Shri Shyamal Dhar, Kolkata V. DCIT, Circle - 49, Kolkata, Kolkata

ITA 2154/KOL/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7651 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2012
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 02-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 02-12-2010
• Court: TRIBUNAL
• Department Lawyers: P S DUTTA
• Assessee Lawyers: S K TULSIYAN
• Keywords: Business income; Condonation of delay
• Section: 147

Judgement Text

1 , B , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- B, KOL KATA [ , . .. . ! ! ! !. .. . , , , , '# ] BEFORE SRI N.VIJAYAKUMARAN, JUDICIAL MEMBER & SRI C.D. RAO, AC COUNTANT MEMBER $ $ $ $ / ITA NO. 2154 (KOL) OF 2010 %& '( / ASSESSMENT YEAR 2005-06 SHRI SHYAMAL, DHAR. KOLKATA, (PAN-ADOPD6771E) DY.COMMISSIONER OF INCOME-TAX CIRCLE-49, KOLKATA. (+, / APPELLANT ) - - - VERSUS - (/0+,/ RESPONDENT ) +, 1 2 '/ FOR THE APPELLANT: / SRI S.K.TULSIYAN /0+, 1 2 ' / FOR THE RESPONDENT: / SRI P.S. DUTTA 3 1 !# / DATE OF HEARING : 27/12/2011 4' 1 !# / DATE OF PRONOUNCEMENT : 06/01/2012 '5 / ORDER ( ), (N. VIJAYAKUMARAN), JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. C.I.T.(A)- XXXII, KOLKATA DATED 20/5/2010. THE ASSESSMENT YEA R INVOLVED IS 2005-06. 2. AT THE OUTSET WE OBSERVE THAT THE APPEAL BY THE ASSESSEE IS LATE BY 143 DAYS. THE ASSESSEE HAS FILED A PETITION SEEKING CONDONATI ON OF THE SAID DELAY AND EXPLAINED THE CAUSE OF SUCH DELAY. ACCORDING TO THE ASSESSEE, AL L THE INCOME-TAX MATTERS WERE BEING LOOKED AFTER BY A TAX PRACTITIONER, SRI UTTAM ROY, WHO DUE TO HIS ILL HEALTH FAILED TO REPRESENT THE CASES OF THE ASSESSEE BEFORE THE DEPA RTMENT DURING THE PERIOD FROM JUNE, 2009 TO SEPTEMBER, 2010. ON GETTING THE PENA LTY ORDER RAISING HEAVY DEMAND, WHICH WAS SUSTAINED BY THE LD. C.I.T.(A), THE ASSES SEE WAS CONFOUNDED AND AT A LOSS ABOUT COURSE OF ACTION ON HIS BEHALF. THE ASSESSEE ALSO FILED AN AFFIDAVIT FROM THE TAX PRACTITIONER SRI UTTAM ROY AFFIRMING THAT HE DOES N OT REPRESENT OTHER ASSESSEES BEFORE THE DEPARTMENT AND THERE WAS SOME INADVERTENT OMISS ION/FAILURE/DEFAULT IN TAKING APPROPRIATE COURSE OF ACTION IN THE MATTER OF THE A SSESSEE. THE ASSESSEE COME ACROSS THE PRESENT LAWYER AND ON PROPER ADVICE RECEIVED FR OM HIM, THE INSTANT APPEAL WAS FILED AND IN DUE COURSE IT WAS DELAYED. THE LEARNED COUNS EL OF THE ASSESSEE SUBMITTED THAT DUE TO ERSTWHILE TAX PRACTIONERS FAILURE/OMISSION TO L OOK INTO THE MATTER, THE DELAY WAS 2 CAUSED. HE FURTHER SUBMITTED THAT NO LITIGANT DOES STAND TO BENEFIT BY LODGING AN APPEAL LATE WHEN THERE IS DEMAND AND PENALTY IMPOSED. THE REFORE, THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM FILING THE APPEAL IN TIME. THE REASONS ALSO AFFIRM THAT THERE WAS NO WILLFUL NEGLIGENCE OR MALAFIDES ON THE PART OF THE ASSESSEE. FURTHER, CONSEQUENCES OF APPROPRIATE ACTION OF THE ERSTWHILE TAX PRACTITI ONER SHOULD NOT BE VISITED ON THE ASSESSEE. THE LEARNED COUNSEL, THEREFORE, PRAYED F OR CONDONATION OF DELAY AND ADMISSION OF THE APPEAL FOR DISPOSAL ON MERITS. 