Oberoi Buildings and Investments Pvt. Ltd., Kolkata V. DCIT, Circle-5, Kolkata, Kolkata

ITA 1938/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1472 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 04-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A K GUPTA
• Keywords: Business income; Question of law; Wrong claim
• Section: 143(3)

Judgement Text

1 ITA NO. 1938/KOL/2016 ASSESSMENT YEAR: 2005-2006 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA D BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 1938/KOL./2016 ASSESSMENT YEAR: 2005-2006 OBEROI BUILDINGS AND INVESTMENTS PVT. LIMITED,..... .................APPELLANT 4, MANGOE LANE, 6 TH FLOOR, KOLKATA-700 001 [PAN: AAACO 2860 R] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. ...............RESPONDENT CIRCLE-5, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 APPEARANCES BY: SHRI A.K. GUPTA, FCA, FOR THE ASSESSEE SHRI ARINDAM BHATTACHARJEE, ADDL. CIT, D.R., FOR TH E DEPARTMENT DATE OF CONCLUDING THE HEARING : FEBRUARY 12, 2018 DATE OF PRONOUNCING THE ORDER : FEBRUARY 16, 2018 O R D E R PER SHRI P.M. JAGTAP, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKATA DAT ED 01.07.2016 WHEREBY HE CONFIRMED THE PENALTY OF RS.2,16,597/- I MPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE IN COME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN REAL ESTATE BUSINESS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 06.10.2005 DECLARI NG TOTAL INCOME OF RS.1,32,710/-. IN THE SAID RETURN, THE RENTAL INCOM E OF RS.13,90,260/- RECEIVED BY THE ASSESSEE-COMPANY FROM SUB-LETTING O F SHOPPING AREA IN THE HOTEL EIH LIMITED IN MUMBAI WAS DECLARED AS BUS INESS INCOME AND VARIOUS EXPENSES AGAINST THE SAME WERE CLAIMED AS D EDUCTION. IN THE 2 ITA NO. 1938/KOL/2016 ASSESSMENT YEAR: 2005-2006 ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN O RDER DATED 26.02.2007, THE SAID RENTAL INCOME WAS BROUGHT TO T AX BY THE ASSESSING OFFICER IN THE HANDS OF THE ASSESSEE-COMPANY UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND SUBSEQUENTLY THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF VARIOUS EXPENSES WAS RESTRI CTED BY HIM DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 11,43,020/-. HE ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)( C) IN RESPECT OF ADDITION MADE TO THE TOTAL INCOME OF THE ASSESSEE A S A RESULT OF CHANGE OF HEAD OF RENTAL INCOME AND SINCE THE EXPLANATION OFF ERED BY THE ASSESSEE IN RESPONSE TO THE SHOW-CAUSE NOTICE ISSUED DURING THE COURSE OF SAID PROCEEDINGS WAS NOT FOUND ACCEPTABLE BY HIM, THE AS SESSING OFFICER IMPOSED THE PENALTY OF RS.2,16,597/- UNDER SECTION 271(1)(C) BEING 100% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE IN R ESPECT OF THE ADDITION MADE TO ITS TOTAL INCOME. 3. THE PENALTY IMPOSED BY THE ASSESSING OFFICER UND ER SECTION 271(1)(C) WAS CHALLENGED BY THE ASSESSEE IN THE APP EAL FILED BEFORE THE LD. CIT(APPEALS) AND THE FOLLOWING SUBMISSIONS WERE FILED BY THE ASSESSEE IN WRITING BEFORE THE LD. CIT(APPEALS) IN SUPPORT O F ITS CASE THAT THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER SECT ION 271(1)(C) WAS NOT SUSTAINABLE:- 'IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143( 3) OF THE ACT, FOLLOWING ADJUSTMENTS/ADDITIONS HAS BEEN MADE BY TH E ASSESSING OFFICER. 1. CONTRIBUTION FROM SHOPS GIVEN ON LEAVE AND LICE NSE AMOUNTING TO RS.13,90,260/- WAS TREATED BY THE AO UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' AS AGAINST OFFERED BY THE ASSESSEE UNDER THE HEAD 'INCOME FROM BUSINESS' LEADING TO INCREASE IN ASSES SED INCOME BY RS.6,43,482/- RELYING ON THE DECISION OF CIT VS POD DAR CEMENT LTD REPORTED IN 226 ITR 625. THE ABOVEMENTIONED DISALLOWANCE WAS CONFIRMED BY T HE HONBLE ITAT, KOLKATA. THE LD. AO OPINED THAT THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND ACCORDINGLY PA SSED AN ORDER U/S. 271(L)(C) OF THE ACT LEVYING 100% OF THE TAX S OUGHT TO BE EVADED AS PENALTY U/S 271(L)(C) OF THE ACT. DURING THE PENALTY PROCEEDINGS, THE APPELLANT POIN TED OUT THAT SINCE INCEPTION 'CONTRIBUTION FROM SHOPS' WAS BEING ASSESSED AS 'BUSINESS INCOME' AS CLAIMED IN RETURN. MERE REPORT ING OF INCOME 3 ITA NO. 1938/KOL/2016 ASSESSMENT YEAR: 2005-2006 UNDER A DIFFERENT HEAD WOULD NOT CHARACTERIZE THE P ARTICULARS REPORTED AS 'INACCURATE' TO ATTRACT LEVY OF PENALTY UNDER SECTION 271(1)(C). AGAIN IT REITERATED BEFORE YOUR GOODSELF THAT MERE LY BECAUSE THE ASSESSING OFFICER WAS OF THE OPINION THAT THE INCOM E FELLS UNDER SOME OTHER HEAD CANNOT BE REASON ENOUGH TO TREAT TH E PARTICULARS REPORTED IN THE RETURN AS 'INACCURATE PARTICULARS'. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF CIT VS.- AMIT JAIN (2013) 351 ITR 74, WHEREIN THE ABOVE ISSUE COM E UP BEFORE THE DELHI HIGH COURT. THE DELHI HIGH COURTS RULING IS BASED ON THE SUPREME COURT RULING IN CIT VS.- RELIANCE PETRO PR ODUCTS PVT. LTD. (2010) 322 ITR 158. EVEN OTHERWISE, IT IS SUBMITTED THAT THE APPELLANT HAS FILED APPEAL BEFORE THE HIGH COURT AGAINST THE ORDER OF THE ABOV EMENTIONED ITAT ORDER ON THE BASIS OF WHICH THE AO HAS PASSED ON ORDER IMPOSING PENALTY, IT IS PERTINENT TO NOTE THAT THE ORDER OF THE ITAT CONFIRMING THE DISALLOWANCE DOES NOT HAVE BINDING E FFECT ON THE APPELLANT INASMUCH AS THE OPERATION OF THE SAID ORD ER HAS BEEN STAYED BY THE HONBLE KOLKATA HIGH COURT (COPY OF H IGH COURT ORDER IS ENCLOSED AS ANNEXURE....). IT HAS BEEN HELD IN A PLETHORA OF CASES BY VENOUS COURTS THAT ONCE AN ORDER IS PUT TO STAY OF OPERATION, IT WILL NOT H AVE ANY BINDING EFFECT ON THE OTHER DECISIONS. IN THIS REGARD, RELIANCE IS PLACED ON THE DECISION OF BANGALORE ITAT RENDERED IN CASE OF MYSORE SALES INTERNATIONAL LIMI TED VS.