAME SET ITA NO. 1247 MUM 2017-MS RAK CONSTRUCTION PROJECT P VT. LTD. 6 OF FACT WHICH MAY BE TERMED AS DIFFERENCE OF OPINIO N BUT NOTHING TO DO WITH THE CONCEALMENT OF INCOME OR FURNISHING INACCU RATE PARTICULAR OF SUCH INCOME. WE ARE ALSO OF THE VIEW THAT MERE ADDITION/ DISALLOWANCE PER SE CANNOT BE THE GROUND FOR IMPOSING PENALTY FOR QUAN TUM ADDITION, UNLESS THERE IS FINDING OF ASSESSING OFFICER THAT ASSESSE E WILLFULLY AND DELIBERATELY CONCEALED THE PARTICULARS OF INCOME OR FILED INACCU RATE PARTICULARS THEREOF . WE HAVE SEEN THAT THE LD. CIT (A) HAS PASSED THE OR DER AFTER CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE. THE REFORE, WE CONFIRMED THE ORDER OF LD. CIT (A) IN DELETING THE PENALTY. NO CO NTRARY FACT OR LAW WAS BROUGHT TO OUR NOTICE TO TAKE A CONTRARY VIEW. 7. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.06.2018. SD/- SD/- SHAMIM YAHYA PAWAN SINGH ACCOUNTANT MEMBER JUDIC IAL MEMBER MUMBAI, DATE: 28.06.2018 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR D BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI