ANAND AUTOMOBILES, MUMBAI V. ACIT, CIRCLE 23(2), MUMBAI

ITA 2603/MUM/2009

• Counselvise Citation: 260319914 RSA 2009
• Duration Of Justice: 2 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-01-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 23-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BALAKRISHNA MENON
• Assessee Lawyers: SANTOSH PARAB
• Keywords: Notional interest; Set aside
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI R.V. EASWAR, PRESIDENT AND SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO. 2602 AND 2603/MUM./2009 (A.YS : 1999-2000 AND 2002-03 ) DATE OF HEARING: 14.6.2011 ANAND AUTOMOBILES C/O B.K. KHARE & COMPANY, C.AS 706/708, SHARDA CHAMBERS NEW MARINE LINES, MUMBAI 400 020 PAN AADFA9171D .. APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-23(2), MUMBAI .... RESPONDENT ASSESSEE BY : MR. SANTOSH PARAB REVENUE BY : MR. BALAKRISHNA MENON O R D E R PER J. SUDHAKAR REDDY, A.M. THESE APPEALS PREFERRED BY ASSESSEE, ARE DIRECTED A GAINST THE IMPUGNED COMMON ORDER DATED 29 TH JANUARY 2009, PASSED BY THE COMMISSIONER (APPEALS)-XXVIII, MUMBAI, FOR ASSESSME NT YEAR 1999-2000 AND 2002-03, WHEREIN THE FIRST APPELLATE AUTHORITY CONFIRMED THE PENALTY LEVIED ON THE ASSESSEE UNDER SECTION 271(1)(C) OF T HE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). ANAND AUTOMOBILES ITA NO.2602/MUM./2009 ITA NO.2603/MUM./2009 2 2. THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271(1)(C) ON AN ADDITION MADE UNDER THE HEAD INCOME FROM HOUSE PROPERTY WHEREIN THE ASSESSING OFFICER INCREASED ANNUAL VALUE BY 10% OF THE DEPOSIT HELD BY THE ASSESSEE. 3. IN APPEAL, THE FIRST APPELLATE AUTHORITY HELD THAT THE ASSESSING OFFICER WAS NOT ENTITLED TO ADD NOTIONAL INTEREST INCOME AS A PART OF ANNUAL VALUE. WHILE HOLDING SO, THE FIRST APPELLATE AUTHORITY HEL D THAT 8.5% OF THE TOTAL MARKET VALUE OF THE PROPERTY SHOULD BE ADOPTED AS A NNUAL VALUE. PENALTY UNDER SECTION 271(1)(C) WAS LEVIED ON THE DIFFERENC E BETWEEN THE ANNUAL VALUE DECLARED AND 8.5% OF THE TOTAL MARKET VALUE O F THE PROPERTY. 4. BEFORE US, THE LEARNED COUNSEL, MR. SANTOSH PARAB, ON BEHALF OF THE ASSESSEE, FILED A COPY OF AN ORDER PASSED BY MUMBAI G BENCH OF THE TRIBUNAL IN ITA NO.4151 AND 4057/MUM./2006, FOR ASS ESSMENT YEAR 1999- 2000, ITA NO.5284 AND 5241/MUM./2004, FOR ASSESSMEN T YEAR 2001-02, ORDER DATED 20 TH APRIL 2011, AND SUBMITS THAT THE TRIBUNAL HAD SET ASIDE THE MATTER TO THE FILE OF ASSESSING OFFICER FOR THE PUR POSE OF DETERMINING THE ANNUAL RENTAL VALUE IN THE LIGHT OF THE VARIOUS OBS ERVATIONS MADE BY THE TRIBUNAL. AS FAR AS NOTIONAL INTEREST ON INTEREST F REE SECURITY DEPOSIT IS CONCERNED, THE TRIBUNAL APPLIED THE FULL BENCH JUDG MENT OF THE HON'BLE DELHI HIGH COURT IN CIT V/S MONI KUMAR SUBBA & ORS., I.T. APPEAL NO.499/2008, VIDE JUDGMENT DATED 30 TH MARCH 2011, AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE LEARNED COUNSEL SUBMITS THAT THERE IS NO VALID ASSESSMENT ORDER AS ON DATE WARRANTING THE SUSTENANCE OF THE P ENALTY ORDER. 5. LEARNED DEPARTMENTAL REPRESENTATIVE, MR. BALAKRISHN A MENON, ON BEHALF OF THE REVENUE, THOUGH NO LEAVING HIS GROUND , ULTIMATELY SUBMITS THAT THE TRIBUNAL HAS SET ASIDE THE ORDER OF THE COMMISS IONER (APPEALS) IN QUANTUM PROCEEDINGS AND, HENCE, PENALTY HAS NO LEGS TO STAND. ANAND AUTOMOBILES ITA NO.2602/MUM./2009 ITA NO.2603/MUM./2009 3 6. IN VIEW OF THE ABOVE SUBMISSIONS, AS THERE IS NO AS SESSMENT ORDER IN EXISTENCE AS ON DATE, WE HOLD THAT THE PENALTY ORDE R HAS TO BE NECESSARILY CANCELLED. WE ORDER ACCORDINGLY. 7. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH JUNE 2011. SD/- R.V. EASWAR PRESIDENT SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 14 TH JUNE 2011 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, A BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI