UMG Properties Pvt.Ltd, New Delhi V. ACIT, Circle-27(1), New Delhi

ITA 2267/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1952 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2015-2016
• Appeal Filed On: 14-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Difference of opinion
• Section: 271(1)(c)

Judgement Text

1 ITA NO. 2267/DEL/2019 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: I(2) + SM C 1 NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEM BER, AND SHRI PRASHANT MAHARISHI, ACCOU NTANT MEMBER ITA NO. 2267/DEL/2019 ( A.Y 2015-16) UMG PROPERTIES PVT. LTD. A-60, NARAINA INDUSTRIAL AREA, PHASE-1 NEW DELHI PIN: 110028 AAACU9679G (APPELLANT) VS ACIT CIRCLE-27(1) NEW DELHI (RESPONDENT) APPELLANT BY NONE RESPONDENT BY SH. PRADEEP SINGH GAUTAM, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 14/1/2019 PASSED BY CIT(A)- 28, NEW DELHI FOR ASSESSMENT YEA R 2015-16. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THE LD. CIT(A) HAS WRONGLY CONCLUDED THAT TH E APPELLATE WILLFULLY AND DELIBERATELY CONCEALED ITS INCOME. THE CONCLUSION IS INCORRECT BOTH ON FACTS AND IN LAW AND HENCE THE PENALTY U/S 271(1)(C) NEED S TO BE DELETED. 3. IN THIS CASE, ASSESSMENT PROCEEDINGS COMPLETED BY ASSESSING OFFICER ON 6/12/2017 DETERMINING THE LOSS OF RS, 11,36,532/- AGAINST THE RETURNED LOSS DATE OF HEARING 05.03.2020 DATE OF PRONOUNCEMENT 04 .05.2020 2 ITA NO. 2267/DEL/2019 OF RS. 98,30,697/- DECLARED BY ASSESSEE IN THE RETU RN FILED ON 29.09.2015. DURING THE ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE COMPANY HAS CLAIMED EXPENSES UNDE R THE HEAD FINANCE COST AMOUNTING TO RS. 86,94,165/- CONSISTING OF INTEREST EXPENSES OF RS. 74,02,025/- AND LOAN PROCESSING FEES OF RS. 12,92,1 40/-. THE ASSESSING OFFICER ASKED THE ASSESSEE TO JUSTIFY THE CLAIM OF EXPENSES, TO WHICH IT WAS REPLIED THAT THE ASSESSEE COMPANY HAD TAKEN LOAN AG AINST PROPERTY FROM M/S. HERO FINCORP LTD. AND PAID INTEREST THEREON AND CAP ITALIZED THE SAID EXPENDITURE UPTO THE DATE OF ACQUISITION WHICH AMOU NTED TO RS. 14,84,895/- BUT INADVERTENTLY IN THE RETURN RS. 85,05,595/- WAS CLAIMED AS INTEREST. HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCED WI TH THE EXPLANATION OF ASSESSEE ON THE GROUND THAT THE ASSESSEE COMPANY WA S NOT CARRYING ON ANY BUSINESS ACTIVITY DURING THE YEAR AS WELL AS IN EAR LIER YEARS, THEREFORE, EXPENSES CLAIMED BY IT CANNOT BE ALLOWED. THEREFORE , THE ASSESSING OFFICER DISALLOWED THE TOTAL EXPENSES AMOUNTING TO RS. 86,9 4,165/- AND ADDED BACK TO THE INCOME OF THE ASSESSEE. AGAINST THE SAID DIS ALLOWANCE BY THE ASSESSING OFFICER, NO APPEAL WAS FILED BY ASSESSEE. IN THE ME ANWHILE, THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS U/S 271(L )(C) OF THE ACT AND PROVIDED OPPORTUNITY TO ASSESSEE BY ISSUING THE NOTICE UNDER THE SAID SECTION. HOWEVER, INITIALLY THE ASSESSEE FAILED TO AVAIL THE OPPORTUN ITY BUT SUBSEQUENTLY EXPLAINED THAT IT WAS MERELY DIFFERENCE OF OPINION AND THEREFORE, PENALTY IS NOT LEVIABLE IN ITS CASE. THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE AND AFTER CONSIDERING T HE MERIT OF THE ADDITIONS AND RELYING ON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. ZOOM COMMUNICATION PVT. LTD. ALONGWITH OTHER DECISI ONS OF DIFFERENT COURTS, CONCLUDED THAT THE ASSESSEE HAS FURNISHED INACCURAT E PARTICULARS OF INCOME LEADING TO THE CONCEALMENT OF INCOME TO THE EXTENT OF RS. 86,94,165/- AND IMPOSED THE PENALTY OF RS. 26,86,497/-, BEING 100% OF THE TAX SOUGHT TO BE EVADED ON THE ABOVE INCOME AND PASSED THE ORDER. 3 ITA NO. 2267/DEL/2019 4. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSES SEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASS ESSEE. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE AND THER E IS NO ADJOURNMENT APPLICATION ON BEHALF OF THE ASSESSEE. THE NOTICE HAS BEEN SERVED TO THE ASSESSEE. THEREFORE, WE ARE TAKING UP THE SUBMISSI ONS OF THE ASSESSEE BEFORE THE CIT(A) AS WELL AS BEFORE THE ASSESSING OFFICER . 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER, PEN ALTY ORDER AND THE ORDER OF THE CIT(A). 7. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIA L AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT IN THIS CASE, THE ASSE SSEE COMPANY HAD TAKEN LOAN AGAINST PROPERTY FROM M/S. HERO FINCORP LTD. AND PA ID INTEREST THEREON AND CAPITALIZED THE SAID EXPENDITURE UPTO THE DATE OF A CQUISITION WHICH AMOUNTED TO RS. 14,84,895/- BUT INADVERTENTLY IN THE RETURN RS. 85,05,595/- WAS CLAIMED AS INTEREST. HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE EXPLANATION OF ASSESSEE MERELY ON THE GROUND THAT T HE ASSESSEE COMPANY WAS NOT CARRYING ON ANY BUSINESS ACTIVITY DURING THE YE AR AS WELL AS IN EARLIER YEARS, THEREFORE, EXPENSES CLAIMED BY IT CANNOT BE ALLOWED . THEREFORE, THE ASSESSING OFFICER DISALLOWED THE TOTAL EXPENSES AMOUNTING TO RS. 86,94,165/- AND ADDED BACK TO THE INCOME OF THE ASSESSEE. THIS DOES NOT A MOUNT TO FURNISHING OF INACCURATE INCOME OR CONCEALMENT OF INCOME AS ENVIS AGED IN SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. THE ASSESSEE HAS EXPLA INED BEFORE THE ASSESSING OFFICER AND THE CIT(A), THAT THE BUSINESS ACTIVITY OF THE ASSESSEE IS INVESTMENT IN REAL ESTATE BUSINESS AND THE SAME CONSTITUTES TH E BUSINESS ACTIVITY. THE ASSESSING OFFICER AS WELL AS THE CIT(A) ONLY PROCEE DED ON THE BASIS THAT THERE WAS NO INCOME DURING THE YEAR THEREFORE THERE IS NO BUSINESS ACTIVITY, BUT THE SAME IS FALLACY AND CANNOT BE TAKEN AS THE BASIS FO R IMPOSING THE PENALTY. THUS, PROVISIONS OF SECTION 271(1)(C) ARE NOT APPLI CABLE IN THE PRESENT CASE. HENCE, THE PENALTY ORDER DOES NOT SUSTAIN. THE APPE AL OF THE ASSESSEE IS ALLOWED. 4 ITA NO. 2267/DEL/2019 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THIS 04 TH DAY OF MAY, 2020. SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED: 04/05/2020 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 5 ITA NO. 2267/DEL/2019 DATE OF DICTATION 18.03.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 18.03.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 1 3 .0 5 .2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1 3 .0 5 .2020 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER