RAJENDRA RATNA CO-OPERATIVE HOUSING SOCIETY LTD, MUMBAI V. ITO WD 24(3)(4), MUMBAI

ITA 2261/MUM/2010

• Counselvise Citation: 226119914 RSA 2010
• Duration Of Justice: 1 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 27-09-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 22-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C G K NAIR
• Keywords: Bonafide belief; Wrong claim; Difference of opinion; Ignorance of law; TDS
• Section: 271(1)(c); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER, A ND SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO. 2260 AND 2261/MUM./2010 (A.YS : 2003-04 AND 2004-05 ) RAJENDRA RATNA CO-OPERATIVE HOUSING SOCIETY LIMITED MAHESH NAGAR, S.V. ROAD GOREGAON (W), MUMBAI 400 062 PAN AAAAR1195A .. APPELLANT V/S INCOME TAX OFFICER WARD-24(3)(4), MUMBAI .... RESPONDENT ASSESSEE BY : MR. SAMEER DALAL A/W MR. KUNAL GOKHALE REVENUE BY : MR. C.G.K. NAIR DATE OF HEARING 07.12.2011 DATE OF ORDER 23.12.2011 O R D E R PER J. SUDHAKAR REDDY, A.M. THESE APPEALS PREFERRED BY THE ASSESSEE, ARE DIREC TED AGAINST THE IMPUGNED COMMON ORDER DATED 18 TH DECEMBER 2009, PASSED BY THE COMMISSIONER (APPEALS)-XXXIV, MUMBAI, FOR ASSESSMEN T YEARS 2003-04 AND 2004-05 RESPECTIVELY, WHEREIN THE FIRST APPELLATE H AS CONFIRMED THE PENALTY RAJENDRA RATNA CO-OPERATIVE HOUSING SOCIETY LIMITED ITA NO.2260-2261/M/2010 2 UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) IMPOSED BY THE ASSESSING OFFICER FOR BOTH THE YEARS UNDER ASSESSMENT. 2. BRIEF FACTS OF THE CASE, AS BROUGHT BY THE COMMISSI ONER (APPEALS) IN PARAS-3 AND 4 OF THE IMPUGNED ORDER, READ AS FOLLOW S:- 3. IN ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY AS SESSING OFFICER THAT THE APPELLANT HAS RECEIVED RENT FROM M/S. BPL COMMUNICATION LTD. AMOUNTING TO RS.2,77,550/- IN A.Y. 2003-04 AND RS.3 ,92,147/- IN A.Y. 2004-05 WHICH WAS NOT OFFERED FOR TAXATION. THESE A MOUNTS WERE TAXED IN BOTH THE YEARS BY THE ASSESSING OFFICER AN D THE ADDITION MADE BY ASSESSING OFFICER WERE CONFIRMED BY CIT(A) ON AG REED BASIS FOR WHICH THE APPELLANT HAS ALSO AGREED. PENALTY PROCEEDINGS WERE ALSO INITIATED IN THE ASSESSMENT ORDER AND AFTER RECEIPT OF CIT(A)S ORDER, SHOW-CAUSE NOTICE WAS ISSUED WHICH WAS SERVED ON TH E APPELLANT ON 25/08/2008. IN RESPONSE TO THIS, IT WAS EXPLAINED B EFORE THE ASSESSING OFFICER THAT THE TOWER WAS INSTALLED IN THE SOCIETY BUILDING AND MISCELLANEOUS INCOME WERE CONSIDERED BY FEW OF MEMB ERS AS NON- TAXABLE INCOME AND THERE WAS DIFFERENCE OF OPINION BETWEEN THE MEMBERS. SO, THE INCOME WAS NOT OFFERED FOR TAXATIO N. IT IS ALSO SUBMITTED THAT NO CONCEALMENT WAS DONE BY THE APPEL LANT AND THERE WAS NO DELIBERATE CONCEALMENT. SO, NO PENALTY SHOUL D BE IMPOSED, IT WAS PLEADED. 4. THIS EXPLANATION WAS NOT ACCEPTABLE TO THE ASSES SING OFFICER. THEREFORE, HE WAS OF THE VIEW THAT THE RENT FROM M/ S. BPL COMMUNICATION LTD. AND MISCELLANEOUS RECEIPTS WERE TAXABLE INCOME AND ADDITION WAS CONFIRMED BY THE CLT(A) WHICH HAS BEEN ACCEPTED BY THE APPELLANT. THE RENT WAS NOT COVERED UNDER THE P RINCIPLE OF MUTUALITY AND WAS TAXABLE IN THE HANDS OF THE APPEL LANT. THEREFORE, HE HAS LEVIED PENALTY FOR COMMITTING DEFAULT U/S 271(1 )(C) OF THE IT. ACT. 3. THE FIRST APPELLATE AUTHORITY CONFIRMED THE FINDING S OF THE ASSESSING OFFICER. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPE AL BEFORE THE TRIBUNAL. 4. LEARNED COUNSEL, MR. SAMEER DALAL, ON BEHALF OF THE ASSESSEE, SUBMITTED BEFORE US THAT THE PARTICULARS OF INCOME WERE DISCLOSED AND THERE IS NO CASE OF CONCEALMENT OR FURNISHING OF INACCURA TE PARTICULARS. HE FILED A COPY OF AUDITORS REPORT & ANNUAL ACCOUNTS AND ARGU ED THAT THE AUDITORS, IN THE INTERNAL AUDIT REPORT DATED 24 TH JULY 2002, HAVE, AT THE LAST PAGE, RECORDED THE OPINION OF THE SOCIETY THAT IT HAS NO TAX LIABILITY ON RENT RECEIVED FROM BPL COMMUNICATION LTD., AS WELL AS OTHER MISCE LLANEOUS RECEIPTS FOR THE RAJENDRA RATNA CO-OPERATIVE HOUSING SOCIETY LIMITED ITA NO.2260-2261/M/2010 3 ASSESSMENT YEAR 2003-04 AS WELL AS RENT RECEIVED FR OM TULIP FOR ASSESSMENT YEAR 2004-05. HE ARGUED THAT THE ASSESSEE SOCIETY W AS UNDER BONAFIDE BELIEF THAT NO INCOME TAX IS PAYABLE ON THESE RECEIPTS. HE POINTED OUT THAT THE TAX WAS DEDUCTED AT SOURCE BY THE PERSONS WHO PAID THE RENT AND THAT THE TDS WAS CLAIMED AS REFUND BY THE SOCIETY. THIS, AS PER THE COUNSEL, DEMONSTRATES THAT THE ASSESSEE HAD BONAFIDELY DECLARED ALL THE P ARTICULARS AS PER ITS UNDERSTANDING OF LAW. HE, ACCORDINGLY, PRAYED FOR R ELIEF. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE, MR. C.G.K. NAIR, ON BEHALF OF THE REVENUE, SUBMITTED THAT THE ASSESSEE OBTAINED L EGAL ADVISE FROM A REPUTED FIRM OF CHARTERED ACCOUNTANTS, AS IS EVIDEN T FROM THE INTERNAL AUDIT REPORT AND UNDER THESE CIRCUMSTANCES, THE CLAIM OF IGNORANCE OF LAW SHOULD NOT BE ACCEPTED. HE SUBMITTED THAT MAKING A FALSE C LAIM OR A PRIMA-FACIE UNACCEPTABLE CLAIM, AMOUNTS TO FURNISHING OF INACCU RATE PARTICULARS. 6. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON A PERUSAL OF THE P APERS ON RECORD, WE FIND THAT THE ASSESSEE, IN THIS CASE, HAS RECEIVED RENT FROM BPL COMMUNICATION LTD. AND FROM TULIP. THE UNDISPUTED FACT IS THAT, T HE RENT RECEIVED IS TAXABLE AND CANNOT BE CLAIMED AS EXEMPT ON PRINCIPLES OF MU TUALITY. THERE ARE CERTAIN OTHER MISCELLANEOUS RECEIPTS, THE DETAILS O F WHICH WERE NOT FULLY FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFI CER. THE ASSESSEE HAD THE BENEFIT OF LEGAL ADVISE FROM M/S. R. KABRA & CO., C HARTERED ACCOUNTANTS, WHO WERE THE INTERNAL AUDITORS. IN THE COMPUTATION OF I NCOME FILED ALONG WITH RETURN OF INCOME ENCLOSED, A NOTE THAT THE CONTRIBU TIONS RECEIVED ARE EXEMPT UNDER THE PRINCIPLES OF MUTUALITY. THERE IS NO COMM ENT ON THE ISSUE OF RENTS RECEIVED OR MISCELLANEOUS INCOME WHICH ARE NOT CONT RIBUTIONS FROM MEMBERS. ON THIS FACTUAL MATRIX, WE ARE NOT INCLINE D TO ACCEPT THE CONTENTIONS OF THE ASSESSEES COUNSEL THAT THE ASSE SSEE HAD BONAFIED IMPRESSION THAT THESE RECEIPTS ARE EXEMPT ON THE PR INCIPLES OF MUTUALITY. A PATENTLY WRONG CLAIM MADE AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS. THIS, IN OUR OPINION, IS A PATENTLY WRONG CLAIM AND HENCE FALLS WITHIN THE RAJENDRA RATNA CO-OPERATIVE HOUSING SOCIETY LIMITED ITA NO.2260-2261/M/2010 4 PARAMETERS OF FURNISHING OF INACCURATE PARTICULARS OF INCOME . IN THE LIGHT OF THE AFORESAID DISCUSSION, WE UPHOLD THE FINDINGS OF THE COMMISSIONER (APPEALS), AS CONTAINED IN PARA-6 OF THE ORDER PASS ED BY HIM, WHICH READS AS FOLLOWS:- 6. I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER AND SUBMISSIONS OF THE APPELLANT. THE EXPLANATION O FFERED BY THE APPELLANT IS NOT ACCEPTABLE BECAUSE IT WILL NOT MAK E ANY DIFFERENCE AS TO WHETHER IT IS A CASE OF CO-OP. HOUSING SOCIETY O R NOT. IN THE CASE OF CO-OP. HOUSING SOCIETY, IT WAS THE DUTY OF THE PRES IDENT & SECRETARY TO DISCLOSE FULL AND TRUE PARTICULARS OF INCOME. THE A RGUMENT THAT THERE WAS DISPUTE ABOUT PERMISSION GIVEN TO BPL COMMUNICA TION LTD. FOR INSTALLATION OF TOWER HAS NO RELEVANCE. THERE WAS N O AGREEMENT BETWEEN THE MEMBERS FOR TAXABILITY OF INCOME AND BE CAUSE OF DIFFERENCE OF OPINION, PROVISIONS OF LAW WILL NOT C HANGE AND THE INCOME-TAX AUTHORITIES ARE SUPPOSED TO IMPLEMENT TH IS AS PER THE STATUTE AND THE ASSESSEE IS BOUND TO COMPLY WHATEVE R MAY BE THEIR STATUS. IT IS AN ACCEPTED FACT THAT RENTAL INCOME W AS EARNED BY THE SOCIETY AND THE SAME WAS TAXABLE BUT NOT OFFERED FO R TAXATION. SO THE DECISIONS RELIED BY THE APPELLANT SUCH AS ITO V/S S ADHU SIGH & SONS 73 LTD 15 AND SUGAR & GENERAL MILLS LIMITED VS CIT 64 CTR (SC) 199 & 168 ITR 705 (SC) IS ALSO NOT APPLICABLE ON THE FACT S ON THE APPELLANTS CASE. SO IN VIEW OF THE AFORESAID FACTS, I AM OF TH E VIEW THAT THE ASSESSING OFFICER IS FULLY JUSTIFIED IN IMPOSING PE NALTY OF RS.1 12,093/- & RS.88,581/- FOR A.YS. 2003-04 & 2004-05 RESPECTIV ELY FOR CONCEALMENT OF INCOME AND FOR COMMITTING DEFAULT U/ S. 271(1)(C) OF THE IT. ACT, 19761. 7. THUS, THE GROUND RAISED BY THE ASSESSEE FOR BOTH TH E YEARS UNDER ASSESSMENT, ARE DISMISSED. 8. IN THE RESULT, ASSESSEES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.12.2011 SD/- V. DURGA RAO JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 23 RD DECEMBER 2011 RAJENDRA RATNA CO-OPERATIVE HOUSING SOCIETY LIMITED ITA NO.2260-2261/M/2010 5 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, D BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI DATE INITIAL 1. DRAFT DICTATED ON 14.12.2011 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 16.12.2011 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 20.12.2011 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 20.12.2011 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 20.12.2011 SR.PS 6. DATE OF PRONOUNCEMENT 23.12.2011 SR.PS 7. FILE SENT TO THE BENCH CLERK 2912.2011 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER