DCIT 8(3)(2), MUMBAI V. VADINAR PROPERTIES LTD, MUMBAI

ITA 1974/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8843 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 07-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K PODAR
• Keywords: Wrong claim; Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO.1974/MUM/2015 (ASSESSMENT YEAR: 2010-11) D C I T 8(3)(2) VS. M/S. VADINAR PROPERTIES LTD. ROOM NO. 615, 6 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 ESSAR HOUSE, 11 K.K. MARG MUMBAI 400034 PAN AACCV2528B APPELLANT RESPONDENT APPELLANT BY: SHRI S.K. PODAR RESPONDENT BY: SHRI NIRAJ SHETH DATE OF HEARING: 21.12.2016 DATE OF PRONOUNCEMENT: 25.01.2017 O R D E R PER JASON P. BOAZ, A.M. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF THE CIT(A)-14, MUMBAI DATED 18.12.2014 DELETING THE PENALTY OF ` 22,41,232/- LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') FOR A.Y. 2010-11. 2. THE FACTS OF THE CASE, BRIEFLY STATED, ARE AS UNDER : - 2.1 THE ASSESSEE, ENGAGED IN THE BUSINESS OF DEVELO PMENT AND LEASING OF PROPERTIES, FILED ITS RETURN OF INCOME FOR A.Y. 20 10-11 ON 15.10.2012 DECLARING TOTAL INCOME OF ` 1,83,28,823/-. A REVISED RETURN OF INCOME WAS FILED ON 30.03.2012 DECLARING INCOME OF ` 1,83,28,823/- FOR THE REASON THAT THERE WAS A MISTAKE IN ADDING SURCHARGE AND CLAIMIN G TDS. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT AND T HE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 18.01.20 13, WHEREIN THE ASSESSEES INCOME WAS DETERMINED AT ` 2,49,22,620/-; IN VIEW OF DISALLOWANCE OF THE ASSESSEES CLAIM FOR INTEREST P AYMENT AND PROCESSING ITA NO. 1974/MUM/2015 M/S. VADINAR PROPERTIES LTD 2 FEE AMOUNTING TO ` 65,93,798/- PERTAINING TO PHASE-II OF TOWNSHIP WHIC H WAS STILL UNDER CONSTRUCTION DURING THE PERIOD UNDE R CONSIDERATION. THIS DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER (AO) PURSUANT TO THE ASSESSEES LETTER DATED 30.07.2012 IN WHICH IT WAS REQUESTED THAT ITS INTEREST CLAIM UNDER INCOME FROM HOUSE PROPERTY B E REDUCED BY ` 65,93,738/- FOR THE REASON THAT ON RECHECKING OF TH E COMPUTATION OF INCOME AND DETAILS OF INTEREST PAYMENT, IT WAS NOTE D BY THEM THAT INTEREST CLAIM ALSO INCLUDED INTEREST PAYMENT OF ` 49,39,298/- AND LOAN PROCESSING FEE OF ` 16,54,500/- WHICH WAS UTILISED FOR PHASE-II OF TOWN SHIP WHICH WAS STILL UNDER CONSTRUCTION IN THE YEAR UNDER CONSIDER ATION AND THE SAID DEDUCTION COULD HAVE BEEN CLAIMED ONLY FROM THE YEA R IN WHICH THE CONSTRUCTION OF THE SAID PROPERTY WAS COMPLETED. PE NALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE SIMULTANEOU SLY INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CON CEALMENT OF INCOME. 2.2 IN PENALTY PROCEEDINGS, AFTER CONSIDERING THE S UBMISSIONS OF THE ASSESSEE, THAT PENALTY UNDER SECTION 271(1)(C) OF T HE ACT SHOULD NOT BE LEVIED IN THE CASE ON HAND SINCE THE AMOUNT OF INTE REST OF ` 65,93,738/- WAS SUO MOTO INDICATED BY ITS LETTER DATED 30.07.20 12 AND OFFERED FOR DISALLOWANCE ON REALISATION OF ITS BONA FIDE MISTAK E MADE IN THE COMPUTATION OF INCOME; THE AO HOLDING THAT THE ASSE SSEE HAD CONCEALED ITS INCOME BY CLAIMING EXPENSES THAT WERE NOT ALLOWABLE PROCEEDED TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT VIDE ORD ER DATED 31.07.2013. 2.3 ON APPEAL, THE LEARNED CIT(A) ALLOWED THE ASSES SEES APPEAL VIDE THE IMPUGNED ORDER DATED 18.12.2014 BY DELETING THE PEN ALTY OF ` 22,41,232/- LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 3.1 AGGRIEVED BY THE ORDER OF THE CIT(A)-14, MUMBAI DATED 18.12.2014 DELETING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT FOR A.Y. 2010- 11, REVENUE HAS PREFERRED THIS APPEAL RAISING THE F OLLOWING GROUNDS: - (I) THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE PENALTY U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 OF RS.22,41,232/- BY THE ASSESSING OFFICER WITHOUT PRO PERLY APPRECIATING THE FACTUAL AND LEGAL MATRIX OF THE CA SE AS CLEARLY BROUGHT OUT BY THE ASSESSING OFFICER IN THE ORDER I MPOSING PENALTY. ITA NO. 1974/MUM/2015 M/S. VADINAR PROPERTIES LTD 3 (II) THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW WITHOUT APPRECIATING THE FACT THAT HAD THE CASE NOT BEEN UN DER SCRUTINY THE ASSESSEE WOULD HAVE NOT WITHDRAWN THE PATENTLY WRONG CLAIM OF DEDUCTION AND THEREFORE RATIO DECENDI OF S UPREME COURT IN CASE OF MAK DATA PVT. LTD. VS. CIT (2013) 40 SCD 925 AS REPORTED IN CIVIL APPEAL NO.9772 OF 2013 CLEARLY AP PLIES. (III) THE LD. CIT APPEAL HAS ERRED IN LAW AND ON F ACTS IN NOT APPRECIATING THAT CONCEALMENT IS TO BE RECKONED WIT H REFERENCE TO THE RETURNED INCOME AND THE FACT OF WITHDRAWAL OF L OSS CLAIMED WAS IRRELEVANT IN THIS REGARD. 2. THE LD.CIT(A)'S ORDER IS CONTRARY TO LAW AND ON FAC TS AND DESERVES TO BE SET ASIDE AND A.O'S ORDER MAY BE RES TORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GR OUND OR ADD A NEW GROUND THAT MAY BE NECESSARY. THE LEARNED D.R. FOR REVENUE WAS HEARD IN SUPPORT O F THE GROUNDS RAISED AND PLACED STRONG RELIANCE ON THE ORDER OF T HE AO LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 3.2 PER CONTRA, THE LEARNED A.R. OF THE ASSESSEE SU PPORTED THE IMPUGNED ORDER OF THE LEARNED CIT(A) DELETING THE PENALTY LE VIED UNDER SECTION 271(1)(C) OF THE ACT FOR A.Y. 2010-11 IN THE CASE O N HAND AS BEING IN ORDER. 3.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JU DICIAL PRONOUNCEMENTS CITED. ON A PERUSAL OF THE IMPUGNED ORDER, IT IS SE EN THAT THE LEARNED CIT(A) HAS DELETED THE PENALTY OF ` 22,41,232/- HOLDING AS UNDER AT PARA 3.3 THEREOF: - 3.3 A READING OF THE PENALTY ORDER ITSELF AS DISCU SSED ABOVE, CLEARLY SHOWS THAT THERE WAS INTEREST EXPENSES DEBI TED AGAINST INCOME FROM HOUSE PROPERTY, HOWEVER, IT WAS FOUND THAT THE FIGURE FOR THE ENTIRE INTEREST PAYMENT, PART OF WHICH WAS RELATED TO FUNDS UTILIZED FOR CONSTRUCTION OF PHASE. II OF TOWNSHIP, WHICH BEING STILL UNDER CONSTRUCTION, THUS DID NOT BELONG TO INCOME EARNED FROM HOUSE PROPERTY IN THE F.Y. RELEVANT TO A.Y. 2010-11, THE SUBJECT M ATTER OF THE APPEAL. IT IS ALSO NOTED THAT VIDE LETTER 30.07.2012, THE ASSE SSEE SUBMITTED IN WRITING THE FACTS AND ADMITTED THE MISTAKE THAT AN AMOUNT OF RS.65,93,798/- HAS BEEN CLAIMED IN THE YEAR, THOUGH THE SAME WAS NOT ALLOWABLE EXPENDITURE IN THE INSTANT A.Y. THE A .O. HAS PASSED THE ORDER ON 31.07.2013 I.E. ALMOST A YEAR LATER THAN S UBMISSION OF THIS LETTER OF ASSESSEE BEFORE HIM. THOUGH IN THE PENALT Y ORDER, THE A.O. HAS