- COMMISSIONER OF INCOME TAX REPORTED IN (2012) 138 I TD 422. THE RELEVANT ASPECT OF THE HIGH COURT ORDER IS REP RODUCED AS FOLLOWS:- WE GRANT UNCONDITIONAL STAY OF OPERATION OF THE I MPUGNED JUDGMENT AND/OR ORDER OF THE LEARNED TRIBUNAL FOR A PERIOD OF THREE WEEKS FROM DATE WITHIN THE TIME AFORESAID IF DR. PALS CLIENT DEPOSITS A SUM OF RS.3,90,000/- WHICH IS IMPUGNED HEREIN, WITH THE DEPARTMENT, THEN THE ORDE R OF STAY WILL CONTINUE UNTIL FURTHER ORDER OF THIS COUR T. UNDER THE ABOVE CIRCUMSTANCES, IT IS SUBMITTED THA T THE CAPTIONED APPEAL MAY KINDLY BE KEPT IN ABEYANCE TILL FURTHER ORDER FROM THE HIGH COURT FOR THE RELEVANT YEAR IN RESPECT OF THE CONCERNED ISSUE. 4. THE LD. CIT(APPEALS) DID NOT FIND MERIT IN THE S UBMISSIONS MADE BY THE ASSESSEE AS ABOVE AND PROCEEDED TO CONFIRM THE PENALTY IMPOSED BY THE ASSESSING OFFICER FOR THE FOLLOWING REASONS GIV EN IN HIS IMPUGNED ORDER:- I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHORIZE D REPRESENTATIVE OF THE APPELLANT AS WELL AS THE PENALTY ORDER FRAME D IN THE LIGHT OF THE MATERIALS AVAILABLE ON RECORD BEFORE THE ASSESS ING OFFICER 4 ITA NO. 1938/KOL/2016 ASSESSMENT YEAR: 2005-2006 DURING THE ASSESSMENT AS WELL AS PENALTY PROCEEDING S. THE ADDITION AS MADE BY THE AO WAS DULY UPHELD BY THE ITAT. THE ASSESSEE HAD SHOWN THE RENTAL INCOME AS BUSINESS INCOME AND CLAI MED EXPENSES OF RS.10,60,560/- AGAINST THE RETURNED INCOME OF RS .13,90,260/- SHOWING THE NET INCOME OF RS.3,29,700/-. HOWEVER, A FTER CONSIDERING IT AS INCOME FROM HOUSE PROPERTY THE TA XABLE NET INCOME COMES TO RS.9,73,182/-. THIS CLEARLY ESTABLI SH THAT THE ASSESSEE HAS MADE A WRONG CLAIM EVEN AFTER SEVERAL JUDGMENTS ARE AGAINST THE CLAIM MADE BY THE ASSESSEE. HENCE, THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE AND IT HAS BEEN CONS IDERED THAT THE ASSESSEE HAS FURNISHED WRONG PARTICULARS OF INCOME . AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE IMPUGNED PENALTY UNDER SECTION 271(1)(C) IS IMPOSED BY THE A SSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) IN RESPECT OF ADD ITION MADE TO THE TOTAL INCOME OF THE ASSESSEE AS A RESULT OF CHANGE IN THE HEAD OF RENTAL INCOME FROM PROFITS & GAINS OF BUSINESS OR PROFESSION TO INCOME FROM HOUSE PROPERTY. IN THE CASE OF CIT VS.- INDERSONS LEATH ER (P) LIMITED [196 TAXMAN 103] CITED BY THE LD. COUNSEL FOR THE ASSESS EE, THE ASSESSEE HAD MADE A CLAIM DECLARING HIS RENTAL INCOME AS BUSINES S INCOME WHILE THE ASSESSING OFFICER HELD THE SAME TO BE INCOME FROM H OUSE PROPERTY. THE ASSESSING OFFICER ALSO LEVIED PENALTY UNDER SECTION 271(1)(C), WHICH WAS CANCELLED BY THE TRIBUNAL BY HOLDING THAT THE ASSES SEE WAS NOT GUILTY OF ANY CONCEALMENT OR FURNISHING OF INACCURATE PARTICU LARS AND THE CLAIM MADE BY THE ASSESSEE WAS IN RESPECT OF A DEBATABLE ISSUE. THE APPEAL FILED BY THE DEPARTMENT AGAINST THE ORDER OF THE TRIBUNAL CANCELLING THE PENALTY UNDER SECTION 271(1)(C) WAS UPHELD BY THE H ONBLE PUNJAB & HARYANA HIGH COURT. AS RIGHTLY SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE ISSUE INVOLVED IN THE PRESENT CASE IS SIMILAR TO THE CASE OF INDERSONS LEATHER (P) LTD.