2.1. WE HAVE HEARD THE PARTIES AND GONE THROUGH TH E CONDONATION PETITION AND THE AFFIDAVIT OF SRI UTTAM ROY, TAX PRACTITIONER. THE HONBLE SUPREME COURT IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI & ORS. [167 I.T.R. 471 (SC)] HAS DIRECTED TO ADOPT A PRAGMATIC AND LIBERAL APPROACH WHILE CONSID ERING THE PETITION FOR CONDONATION OF DELAY. WE, THEREFORE, RESPECTFULLY RELYING UPON TH E ABOVE DECISION OF HONBLE SUPREME COURT AND CONSIDERING THE FACTS OF THE CASE DEEM IT PROPER TO CONDONE THE DELAY OF 143 DAYS IN RESPECT OF THE APPEAL BEFORE US AND ADMIT T HE SAME FOR HEARING ON MERITS. 3. THE ASSESSEE FILED RETURN FOR THE ASSESSMENT YE AR UNDER CONSIDERATION SHOWING INCOME OF RS.11,69,732/-, WHEREIN THE RENTAL INCOME DERIVED FROM HIS PROPRIETORSHIP CONCERN, M/S. NAVNIRMAN, HAS BEEN SHOWN AS BUSINESS INCOME. THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT. THEREAFTER THE CASE WAS RE OPENED U/S. 147 OF THE ACT AND THE ASSESSMENT WAS FINALIZED U/S. 143(3)/147 OF THE ACT ON A TOTAL INCOME OF RS.12,74,830/-. ACCORDING TO THE ASSESSEE, A FLAT ON THE TOP FLOOR OF BUILDING AT 136, BANGUR AVENUE, KOLKATA WAS CONSTRUCTED BY THE ASSESSEES PROPRIETO RSHIP CONCERN M/S. NAVNIRMAN AND AFTER FURNISHING THE FLAT, THE SAME WAS CONVERTED I NTO A COMMERCIAL UNIT AND USED AS GUEST HOUSE. FURTHER, PART OF THE SAME BUILDING WA S THE PROPERTY OF SREMAN GUEST HOUSE UNDER THE ASSESSEES PROPRIETORSHIP. THE ASS ESSEE CLAIMED THE RENTAL INCOME FROM THESE GUEST HOUSES AS HIS BUSINESS INCOME AND SHOWN ACCORDINGLY IN THE COMPUTATION OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE LD. A.O., HOWEVER, TREATED THE RENTAL INCOME AS INCOME FROM HOUSE PROPERTY, WHICH HAS RESULTED IN ESCAPEMENT OF INCOME CHARGEABLE TO TAX BY RS.1,85,512/- AND TAX T O THE EXTENT OF RS.62,443/-. ON THESE FACTS, THE LD. A.O. HELD THAT THE ASSESSEE HA S FURNISHED INACCURATE PARTICULARS BY SHOWING HOUSE PROPERTY INCOME AS BUSINESS INCOME AN D THUS LEVIED PENALTY U/S. 271(1)(C) OF THE ACT OF RS.62,443/-. THE LD. C.I.T.(A), ON A PPEAL, UPHELD THE LEVY OF PENALTY. 3 4. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL PLACED ON RECORD. IN THIS CASE THE PENALTY U/S. 271(1)(C) OF THE ACT HAS BEEN IMPOSED ON THE SOLE GROUND THAT THE RENTAL INCOME FROM ASSESSEES GUEST HOUSE SHOWN AS BUSINESS INCOME HAS BEEN TREATED AS BUSINESS INCOME BY THE LD. A.O., WHICH ACCORDING TO HIM LED TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE COMPUTATION OF INCOM E FILED ALONG WITH THE RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE H AS SHOWN THE RENTAL INCOME AS BUSINESS INCOME. THEREFORE, THE INFORMATION/PARTIC ULARS OF SUCH INCOME WERE WELL AVAILABLE WITH THE DEPARTMENT DURING ASSESSMENT PRO CEEDINGS. IN ORDER TO ESTABLISH INACCURATE PARTICULARS, IT MUST MEAN THAT THE DET AILS SUPPLIED IN THE RETURN ARE NOT ACCURATE AND NOT ACCORDING TO TRUTH OR ERRONEOUS. IN THIS CASE, THERE IS NO FINDING OF THE AUTHORITIES BELOW THAT THAT ANY DETAILS IN RESPECT OF RENTAL INCOME SUPPLIED BY THE ASSESSEE IN HIS RETURN WERE FOUND TO BE INCORRECT O R ERRONEOUS OR FALSE. THEREFORE, SUCH NOT BEING THE CASE, IN OUR OPINION, THERE REMAINS N O SCOPE TO ATTRACT PENAL PROVISION U/S. 271(1)(C) OF THE ACT. IT IS AN ESTABLISHED POSITIO N THAT A MERE MAKING OF THE CLAIM, EVEN IF IT IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. ADMITTEDLY, THE DETAILS/DOCUMENTS FURNISHED BY THE ASSESSEE IN RESPECT OF HIS RENTAL INCOME WERE NOT FOUND TO BE FALSE OR INACCURATE AND HENCE COULD NOT BE VIEWED AS THE CON CEALMENT OF INCOME ON THE PART OF THE ASSESSEE SO AS TO ATTRACT SEC. 271(1)(C) OF THE ACT. IN THIS CONNECTION, WE MAY REFER TO THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD. [(2010) 322 ITR 158 (SC)]. 4.1. FURTHER, THE DEEMING FICTION OF EXPLANATION 1 TO SEC. 271(1)(C) OF THE AT APPLIES ONLY WITH RESPECT TO FACTS MATERIAL TO THE COMPUTA TION OF INCOME AND NOT WITH THE COMPUTATION PER SE. THE FICTION DOES NOT APPLY WHER E THE CONTROVERSY IS REGARDING THE LEGALITY OF THE CLAIM MADE BY THE ASSESSEE. WHEN TH E ASSESSEE OFFERS AN EXPLANATION IN DISCHARGE OF THE ONUS CAST UPON HIM BY EXPLANATION 1 TO S. 271(1)(C) OF THE ACT, THE LD. A.O. MUST CONSIDER THE EXPLANATION OBJECTIVELY AND UNLESS HE FINDS THE SAME AGAINST THE HUMAN PROBABILITIES OR UNLESS THERE ARE ANY REAL IN CONSISTENCIES OR FACTUAL ERRORS IN SUCH AN EXPLANATION, THE LD. A.O. OUGHT TO ACCEPT THE SA ME. THE ASSESSEE CANNOT BE EXPECTED TO PROVE THE CLAIM OF BONA FIDES TO THE HILT. ON TH E FACTS AND CIRCUMSTANCES OF THE CASE, THE STATUTORY PRESCRIPTION TO ATTRACT THE PENAL PRO VISIONS U/S. 271(1)(C) OF THE ACT FOR 4 FURNISHING OF INACCURATE PARTICULARS IS CLEARLY ABS ENT IN THE INSTANT CASE IN VIEW OF THE POSITION AS SETTLED IN THE CASE OF KANBAY SOFTWARE INDIA (P) LTD. VS. DCIT [31 SOT 153- ITAT, PUNE] AS UNDER: THE EXPRESSION FURNISHING OF INACCURATE PARTICULA RS OF INCOME IMPLIES FURNISHING OF DETAILS OR INFORMATION ABOUT INCOME WHICH ARE NO T IN CONFORMITY WITH THE FACTS OR TRUTH. IT DOES NOT EXTEND TO SUBJECTIVE AREAS SU CH AS THE TAXABILITY OF INCOME, ADMISSIBILITY OF A DEDUCTION AND INTERPRETATION OF LAW. THE MAKING OF AN INCORRECT CLAIM DOES NOT AMOUNT TO FURNISHING INACCURATE PART ICULARS; THE DEEMING FICTION OF EXPLANATION 1 TO S. 271 (1)(C) APPLIES ONLY WITH RE SPECT TO FACTS MATERIAL TO THE COMPUTATION OF INCOME AND NOT WITH THE COMPUTATION PER SE. IN VIEW OF OUR DISCUSSIONS HEREINABOVE, AND MOST RE SPECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS REFERRED TO ABOVE, WE FIND NO JUSTIFICAT ION FOR THE IMPOSITION OF PENALTY U/S. 271(1)(C) OF THE ACT IN THE INSTANT CASE OF THE ASS ESSEE. THAT BEING SO, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE AND C ANCEL THE PENALTY OF RS.62,443/- IMPOSED U/S. 271(1)(C) OF THE ACT. 5. IN THE RESULT, THE ASSESSEES APPEAL FOR A.Y. 2 005-06 IS ALLOWED. 6 '5 #' 7 8 69 THIS ORDER IS PRONOUNCED IN THE COURT ON 06/JAN/XII SD/- SD/- ( . .. . ! ! ! !. .. . ) '# ( ) (C.D. RAO), ACCOUNTANT MEMBER (N.VIJAYAKUMARAN) JUDICIAL MEMBER ( (( (!# !# !# !#) )) ) DATE: 06-01-2012 '5 1 /%% :'';- COPY OF THE ORDER FORWARDED TO: 1. +, / THE APPELLANT : SHRI SHYAMAL DHAR, 165/1, BANGUR AVENUE, BLOCK-A, KOLKATA-700 055. 2 . /0+, / THE RESPONDENT : THE D.C.I.T., CIRCLE-49, KOLKATA 3. %5 () : THE CIT(A)-XXXII, KOLKATA 4. %5 / THE C.I.T., KOL , KOLKATA. 5. >%8 /% / DR, ITAT, KOLKATA BENCHES, KOLKATA 6. GUARD FILE . 0 /%/ TRUE COPY, '5/ BY ORDER, (DKP) ASSTT. REGISTRAR .