MILTONS P.LTD, MUMBAI V. ASST CIT 6(3), MUMBAI

ITA 1279/MUM/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0887 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 26-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHANDR
• Assessee Lawyers: HERO RAIAR
• Keywords: Capital receipt; Surrender of tenancy right
• Section: 143(3)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.1279/MUM/2014 ASSESSMENT YEAR: 2008-09 M/S MILTONS PVT. LTD. ARVIND HOUSE, DARUKHANA, QUAY STREET, REAY ROAD EAST. MUMBAI-400010 / VS. ACIT, CIRCLE-6(3), 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 ( !' # /ASSESSEE) ( $ / REVENUE) PAN. NO.AABCM6689D $% & # ' / DATE OF HEARING : 25/01/2018 & # ' / DATE OF ORDER: 25/01/2018 !' # ! / ASSESSEE BY SHRI HERO RAI-AR $ ! / REVENUE BY SHRI T.A. KHAN-DR ITA NO. 1279/MUM/2014 M/S MILTONS PVT. LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 24/12/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, CONFIRMING THE PENALTY OF RS.60 LAKH LEVIED U/S 271 (1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSE E, SHRI HERO RAI, EXPLAINED THAT WHILE CONFIRMING THE PENALTY, THE FIRST APPELLATE AUTHORITY COULD NOT APPRECIATE THAT THE ASSESSEE FULLY DISCLOSED THE MATERIAL FACTS IN ITS RETURN AND FILED A NOTE WITH THE RETURN THAT THE SUM OF RS.2 C RORE WAS RECEIVED BY WAY OF COMPENSATION FOR SURRENDERING TH E POSSESSORY RIGHTS OF THE PREMISES. IT WAS ALSO CON TENDED THAT THE CASE OF THE ASSESSEE IS COVERED BY THE DECISION IN THE CASE OF SISTER CONCERN, ORDER DATED 15/07/2016 (ITA NO.2383/MUM/2014). ON THE OTHER HAND, THE LD. DR, SHRI T.A. KHAN, DEFENDED THE IMPUGNED ORDER BY CONTENDIN G THAT THE ASSESSEE DID NOT DISCLOSED THE MATERIAL FACTS, THEREFORE, THERE IS FURNISHING OF INACCURATE PARTICULARS OF IN COME, THUS, THE PENALTY WAS RIGHTLY IMPOSED. ITA NO. 1279/MUM/2014 M/S MILTONS PVT. LTD. 3 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT ASSESSMENT ORDER WAS FRAMED U/S 143(3) OF THE ACT BY OBSERVING THAT THE ASSESSEE RECEIVED A CONSIDERA TION OF RS.2 CRORES ON SURRENDER OF TENANCY RIGHTS (AS PER THE ASSESSEE POSSESSORY RIGHTS) AND TREATED THE SAME AS CAPITAL RECEIPT NOT CHARGEABLE TO TAX. THE LD. ASSESSING O FFICER CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND WAS OF THE VIEW THAT IT WAS MERELY A CHANGE IN THE NOMENCLATUR E AND TREATED THE SAID RECEIPT AS LONG TERM CAPITAL GAIN IN RESPECT OF SURRENDER OF TENANCY RIGHTS, WHEREAS, THE STAND OF THE ASSESSEE IS THAT IT IS SURRENDER OF POSSESSORY RIGH TS. THE LD. ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) OF T HE ACT. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (A PPEAL), THE PENALTY SO IMPOSED WAS AFFIRMED AGAINST WHICH T HE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 2.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, PENAL TY ORDER, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MATERIAL AV AILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE CO UNSEL, IF KEPT IN JUXTAPOSITION AND ANALYZED, WE FIND THAT AS SESSMENT ITA NO. 1279/MUM/2014 M/S MILTONS PVT. LTD. 4 PROCEEDINGS AND PENALTY PROCEEDINGS ARE ALTOGETHER DIFFERENT AND INDEPENDENT OF EACH OTHER. NOW, CONSIDERING THE SE FACTS, WE SHALL EXAMINE, WHETHER THERE IS CONCEALMENT OF I NCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME . WE HAVE PERUSED THE RETURN FILED BY THE ASSESSEE AND NOTE T HAT IN COMPUTATION OF TOTAL INCOME (PAGE-2 OF THE PAPER BO OK) FOLLOWING NOTE HAS BEEN MENTIONED BY THE ASSESSEE:- NOTE:- DURING THE YEAR, THE MILTONS PVT. LTD. HAS RECEIVED A SUM OF RS.2 CRORES VIDE AGREEMENT DATED 10 TH SEPTEMBER, 2007 BETWEEN MILTONS PVT. LTD. AND NEW JACK PRINTING WORKS PVT. LTD. BY WAY OF COMPENSATION FOR SURRENDERING POSSESSORY RIGHT OF PREMISES SITUATED AT N.M. JOSHI MARG, LOWER PAREL. THE ASSESSEE CLAIMS THAT THIS COMPENSATION FOR SURRENDER OF THE ABOVE RIGHTS OF LICENCE IS NOT TAXABLE UNDER THE INCOME TAX ACT. IN THE LIGHT OF THE ABOVE NOTE, IT IS ALSO OUR BOUN DED DUTY TO ANALYZE THE PROVISION OF SECTION 271(1)(C) OF THE ACT, WHICH IS REPRODUCED HEREUNDER:- '271(1) IF THE ASSESSING OFFICER OR THE COMMISSIONE R (APPEALS) OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY P ERSON- (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.' ITA NO. 1279/MUM/2014 M/S MILTONS PVT. LTD. 5 2.3. A GLANCE AT THIS PROVISION WOULD SUGGEST THAT IN ORDER TO BE COVERED UNDER THIS SECTION FIRSTLY, THE RE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE AND SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INAC CURATE PARTICULARS OF HIS INCOME. PRESENT IS NOT THE CASE OF CONCEALMENT OF THE INCOME. THAT IS NOT THE CASE OF THE REVENUE EITHER. AS PER LAW LEXICON, THE MEANING OF THE WORD 'PARTICULAR' IS A DETAIL OR DETAILS (IN PLURAL SENS E); THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACCOUNT. TH EREFORE, THE WORD 'PARTICULARS' USED IN THE SECTION 271(1)(C) WO ULD EMBRACE THE MEANING OF THE DETAILS OF THE CLAIM MAD E. IT IS AN ADMITTED POSITION IN THE PRESENT CASE THAT NO INFOR MATION GIVEN IN THE RETURN WAS FOUND TO BE INCORRECT OR IN ACCURATE. IT IS NOT AS IF ANY STATEMENT MADE OR ANY DETAIL SU PPLIED WAS FOUND TO BE FACTUALLY INCORRECT. HENCE, AT LEAST, PR IMA FACIE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING IN ACCURATE PARTICULARS. THE WORDS ARE PLAIN AND SIMPLE. IN ORD ER TO EXPOSE THE ASSESSEE TO THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, MAKING AN I NCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCU RATE ITA NO. 1279/MUM/2014 M/S MILTONS PVT. LTD. 6 PARTICULARS. IN COMMISSIONER OF INCOME TAX, DELHI V S. ATUL MOHAN BINDAL [2009(9) SCC 589], WHERE HON'BLE APEX COURT WAS CONSIDERING THE SAME PROVISION, THE COURT OBSER VED THAT THE ASSESSING OFFICER HAS TO BE SATISFIED THAT A PE RSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME. HON'BLE COUR T REFERRED TO ANOTHER DECISION OF THIS COURT IN UNION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS [2008(13) SCC 369], AS ALSO, THE DECISION IN UNION OF INDIA VS.RAJASTHAN SPG. & WVG. MILLS [2009(13) SCC 448] AND REITERATED IN PARA 13 THAT:- '13. IT GOES WITHOUT SAYING THAT FOR APPLICABILITY OF SECTION 271(1)(C), CONDITIONS STATED THEREIN MUST E XIST.' 2.4. THEREFORE, IT IS OBVIOUS THAT IT MUST BE SHOW N THAT THE CONDITIONS UNDER SECTION 271(1)(C) MUST EXIST B EFORE THE PENALTY IS IMPOSED. THERE CAN BE NO DISPUTE THAT EV ERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE BECAUSE THAT IS THE ONLY DOCUMENT, WHERE THE ASSESSEE CAN F URNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULAR S ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. IN DILIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. [2007(6) SCC 329], HON'BLE COURT EXPLAINED THE TERMS ITA NO. 1279/MUM/2014 M/S MILTONS PVT. LTD. 7 'CONCEALMENT OF INCOME' AND 'FURNISHING INACCURATE PARTICULARS'. THE COURT WENT ON TO HOLD THEREIN THA T IN ORDER TO ATTRACT THE PENALTY UNDER SECTION 271(1)(C), MENS REA WAS NECESSARY, AS ACCORDING TO THE COURT, THE WORD 'INA CCURATE' SIGNIFIES A DELIBERATE ACT OR OMISSION ON BEHALF OF THE ASSESSEE. IT WENT ON TO HOLD THAT CLAUSE (III) OF S ECTION 271(1) PROVIDED FOR A DISCRETIONARY JURISDICTION UPON THE ASSESSING AUTHORITY, INASMUCH AS THE AMOUNT OF PENALTY COULD NOT BE LESS THAN THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF SUCH CONCEALMENT OF PARTICULARS OF INCOME, BUT IT M AY NOT EXCEED THREE TIMES THEREOF. IT WAS POINTED OUT THAT THE TERM 'INACCURATE PARTICULARS' WAS NOT DEFINED ANYWHERE I N THE ACT AND, THEREFORE, IT WAS HELD THAT FURNISHING OF AN A SSESSMENT OF THE VALUE OF THE PROPERTY MAY NOT BY ITSELF BE F URNISHING INACCURATE PARTICULARS. IT WAS FURTHER HELD THAT TH E ASSESSEE MUST BE FOUND TO HAVE FAILED TO PROVE THAT HIS EXPL ANATION IS NOT ONLY BONA FIDE BUT ALL THE FACTS RELATING TO TH E SAME AND MATERIAL TO THE COMPUTATION OF HIS INCOME WERE NOT DISCLOSED BY HIM. IT WAS THEN HELD THAT THE EXPLANATION MUST BE PRECEDED BY A FINDING AS TO HOW AND IN WHAT MANNER, THE ASSESSEE HAD FURNISHED THE PARTICULARS OF HIS INCOM E. THE ITA NO. 1279/MUM/2014 M/S MILTONS PVT. LTD. 8 COURT ULTIMATELY WENT ON TO HOLD THAT THE ELEMENT O F MENS REA WAS ESSENTIAL. IT WAS ONLY ON THE POINT OF MENS REA THAT THE JUDGMENT IN DILIP N. SHROFF VS. JOINT COMMISSIO NER OF INCOME TAX, MUMBAI & ANR. WAS UPSET. IN UNION OF IN DIA VS. DHARAMENDRA TEXTILE PROCESSORS (CITED SUPRA), AFTER QUOTING FROM SECTION 271 EXTENSIVELY AND ALSO CONSIDERING S ECTION 271(1)(C), THE COURT CAME TO THE CONCLUSION THAT SI NCE SECTION 271(1)(C) INDICATED THE ELEMENT OF STRICT LIABILITY ON THE ASSESSEE FOR THE CONCEALMENT OR FOR GIVING INACCURA TE PARTICULARS WHILE FILING RETURN, THERE WAS NO NECES SITY OF MENS REA. THE COURT WENT ON TO HOLD THAT THE OBJECTIVE BEHIND ENACTMENT OF SECTION 271(1)(C) READ WITH EXP LANATIONS INDICATED WITH THE SAID SECTION WAS FOR PROVIDING R EMEDY FOR LOSS OF REVENUE AND SUCH A PENALTY WAS A CIVIL LIAB ILITY AND, THEREFORE, WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS WAS THE CASE IN T HE MATTER OF PROSECUTION UNDER SECTION 276-C OF THE ACT. THE BAS IC REASON WHY DECISION IN DILIP N. SHROFF VS. JOINT COMMISSIO NER OF INCOME TAX, MUMBAI & ANR. (CITED SUPRA) WAS OVERRUL ED BY HON'BLE APEX COURT IN UNION OF INDIA VS. DHARAMENDR A TEXTILE PROCESSORS (CITED SUPRA), WAS THAT ACCORDIN G TO THE ITA NO. 