(SUPRA), INASMUCH AS THE CLAIM OF THE ASSESESE FOR RENTAL INCOME BEING ITS BUSINESS INCOME WAS ACC EPTED BY THE ASSESSING OFFICER HIMSELF CONSISTENTLY IN THE EARLI ER YEARS AND THE ISSUE RELATING TO THE HEAD OF INCOME UNDER WHICH THE RENT AL INCOME IN QUESTION 5 ITA NO. 1938/KOL/2016 ASSESSMENT YEAR: 2005-2006 IS ASSESSABLE TO TAX WAS NOT ONLY A DEBATABLE ONE, BUT EVEN THE CLAIM MADE BY THE ASSESSEE WAS BONAFIDE. MOREOVER, AS POI NTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, THE APPEAL FILED BY THE A SSESSEE AGAINST THE ORDER PASSED BY THE TRIBUNAL IN THE QUANTUM PROCEED INGS CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN TAXING THE RENTA L INCOME AS HOUSE PROPERTY INCOME HAS ALREADY BEEN ADMITTED BY THE HO NBLE CALCUTTA HIGH COURT, WHICH AGAIN GOES TO SHOW THAT THE ISSUE IS H IGHLY DEBATABLE. AS HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT VS.- NAYAN BUILDERS & DEVELOPERS (INCOME TAX APPEAL NO. 415 OF 2012 DATED 08.07.2014) CITED BY THE LD. COUNSEL FOR THE ASSESS EE, PENALTY IMPOSED UNDER SECTION 271(1)(C) IS LIABLE TO BE DELETED WHE RE THE HONBLE HIGH COURT HAS ADMITTED SUBSTANTIAL QUESTION OF LAW ON T HE ISSUE IN QUANTUM PROCEEDINGS ON THE BASIS OF WHICH SUCH PENALTY WAS LEVIED. IN OUR OPINION, THE ISSUE INVOLVED IN THE PRESENT CASE REL ATING TO LEVY OF PENALTY UNDER SECTION 271(1)(C) THUS IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE PUNJAB & HARYANA HIG H COURT IN THE CASE OF INDERSONS LEATHER (P) LTD. (SUPRA) AS WELL AS THAT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF NAYAN BUILDERS & DEVELOPE RS (SUPRA). AT THE TIME OF HEARING BEFORE US, THE LD. D.R. HAS NOT RAI SED ANY MATERIAL CONTENTION IN THIS REGARD AND HAS RELIED ONLY ON TH E ORDERS OF THE AUTHORITIES BELOW IN SUPPORT OF THE REVENUES CASE. WE, THEREFORE, RESPECTFULLY FOLLOW THE ORDER OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF INDERSONS LEATHER (P) LTD. (SUPRA) A S WELL AS THAT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF NAYAN BUIL DERS & DEVELOPERS (SUPRA) AND CANCEL THE PENALTY IMPOSED BY THE ASSES SING OFFICER UNDER SECTION 271(1)(C) AND CONFIRMED BY THE LD. CIT(APPE ALS). 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH DAY OF FEBRUARY, 2018. SD/- SD/- (S.S.VISWANETHRA RAVI) (P.M. JA GTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 16 TH DAY OF FEBRUARY, 2018 6 ITA NO. 1938/KOL/2016 ASSESSMENT YEAR: 2005-2006 COPIES TO : (1) OBEROI BUILDINGS AND INVESTMENTS PVT. LIMITED, 4, MANGOE LANE, 6 TH FLOOR, KOLKATA-700 001 2) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-5, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (3) CIT(APPEALS)-2, KOLKATA, (4) CIT- , KOLKATA, (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/DDO, INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.