The ACIT, Circle-5, Baroda V. M/s. Jayraj Estate Pvt.Ltd., Baroda

ITA 1805/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60297 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-04-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 29-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

ITA NO.1805 & 1806/AHD/2009 A.YRS. 2001 -02 & 2002-03. 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI MUKUL KR.SHRAWAT JM & SHRI ANIL CHATUR VEDI A.M.) I.T.A. NO.1805/AHD/2009. (A SSESSMENT YEAR: 2001-02) I.T.A. NO.1806/AHD/2009 (A SSESSMENT YEAR : 2002-03) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-5, 5 TH FLOOR, AAYAKAR BHAVAN, NEAR RACE COURSE CIRCLE, BARODA. (APPELLANT) VS. M/S. JAYRAJ ESTATE PRIVATE LIMITED, SAMRAJYA COMPLEX, AKOTA, MUNJMAHUDA ROAD, BARODA. (RESPONDENT) PAN: AAACJ 5505 E APPELLANT BY : SHRI SAMIR TEKRIWAL, SR. D .R. RESPONDENT BY : SHRI S.N.SOPARKAR, SR. ADV. WITH SHRI P.M. MEHTA. ( )/ ORDER DATE OF HEARING : 17-4-2012. DATE OF PRONOUNCEMENT : PER: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. THESE TWO APPEALS ARE DIRECTED AGAINST THE ORDER O F CIT(A)-V, BARODA DATED 24-3-2009 FOR THE ASSESSMENT YEARS 2001-02 AN D 2002-03 RESPECTIVELY. 2. SINCE THE FACTS AND ISSUES INVOLVED ARE IDENTICA L FOR BOTH THE ASSESSMENT YEARS AND THE APPEALS HAVE BEEN HEARD TO GETHER, THESE ARE BEING DISPOSED OF BY A SINGLE ORDER FOR THE SAKE OF CONVENIENCE. THE COMMON DISPUTE INVOLVED FOR BOTH THE ASSESSMENT YEA RS RELATE TO DELETION, ITA NO.1805 & 1806/AHD/2009 A.YRS. 2001 -02 & 2002-03. 2 OF PENALTY OF RS.4,85,000/- AND OF RS.4,32,000/- FO R A.Y.2001-02, A.Y. 2002-03 RESPECTIVELY BY CIT(A). 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONST RUCTION AND DEVELOPMENT OF REAL ESTATE. THE ASSESSEE HAD RENTED OUT ITS OFFICE PREMISES AT BARODA TO IDBI BANK. ASSESSEE AND ITS S ISTER CONCERN, M/S ANJALI CONSTRUCTION ENTERED INTO TWO SEPARATE AGREE MENTS WITH IDBI BANK FOR RENT PAYABLE TO THE ASSESSEE AND FOR SERVICE CH ARGES PAYABLE TO ANJALI CONSTRUCTION. DURING THE YEAR THE ASSESSEE RECEIVED RENT FOR THE PREMISES AND M/S ANJALI CONSTRUCTION RECEIVED THE SERVICE CH ARGES. 4. DURING THE COURSE OF ASSESSMENT U/S 143(3) OF TH E ASSESSEE, THE AO HELD THAT THE SERVICE CHARGES OF RS 16,19,550/- (IN AY 2001-02) AND RS 11,47,240 (IN AY 2002-03) FROM RECEIVED BY ANJALI C ONSTRUCTION FROM IDBI IS IN THE NATURE OF RENT RECEIPT OF THE ASSESSEE. H E THEREFORE ADDED RS 16,19,550/- (IN AY 2001-02) AND RS 11,47,240 (IN AY 2002-03) RECEIVED BY ANJALI CONSTRUCTION IN THE HANDS OF ASSESSEE. THIS RESULTED INTO ADDITION OF RS 12,14,662 AND OF RS 12,09,760 (AFTER ALLOWING TH E ALLOWABLE DEDUCTIONS) FOR AY 2001-02 AND AY 2002-03 RESPECTIVELY. THE ADD ITION WAS CONFIRMED BY CIT (A) VIDE ORDER DATED 5.11.2004. ON THE ADDIT ION MADE, THE A.O. INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) AND IM POSED PENALTY OF RS.4,85,000/- (FOR AY 2001-02) AND OF RS 4,32,000/- (FOR AY 2002-03) ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. 5. AGGRIEVED BY THE DECISION OF THE AO TO LEVY PENA LTY, THE ASSESSEE CARRIED THE MATTER BEFORE CIT (A). CIT (A) DELETED THE PENALTY BY HOLDING AS UNDER: ITA NO.1805 & 1806/AHD/2009 A.YRS. 2001 -02 & 2002-03. 3 6. I HAVE HEARD THE ARGUMENTS ADVANCED BY THE A.R. AND ALSO VERIFIED THE SUBMISSION MADE BEFORE ME WHICH HAVE B EEN PLACED ON RECORD. THE A.R. HAS EXPLAINED THE FACTS OF THE CAS E AND ALSO THE PROVISIONS OF LAW. THE A.O. HAS INCORRECTLY HELD TH AT THE APPELLANT HAD FURNISHED THE INACCURATE PARTICULARS OF INCOME AS A LL THE DETAILS WERE AVAILABLE ON RECORD. THIS IS THE CASE OF ESTIMATE O F PROPERTY INCOME AND ALSO THE CLUBBING OF INCOME. THE AMOUNT OF SERV ICE CHARGES HAS BEEN OFFERED TO TAX IN THE CASE OF M/S. ANJALI CONS TRUCTION. THE A.O. HAS THEREFORE, INCORRECTLY HELD THAT THE APPELLANT HAS EVADED THE INCOME CHARGEABLE TO TAX. THE CONFIRMED ADDITION DO ES NOT LEAD TO THE CONCLUSION THAT THE APPELLANT HAS CONCEALED THE PARTICULARS OF INCOME. IN MY OPINION, THE A.O. HAS FAILED TO FULFI LL THE CONDITIONS LAID DOWN U/S. 271(1)(C ) OF THE ACT REQUIRING TO IMPOSE PENALTY IN THE SAID SECTION. IN VIEW OF THE FACTS, CIRCUMSTANCES, LEGAL POSITION AND THE SURROUNDING CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE A.O. WAS NOT JUSTIFIED IN IMPOSING THE PENALTY AND HE IS ACCORDINGLY DIRECTED TO DELETE THE SAME. 6. AGGRIEVED BY THE DECISION OF CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 7. BEFORE US THE LD. D.R. RELIED ON THE ORDER OF A. O FOR THE LEVY OF PENALTY. ON THE OTHER HAND THE LD. A.R. SUBMITTED T HAT THE AO HAD INCORRECTLY HELD THAT THE ASSESSEE HAD FURNISHED IN ACCURATE PARTICULARS OF INCOME. IT WAS SUBMITTED THAT TWO SEPARATE AGREEMEN TS WERE ENTERED BY IDBI, ONE WITH THE ASSESSEE FOR RENT AND WITH ANJAL I CONSTRUCTION FOR SERVICE ITA NO.1805 & 1806/AHD/2009 A.YRS. 2001 -02 & 2002-03. 4 CHARGES. FROM AY 1998-99, BEING THE YEAR IN WHICH T HE AGREEMENT WAS ENTERED, AND ONWARDS, THE RENT RECEIPTS AND SERVICE CHARGES RECEIPTS HAVE BEEN OFFERED TO TAX BY THE ASSESSEE AND ANJALI CONS TRUCTION RESPECTIVELY. IT WAS FURTHER STATED THAT IT WAS THE CASE OF ESTIMATE OF PROPERTY INCOME AND ALSO THE CLUBBING OF INCOME. ANJALI CONSTRUCTION HA S OFFERED THE SERVICE CHARGES RECEIPT TO TAX. THE EXPLANATIONS OFFERED BY THE ASSESSEE WERE BONAFIDE AND NOT FOUND TO BE FALSE. THE CONFIRMED A DDITION CANNOT LEAD TO THE CONCLUSION THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME. ACCORDINGLY, THE CIT (A) WAS RIGHT IN DELETING THE PENALTY. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAD GIVEN ON RENT ITS OFFICE PREMISES TO IDBI AND TWO SEPARATE A GREEMENTS WERE ENTERED BY IDBI, ONE WITH THE ASSESSEE FOR RENT AND THE OTH ER WITH ANJALI CONSTRUCTION FOR SERVICE CHARGES. FROM AY 1998-99 T HE RENT RECEIPTS AND SERVICE CHARGES RECEIPTS FROM IDBI HAVE BEEN OFFERE D TO TAX BY THE ASSESSEE AND ANJALI CONSTRUCTION RESPECTIVELY. ANJA LI CONSTRUCTION HAS OFFERED THE SERVICE CHARGES RECEIPT TO TAX. IT IS A LSO AN UNDISPUTED FACT THAT THE ASSESSEE AS WELL AS ANJALI CONSTRUCTION ARE SUB JECT TO TAX AND ARE TAXED AT THE SAME RATES AND THEREFORE IT CANNOT BE SAID THAT THERE WAS TAX SOUGHT TO BE EVADED. THE AO DID NOT ACCEPT THE ARGU MENTS OF THE ASSESSEE THAT THE SERVICE CHARGES RECEIPTS ARE TAXA BLE IN THE CASE OF ANJALI CONSTRUCTION AND THIS DOES NOT LEAD TO CONCLUSION T HAT THE ASSESSEE HAD ATTEMPTED TO CONCEAL ITS PARTICULARS OF INCOME. THE EXPLANATIONS OFFERED BY THE ASSESSEE WERE BONAFIDE AND NOT FOUND TO BE FALS E. THE CONFIRMED ADDITION CANNOT LEAD TO THE CONCLUSION THAT THE ASS ESSEE HAS CONCEALED THE PARTICULARS OF INCOME. THE ASSESSEE NEITHER CONCEAL ED NOR COULD BE ITA NO.1805 & 1806/AHD/2009 A.YRS. 2001 -02 & 2002-03. 5 DEEMED TO HAVE CONCEALED ANY INCOME SO AS TO WARRAN T IMPOSITION OF PENALTY U/S 271(1)(C). IN VIEW OF THE TOTALITY OF T HE FACTS WE ARE OF THE CONSIDERED VIEW THAT CIT(A) RIGHTLY DIRECTED THE A. O. TO DELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. IN VIEW OF THIS POSITION, NO INTERFERENCE IS CALLED FOR IN THE ORDER PASSED BY THE CIT (A). WE A CCORDINGLY DISMISS THE REVENUES GROUND OF APPEAL. 9. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 27 4 - 2012. SD/- SD/- (MUKUL KUMAR SHRAWAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACC OUNTANT MEMBER AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-V, BARODA. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. ITA NO.1805 & 1806/AHD/2009 A.YRS. 2001 -02 & 2002-03. 6 1.DATE OF DICTATION 17 - 4 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 26 / 4 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 26 - 4 -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 27 - 4 -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 27 - 4 -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2 7 - 4 -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 30- 4-2012 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..