1279/MUM/2014 M/S MILTONS PVT. LTD. 9 COURT THE EFFECT AND DIFFERENCE BETWEEN SECTION 271 (1)(C) AND SECTION 276-C OF THE ACT WAS LOST SIGHT OF IN CASE OF DILIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. (CITED SUPRA). HOWEVER, IT MUST BE POINTED OUT THAT IN UNION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS ( CITED SUPRA), NO FAULT WAS FOUND WITH THE REASONING IN TH E DECISION IN DILIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. (CITED SUPRA), WHERE THE COURT EXPLAI NED THE MEANING OF THE TERMS 'CONCEAL' AND INACCURATE'. IT WAS ONLY THE ULTIMATE INFERENCE IN DILIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. (CITED SU PRA) TO THE EFFECT THAT MENS REA WAS AN ESSENTIAL INGREDIENT FOR THE PENALTY UNDER SECTION 271(1)(C) THAT THE DECISION I N DILIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. (CITED SUPRA) WAS OVERRULED. WE ARE NOT CONCER NED IN THE PRESENT CASE WITH THE MENS REA . HOWEVER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A MATTER OF FACT, TH E ASSESSEE HAS GIVEN INACCURATE PARTICULARS. IN WEBSTER'S DICT IONARY, THE WORD 'INACCURATE' HAS BEEN DEFINED AS:- 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRAN SCRIPT'. ITA NO. 1279/MUM/2014 M/S MILTONS PVT. LTD. 10 WE HAVE ALREADY SEEN THE MEANING OF THE WORD 'PARTICULARS' IN THE EARLIER PART OF THIS ORDER. RE ADING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SU PPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CO RRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO FINDING THAT ANY DET AILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCO RRECT OR ERRONEOUS OR FALSE. IN THE PRESENT APPEAL, THE PENA LTY WAS LEVIED/CONFIRMED DUE TO THE REASON THAT THE LD. ASS ESSING OFFICER IMPOSED THE PENALTY INVOKING THE PROVISIONS OF SECTION 45 R.W.S. 55(2)(A) OF THE ACT ON ACCOUNT OF TRANSFE R OF TENANCY RIGHTS, WHEREAS, THE NOTE PUT BY THE ASSESSEE IN IT S RETURN/P & L ACCOUNT, IT HAS BEEN CLEARLY MENTIONED THAT THE AMOUNT OF `2 CRORES WAS RECEIVED VIDE AGREEMENT DATED 10 TH SEPTEMBER, BY WAY OF COMPENSATION FOR SURRENDERING POSSESSORY RIGHTS OF THE PREMISES. THUS, NEITHER TH ERE IS CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULAR OF SUCH INCOME, THAT BEING THE CASE, THE RE WOULD BE NO QUESTION OF LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN THE LIGHT OF THE FOREGOING DISCUSSIO N, WE ARE OF THE CONSIDERED OPINION THAT ORDER OF THE LD. COMMIS SIONER OF ITA NO. 1279/MUM/2014 M/S MILTONS PVT. LTD. 11 INCOME TAX (APPEAL) DESERVES TO BE REVERSED, RESULT ANTLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF THE LD. REPRESENTATIVE FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 25/01/2018. SD/- SD/- ( RAJESH KUMAR ) (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER % MUMBAI; ( DATED : 25/01/2018 F{X~{T? P.S / /. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT (RESPECTIVE ASSESSEE) 2. ./,- / THE RESPONDENT. 3. 0 0 1# ( *+ ) / THE CIT, MUMBAI. 4. 0 0 1# / CIT(A)- , MUMBAI, 5. 3$4 .# , 0 *+' * 5 , % / DR, ITAT, MUMBAI 6. 6! 7% / GUARD FILE. ! / BY ORDER, /! (DY./ASSTT. REGISTRAR) , % / ITAT, MUMBAI