STATED THAT DETAILS OF EXPENDITURE CLAIMED ARE NOT SUBSTANTIATED AND THEN NO EVIDENCE OF GENUINENESS OF THESE EXPENSES W ERE FURNISHED, THE FACT REMAINS THAT THE A.O. HAS ALSO NOT BROUGHT ANY FINDING ON RECORD TO ITA NO. 1974/MUM/2015 M/S. VADINAR PROPERTIES LTD 4 PROVE THAT THE EXPENSES WERE NOT GENUINE AND NOT SU BSTANTIATED. THE UNDISPUTED FACT REMAINS THAT A.O. HAS NOT GIVEN REA SON TO SUPPORT HIS STATEMENT AND THEN EVEN IF THESE EXPENSES WERE FOUN D AS NOT GENUINE FOR THE REASONS THEY CLAIM WAS NOT MADE DURING THE PERIOD RELEVANT TO A.Y. 2010-11, AS ASSESSEE GAVE THE REASONING THAT I T TECHNICALLY BELONGED TO LATER YEARS, NO COGNIZANCE OF A.O.'S UN SUPPORTED STATEMENT CAN BE TAKEN IN THE CASE. THE A.O. HAS SIMPLY ADDED THIS AMOUNT OF RS.65,93,798/-, WHICH WAS ALREADY OFFERED DURING TH E COURSE OF ASSESSMENT PROCEEDINGS ITSELF BY THE APPELLANT. ON THESE GIVEN FACTS, WHEN THE FIGURE OF INTEREST EXPENSES WAS DULY DISCL OSED COUPLED WITH THE FACT THAT THE DISALLOWABLE INTEREST AMOUNTING T O RS.65,93,798/- OUT OF THE TOTAL INTEREST PAYMENT OF RS.8,89,72,101/- W AS ALSO DISCLOSED BY THE APPELLANT ONLY; BY SUBMITTING THEIR LETTER DT.3 0.07.2012 AND SAME HAS RESULTED INTO ENHANCED ASSESSED INCOME, THE APP ELLANT CANNOT BE SAID TO HAVE FURNISHED WRONG PARTICULARS OR INACCUR ATE PARTICULARS OF HAVING CONCEALED PARTICULARS OR CONCEALED THE INCOM E. IN FACT BY MAKING ADMISSION ON THEIR OWN, THEY HAVE OFFERED EN HANCED INCOME TO BE TAXED IN THE F.Y. RELEVANT TO A.Y. 2010-11. IN V IEW OF THIS WHERE INCOME HAS BEEN ASSESSED AT A ENHANCED FIGURE, THAT TOO ON ACCOUNT OF ASSESSEE'S SUBMISSION ONLY DURING THE COURSE OF ASS ESSMENT PROCEEDINGS ITSELF, WHICH THE A.O. HAS NOT BEEN ABL E TO DECIPHER, THE APPELLANT CANNOT BE FOUND FAULT WITH AS PER THE PRO VISIONS OF SEC.271(I)(C) AND HENCE, THE PENALTY LEVIED U/S.271 (1)(C) AMOUNTING TO RS. 22,41,232/- BEING SUSTAINABLE, IS DELETED HEREW ITH. GROUND NO.1 IS ALLOWED. 3.3.2 FROM A CAREFUL PERUSAL OF THE FINDING OF THE LEARNED CIT(A) IN THE IMPUGNED ORDER AND THE CONTENTIONS OF THE AO IN THE ORDER LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT, IT IS EVIDENTLY CLEAR THAT INTEREST EXPENSES WERE DEBITED AGAINST INCOME FROM HOUSE PR OPERTY. IT IS SEEN THAT THE ASSESSEE VIDE LETTER DATED 30.07.2012, SUBMITTE D IN THE COURSE OF ASSESSMENT PROCEEDINGS, HAD BROUGHT TO THE NOTICE O F THE AO THAT ON RECHECKING THE COMPUTATION OF INCOME AND DETAILS OF INTEREST PAYMENTS IT FOUND THAT THE FIGURE OF INTEREST PAYMENT INCLUDES INTEREST PAYMENT OF ` 49,39,298/- AND LOAN PROCESSING FEE OF ` 16,54,500/- WERE RELATED TO THE LOAN UTILIZED FOR PHASE-II OF TOWNSHIP, WHICH WAS S TILL UNDER CONSTRUCTION IN THE YEAR UNDER CONSIDERATION, DID NOT PERTAIN TO THE INCOME FROM HOUSE PROPERTY EARNED IN THE YEAR UNDER CONSIDERATION. T HE ASSESSEE THEREBY SUO MOTO ADMITTED THE MISTAKE COMMITTED BY IT THAT AN A MOUNT OF ` 65,93,798/- HAS BEEN CLAIMED IN THIS YEAR WHICH WAS NOT ALLOWABLE EXPENDITURE AND ENHANCED ITS INCOME ACCORDINGLY. WE FIND FROM THE RECORD THAT THE ORDER OF ASSESSMENT FOR THE YEAR UNDER CON SIDERATION WAS PASSED ITA NO. 1974/MUM/2015 M/S. VADINAR PROPERTIES LTD 5 ALMOST SIX MONTHS LATER ON 18.01.2013. THOUGH THE A O CONTENDS THAT THE GENUINENESS OR DETAILS OF EXPENDITURE CLAIMED ARE N OT SUBSTANTIATED, WE FIND THAT THE AO HAS NOT BROUGHT ON RECORD ANY MATE RIAL EVIDENCE TO PROVE HIS CONTENTION THAT THE AFORESAID EXPENSES WERE NOT GENUINE AND NOT SUBSTANTIATED. IN OUR VIEW, THE FACTS ON RECORD IND ICATE THAT THE AO HAS MERELY DISALLOWED THIS AMOUNT OF ` 65,93,798/- WHICH WAS ALREADY DISCLOSED BY THE ASSESSEE SUO MOTO VIDE ITS LETTER DATED 31.07.2012 THEREBY ENHANCING ITS INCOME FOR A.Y. 2010-11 IN THE COURSE OF ASSESSMENT PROCEEDINGS. IN THIS FACTUAL MATRIX, WHEN ALL THE R ELEVANT DETAILS WERE PLACED ON RECORD SUO MOTO BY THE ASSESSEE ON THIS I SSUE VIDE LETTER DATED 30.07.2012 RESULTING IN ENHANCING ITS INCOME FOR A. Y. 2010-11, IN OUR CONSIDERED OPINION, THE ASSESSEE CANNOT BE SAID TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED PARTI CULARS OF INCOME, IN TERMS OF THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. IN THAT VIEW OF THE MATTER, WE UPHOLD THE ORDER OF THE LEARNED CIT(A) H OLDING THAT THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT LEVIED BY THE AO TO BE UNSUSTAINABLE AND IN DELETING THE SAME. WE HOLD AND DIRECT ACCORDINGL Y. 2.3.2 IN THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF MAK DATA P. LTD. (2013) 358 ITR 593 (SC), RELIED ON BY REVENUE, THE HON'BLE COURT WHILE CONSIDERING THE PROVISIONS OF EXPLANATION 1 TO SECT ION 271(1)(C) OF THE ACT OBSERVED THAT THE GENERAL PRINCIPLES OF LAW IN RESP ECT OF PENALTY FOR CONCEALMENT OF INCOME, DOES NOT GRANT THE ASSESSEE IMMUNITY FROM PENALTY ON ACCOUNT OF SURRENDER OR VOLUNTARY DISCLOSURE OF INCOME. AS PER THE PROVISIONS OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT, THE QUESTION IS WHETHER THE ASSESSEE HAS OFFERED ANY EXPLANATION FO R CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE CASE ON HAND, WE FIND THAT THIS REQUIREMENT LAID DOWN BY THE HON'BLE APEX COURT HAS BEEN MET BY THE ASSESSEE. AS OBSERVED BY THE LEARNED CIT (A), THE ASSESSEES EXPLANATION BY SUBMITTING ITS LETTER DATED 30.07.20 12 SUO MOTO WITHDRAWING ITS CLAIM FOR INTEREST EXPENSES TO THE EXTENT OF ` 65,93,798/-, MISTAKENLY CLAIMED IN ITS COMPUTATION OF INCOME, RESULTING IN ENHANCED INCOME BEING OFFERED FOR A.Y. 2010-11; WELL BEFORE COMPLETION OF ASSESSMENT ORDER ON 18.01.2013 PROVES THAT ASSESSEE CANNOT BE SAID TO H AVE FURNISHED ITA NO. 1974/MUM/2015 M/S. VADINAR PROPERTIES LTD 6 INACCURATE PARTICULARS OF INCOME OR CONCEALED PARTI CULARS OF INCOME. IN THE LIGHT OF THE FACTUAL AND LEGAL MATRIX OF THE CASE O N HAND AS DISCUSSED IN PARAS 3.3.1 TO 3.3.3 (SUPRA) WE UPHOLD THE ORDER OF THE LEARNED CIT(A) IN HOLDING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT IN THE CASE ON HAND FOR A.Y. 2010-11 TO BE UNSUSTAINABLE AND IN DE LETING THE SAME. CONSEQUENTLY GROUNDS (I) TO (III) TO 3 RAISED BY RE VENUE ARE DISMISSED. 4. IN THE RESULT, REVENUES APPEAL FOR A.Y. 2010-11 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JANUARY, 2017. SD/ - SD/ - (SANDEEP GOSAIN) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 25 TH JANUARY, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -9, MUMBAI 4. THE CIT - 4, MUMBAI 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.