GOODDEAL INVESTMENTS & FINANCE P. LTD, MUMBAI V. ITO 8(10(4), MUMBAI

ITA 2613/MUM/2010

• Counselvise Citation: 261319914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 06-04-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 05-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK PER R K
• Keywords: Capital asset; Business income; Revised return
• Section: 271(1)(c); 14A

Judgement Text

1 ITA NO.2613/MUM/2010 IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI G GG G BENCH BENCH BENCH BENCH MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI BEFORE BEFORE BEFORE BEFORE SHRI D MANMOHAN, VP & SHRI D MANMOHAN, VP & SHRI D MANMOHAN, VP & SHRI D MANMOHAN, VP & SHRI R K PANDA, AM SHRI R K PANDA, AM SHRI R K PANDA, AM SHRI R K PANDA, AM ITA NO. ITA NO. ITA NO. ITA NO.2613/MUM/2010 2613/MUM/2010 2613/MUM/2010 2613/MUM/2010 (ASST YEAR (ASST YEAR (ASST YEAR (ASST YEAR 2004 2004 2004 2004- -- -05 0505 05) )) ) GOODDEAL INVESTMENTS & FINANCE P LTD ATLANTYA ARCADE ANDHERI KURLA ROAD MAROL, ANDHYERI (E) MUMBAI 59 VS THE INCOME TAX OFFICER WARD 8(10(4), MUMBAI ( (( (APPELLANT APPELLANT APPELLANT APPELLANT) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO.AABCG3209K AABCG3209K AABCG3209K AABCG3209K A SSESSEE BY SHRI K SHIVRAM & AJAY SINGH REVENUE BY SHRI A K NAYAK PER R K PANDA, AM PER R K PANDA, AM PER R K PANDA, AM PER R K PANDA, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 8.1.2010 OF THE CIT(A)-16, MUMBAI RELATING TO ASSES SMENT YEAR 2004-05. 2 THE ASSESSEE IN ITS GROUNDS OF APPEAL HAS CHALLEN GED THE ORDER OF THE CIT(A) IN CONFIRMING THE PENALTY OF RS. 7,94,610/- LEVIED BY THE ASSESSING OFFICER U/S 271(1)( C) OF THE I T ACT. 2.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SEE IS ENGAGED IN THE BUSINESS OF INVESTMENT AND FINANCE. WHILE GOING TH ROUGH THE RETURN OF INCOME, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS R ECEIVED AN AMOUNT OF RS.22,14,944/- AS INTEREST ON INCOME TAX REFUND. TH E ASSESSEE CONSIDERED THIS INCOME AS BUSINESS INCOME INSTEAD OF OFFERING THI S INCOME TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. ON BEING QUESTIO NED BY THE ASSESSING OFFICER TO EXPLAIN AS TO THE ALLOWABILITY OF THIS INCOME AS BUSINESS INCOME AND SET OFF 2 ITA NO.2613/MUM/2010 OF BROUGHT FORWARD LOSS OF EARLIER YEARS AGAINST THE INCOME ARISING FROM INTEREST ON INCOME TAX REFUND OF RS. 22,14,944/-, THE ASSESS EE EXPLAINED THAT THE SAME HAS BEEN OFFERED FOR TAXATION AS BUSINESS INCOME. HOWEVER, THE ASSESSEE AGREED THAT THE SAME MAY BE TREATED AS INCOME FROM OTHER SOURCES AND REQUESTED THAT NO ADVERSE ACTION SHOULD BE TAKEN IN THIS REGARD. THE ASSESSING OFFICER, ACCORDINGLY REDUCED AN AMOUNT OF RS. 22,14 ,944/- FROM THE BUSINESS INCOME AND ADDED THE SAME TO THE TOTAL INCOME AS INCOME FROM OTHER SOURCES. THE ASSESSEE DIDNT PREFER ANY APPEAL AG AINST THE SAME. THE ASSESSING OFFICER, THEREAFTER INITIATED PROCEEDINGS U/S 271(1)( C) OF THE I T ACT. 2.2 THE ASSESSEE MADE A DETAILED SUBMISSION BEFORE THE ASSESSING OFFICER AND RELIED ON CERTAIN DECISIONS. HOWEVER, THE ASSESSIN G OFFICER WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE HELD THA T PENALTY U/S 271(1)( C) IS LEVIABLE NOT ONLY FOR CONCEALING THE INCOME BUT A LSO FOR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME. IN THE INSTANT CASE, T HE ASSESSEE, BY FURNISHING INACCURATE PARTICULARS OF ITS INCOME, HAS TRIED TO GET UNDUE BENEFIT. HAD THE ASSESSEES CASE NOT BEEN SELECTED FOR SCRUTINY, THE ASSESSEE COULD HAVE BENEFITED BY FILING SUCH INACCURATE PARTICULARS OF INCOME. THE ASSESSEE TOOK A CHANCE WITH THE DEPARTMENT. HAD THE REVENUE NOT D ETECTED THE INACCURATE PARTICULARS OF INCOME OF THE ASSESSEE, THE ASSESSEE COULD HAVE ENJOYED THE FRUITS. HE DISTINGUISHED THE VARIOUS DECISIONS CIT ED BEFORE HIM. REJECTING THE EXPLANATION GIVEN BY THE ASSESSEE AND HOLDING THAT THE ASSESSEE HAS MADE A DELIBERATE ATTEMPT TO DEFRAUD THE REVENUE, THE ASSE SSING OFFICER LEVIED RS. 7,94,610/- BEING MINIMUM PENALTY U/S 271(1)( C ) OF THE ACT. 3 IN APPEAL, THE CIT(A) RELYING ON THE DECISIONS OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF H V VENUGOPAL CHETTIAR VS CIT REPORTED IN 143 ITR 376 AND 3 ITA NO.2613/MUM/2010 THRIPATHY KUMAR KHEMKA VS CIT REPORTED IN 291 ITR 1 22 (MAD) THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF P C JO SEPH & BROS VS CIT REPORTED IN 240 ITR 818 AND THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V CHEMIEQUIP LTD REPORTED IN 265 ITR 265 (BOM) UPHELD THE ACTION OF THE ASSESSING OFFICER IN LEVYING PENALTY U/S 271(1)( C) OF THE ACT. THE LD CIT(A) ALSO RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILE REPORTED IN 295 ITR 294. 4 AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSE SSEE IS IN APPEAL HERE BEFORE US. 5. THE LD COUNSEL FOR THE ASSESSEE, REFERRING TO PA GE 19 OF THE PAPER BOOK, DREW THE ATTENTION OF THE BENCH TO THE DISCLOSURE O F INTEREST ON INCOME TAX REFUND OF RS. 22,14,944/- IN THE P&L ACCOUNT. REFE RRING TO PAGE 2 OF THE PAPER BOOK, HE SUBMITTED THAT THE COMPANY HAS HUGE BROUGH T FORWARD LOSS OF RS. 7,79,31,275/-. 5.1 REFERRING TO PAGE 29 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE REPLY GIVEN BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS REGARDING THE TREATMENT OF SUCH INTERES T INCOME AS BUSINESS INCOME. HE SUBMITTED THAT THE ASSESSEE, UNDER BONA FIDE BELIEF, HAS CLAIMED THE INTEREST ON INCOME TAX REFUND AS BUSINESS INCOME. THE DISCLOSURE OF SUCH INTEREST, IN THE AUDITED ACCOUNTS AS BUSINESS INCO ME WAS NOT INTENTIONAL. SINCE THE ASSESSEE IS AN INVESTMENT COMPANY AND THE INTER EST INCOME WAS DULY DISCLOSED IN THE P&L ACCOUNT AND SINCE ASSESSEE AGR EED BEFORE THE ASSESSING OFFICER FOR THE TREATMENT OF THE SAME AS BUSINESS INCOME AND SINCE THE 4 ITA NO.2613/MUM/2010 ASSESSEE HAS NOT INTENTIONALLY CONCEALED ANY INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME; THEREFORE, PENALTY SHOULD NO T BE LEVIED. 5.2 REFERRING TO THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS (P) LTD REPORTED IN 322 I TR 158/230 CTR 320, HE SUBMITTED THAT THE HONBLE SUPREME COURT IN THE SAI D DECISION HAS HELD THAT MERELY BECAUSE THE ASSESSEE HAS CLAIMED DEDUCTION O F INTEREST EXPENDITURE WHICH HAS NOT BEEN ACCEPTED BY THE REVENUE, PENALTY UNDER S. 271(1)(C) IS NOT ATTRACTED. A MERE MAKING OF THE CLAIM, WHICH IS NO T SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULAR S REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AM OUNT TO FURNISHING OF INACCURATE PARTICULARS. 5.3 REFERRING TO THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS JMD ADVISORS P LTD REPORTED IN 310 ITR 280 (AT), HE SUBMITTED THAT A MERE CHANGE OF HEAD OF INCOME BY THE ASSESSING OFFI CER IN THE ASSESSMENT CANNOT BE CONSTRUED AS CONCEALMENT AS ENVISAGED IN SEC. 271(1)( C) OF THE I T ACT, 1961 SO AS TO ATTRACT THE PENAL PROVISIONS THE REIN. HE ACCORDINGLY SUBMITTED THAT THE PENALTY LEVIED BY THE ASSESSING OFFICER AN D SUSTAINED BY THE CIT(A) SHOULD BE DELETED. 5.4 THE LD DR, ON THE OTHER HAND, STRONGLY RELIED O N THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE ASSESSEE HAS DELIBERATELY CLAIME D SET OFF OF BROUGHT FORWARD BUSINESS LOSS FROM THE INTEREST INCOME BY TREATING THE SAME AS BUSINESS INCOME. 5.5 THE LD COUNSEL FOR THE ASSESSEE IN HIS REJOINDE R DREW THE ATTENTION OF THE BENCH TO THE LAST PARA AT PAGE 165 OF THE ORDER OF THE HONBLE SUPREME COURT IN 5 ITA NO.2613/MUM/2010 THE CASE OF RELIANCE PETROPRODUCTS P LTD (SUPRA). HE FURTHER SUBMITTED THAT FULL DETAILS WERE GIVEN IN THE RETURN AND THE MISTAKE WA S ALSO ADMITTED BEFORE THE ASSESSING OFFICER; THEREFORE, NO ADVERSE ACTION SHO ULD HAVE BEEN TAKEN UNDER THE FACTS OF THE CASE. 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS OF BOTH T HE PARTIES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIO US DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE H AS SHOWN INTEREST ON INCOME TAX REFUND OF RS. 22,14,944/- IN THE P&L ACCOUNT AN D THE SAID INTEREST INCOME HAS BEEN INCLUDED IN THE BUSINESS INCOME OF THE ASSESSE E WHICH HAS BEEN SET OFF AGAINST THE BROUGHT FORWARD BUSINESS LOSSES. WE FI ND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ONLY AFTER BEING QUESTIONED BY THE ASSESSING OFFICER TO EXPLAIN THE JUSTIFICATION OF THE SAME THAT THE ASSE SSEE ADMITTED THE MISTAKE AND REQUESTED THE ASSESSING OFFICER TO TREAT THE SAME A S INCOME FROM OTHER SOURCES. 6.1 IT IS THE CASE OF THE REVENUE THAT BY CLAIMING SUCH INTEREST INCOME AS BUSINESS INCOME INSTEAD OF TREATING THE SAME AS INCOME FROM OTHER SOURCES, THE ASSESSEE TRIED TO TAKE UNDUE ADVANTAGE OF SETTI NG OFF OF BROUGHT FORWARD BUSINESS LOSS. HAD THERE BEEN NO DETECTION BY THE D EPARTMENT THE ASSESSEE COULD HAVE ENJOYED THE FRUITS. WE ARE IN AGREEMENT WITH THE ABOVE SUBMISSION OF THE LD. D.R. IN THIS CASE, THE ASSESSEE IS A LIMIT ED COMPANY. ITS ACCOUNTS ARE AUDITED BOTH UNDER THE COMPANIES ACT AND AS PER THE PROVISIONS OF SECTION 44AB OF THE INCOME TAX ACT, 1961. THE ASSESSEE IS ALSO CLAIMING PROFESSIONAL FEES AND LEGAL CHARGES. HOWEVER, BEFORE BEING DETECTED BY T HE A.O., NEITHER THE ASSESSEE FILED A REVISED RETURN NOR REQUESTED THE A.O. TO CO NSIDER THE SAME AS INCOME FROM OTHER SOURCES. INTEREST ON INCOME-TAX REFUND UNDER NO CIRCUMSTANCES CAN 6 ITA NO.2613/MUM/2010 BE CONSIDERED AS BUSINESS INCOME. THEREFORE, WE DO NOT FIND ANY FORCE IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THERE WAS FULL DISCLOSURE OF THE INTEREST INCOME IN THE RETURN OF INCOME, THAT T HE ASSESSEE HAS ADMITTED THE MISTAKE OF DISCLOSING THE SAME UNDER THE HEAD BUSI NESS INCOME AS AGAINST INCOME FROM OTHER SOURCES DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THAT THERE WAS NEITHER ANY CONCEALMENT OF INCOME NOR FUR NISHING OF ANY INACCURATE PARTICULARS OF INCOME AND THAT THE DISCLOSURE WAS B ONAFIDE AND NEITHER MALFIDE NOR INTENTIONAL. 7. THE VARIOUS DECISIONS RELIED ON BY THE LD. COUNS EL FOR THE ASSESSEE ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) THE ASSESS EE HAD CLAIMED INTEREST EXPENDITURE U/S 36(1)(III) ON LOSS INCURRED FOR PUR CHASE OF SOME SHARES BY WAY OF ITS BUSINESS POLICIES. THE ASSESSEE, HOWEVER, DID NOT EARN ANY DIVIDEND FROM THOSE SHARES. THE A.O. DISALLOWED SUCH INTEREST U/ S 14A OF THE INCOME TAX ACT AND THEREAFTER LEVIED PENALTY U/S 271(1)(C) WHICH W AS DELETED BY CIT(A) AND UPHELD BY THE ITAT. THE APPEAL BY REVENUE WAS ALSO DISMISSED BY THE HONBLE HIGH COURT. WHEN THE REVENUE CHALLENGED THE ORDER OF THE HONBLE HIGH COURT, THE HONBLE SUPREME COURT DISMISSED THE APPEAL FILE D BY THE REVENUE BY HOLDING THAT WHERE THERE IS NO FINDING THAT ANY DETAILS SUP PLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FA LSE THERE IS NO QUESTION OF INITIATING THE PENALTY U/S 271(1)(C). A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. HOWEVER, IN T HE INSTANT CASE, THERE IS AN INCORRECT CLAIM IN AS MUCH AS INTEREST ON INCOME-TA X REFUND WHICH SHOULD HAVE BEEN TREATED AS INCOME FROM OTHER SOURCES HAS BEE N CLAIMED AS BUSINESS INCOME AND HAS BEEN SET OFF WITH BROUGHT FORWARD B USINESS LOSS. THEREFORE, THE 7 ITA NO.2613/MUM/2010 EXPLANATION TO PROVISIONS OF SECTION 271(1)(C) IS C LEARLY APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE DECISION OF THE HONBLE APEX COURT CANNOT BE TAKEN AS PANACEA FOR ALL CASES WHERE PENALTY HAS BEEN LEVIED WITHOUT ANALYSING THE FACTS AND CIRCUMSTANCES UNDER WHICH THE HONBLE APEX COUR T DELIVERED THE JUDGMENT. 7.1 THE HONBLE SUPREME COURT IN THE CASE OF CIT VS . SUN ENGINEERING WORKS (P) LTD. REPORTED IN 198 ITR 297 HAS HELD AS UNDER: - IT IS NEITHER DESIRABLE NOR PERMISSIBLE TO PICK OU T A WORD OR A SENTENCE FROM THE JUDGMENT OF THIS COURT, DIVORCED FROM THE CONTEXT OF THE QUESTION UNDER CONSIDERATION AND TREAT IT TO BE THE COMPLETE LAW DECLARED BY THIS COURT. THE JUDGMENT MUST BE READ AS A WHOLE AND THE OBSERVATIONS FROM THE JUDGMENT HAVE TO BE CONSIDERE D IN THE LIGHT OF THE QUESTIONS WHICH WERE BEFORE THIS COURT. A DECI SION OF THIS COURT TAKES ITS COLOUR FROM THE QUESTIONS INVOLVED IN THE CASE IN WHICH IT IS RENDERED AND, WHILE APPLYING THE DECISION TO LATER CASE, THE COURTS MUST CAREFULLY TRY TO ASCERTAIN THE TRUE PRINCIPLE LAID DOWN BY THE DECISION OF THIS COURT AND NOT TO PICK OUT WORDS OR SENTENCES FROM THE JUDGMENT, DIVORCED FROM THE CONTEXT OF THE QUESTION S UNDER CONSIDERATION BY THIS COURT, TO SUPPORT THEIR REASO NINGS. IN MADHAV RAO JIVAJI RAO SCINDIA V. UNION OF INDIA [1971] 3 SC R 0; AIR 1971 SC 530, THIS COURT CAUTIONED (AT PAGE 578 OF AIR 1971 SC): IT IS NOT PROPER TO REGARD A WORD, A CLAUSE OR A S ENTENCE OCCURRING IN A JUDGMENT OF THE SUPREME COURT, DIVORCED FROM ITS CO NTEXT, AS CONTAINING A FULL EXPOSITION OF THE LAW ON A QUESTI ON WHEN THE QUESTION DID NOT EVEN FALL TO BE ANSWERED IN THAT JUDGMENT. 7.2 IN BHARAT PETROLEUM CORPORATION LTD. V. N.R. VA IRAMANI, 8 SCC 579, THE SUPREME COURT HELD THAT COURTS SHOULD NOT PLACE RE LIANCE ON DECISIONS, WITHOUT DISCUSSING AS TO HOW THE FACTUAL SITUATION FITS IN WITH THE FACT SITUATION OF THE DECISION ON WHICH RELIANCE IS PLACED. OBSERVATIONS OF COURTS ARE NEITHER TO BE READ AS ELUCIDS THEOREMS NOR AS PROVISIONS OF A ST ATUTE AND THAT TOO TAKEN OUT OF THEIR CONTEXT. THESE OBSERVATIONS MUST BE READ IN THE CONTEXT IN WHICH THEY APPEAR TO HAVE BEEN STATED. JUDGMENTS OF COURTS ARE NOT BE CONSTRUED AS STATUTUES. 8 ITA NO.2613/MUM/2010 7.3 IN VIEW OF THE ABOVE THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINAB LE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGA RDING THE INCOME OF THE ASSESSEE AND THAT SUCH A CLAIM MADE IN THE RETURN C ANNOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS CANNOT BE ACCEPTED, MAKIN G THE PROVISIONS OF SECTION 271(1)(C) OTIOSE WHICH IS NEITHER THE INTENTION OF THE HONBLE APEX COURT NOR THE INTENTION OF THE LEGISLATURE. 7.4 IN THE CASE OF JMD ADVISORS PVT. LTD. (SUPRA) N O DOUBT, PENALTY WAS DELETED ON VARIOUS GROUNDS INCLUDING AN OBSERVATION THAT A MERE CHANGE OF HEAD OF INCOME BY THE A.O. IN THE ASSESSMENT CANNOT BE CONS TRUED AS CONCEALMENT AS ENVISAGED IN SECTION 271(1)(C) OF THE I.T. ACT SO A S TO ATTRACT PENAL PROVISIONS THEREIN. HOWEVER, ONE MUST UNDERSTAND AS TO WHY AN D HOW THE TRIBUNAL CAME TO SUCH CONCLUSION. WE FIND THE TRIBUNAL AT PAGE 291H AS OBSERVED AS UNDER:- WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT TH E PROPERTY IN QUESTION PURCHASED BY THE ASSESSEE-COMPANY AND THE BUILDING CONSTRUCTED THEREON WAS TREATED BY THE ASSESSING O FFICER AS ITS CAPITAL ASSET MAINLY RELYING ON THE BALANCE- SHEET OF THE ASSESSEE-COMPANY FOR THE YEAR UNDER CONSIDERATION W HEREIN THE SAID PROPERTY WAS SHOWN UNDER THE HEAD FIXED A SSETS. HE, HOWEVER, IGNORED/OVERLOOKED THE FACT THAT THE ASSE SSEE- COMPANY WAS ADMITTEDLY INCORPORATED WITH THE MAIN OBJECT OF CARRYING ON THE REAL ESTATE BUSINESS AND AS POINTE D OUT BY LEARNED COUNSEL FOR THE ASSESSEE FROM THE SUBMISSIO NS MADE BEFORE THE ASSESSING OFFICER AS REPRODUCED ON PAGE 2 OF THE ASSESSMENT ORDER, THE SAID PROPERTY INCLUDING CONST RUCTION THEREON WAS SHOWN AS WORK-IN-PROGRESS BY THE ASS ESSEE- COMPANY IN ITS BALANCE- SHEET RELEVANT TO THE ASSES SMENT YEARS 1998-99 TO 2002-03. THE ACTION OF THE ASSESSING OF FICER TO TREAT THE PROFIT OR LOSS ARISING FROM THE SALE OF THE SA ID PROPERTY AS CAPITAL GAIN AS AGAINST BUSINESS INCOME AS CLAIMED BY THE ASSESSEE, IN OUR OPINION, WAS THUS NOT WELL-FOUNDED AND EVEN THOUGH THE SAID ACTION OF THE ASSESSING OFFICER WA S NOT CHALLENGED BY THE ASSESSEE IN THE QUANTUM PROCEEDI NGS DUE TO THE FACT THAT THE INCOME FINALLY ASSESSED WAS LOSS AS EXPLAINED BY LEARNED COUNSEL FOR THE ASSESSEE, THIS BY ITSELF CAN- NOT BE SUFFICIENT TO DRAW ANY ADVERSE INFERENCE AGAINST TH E ASSESSEE 9 ITA NO.2613/MUM/2010 DURING THE COURSE OF PENALTY PROCEEDINGS WHICH ARE DISTINCT AND SEPARATE FROM THE ASSESSMENT PROCEEDINGS. MOREOVER , A MERE CHANGE OF HEAD OF INCOME BY THE ASSESSING OFFICER I N THE ASSESSMENT CANNOT BE CONSTRUED AS CONCEALMENT AS EN VISAGED IN SECTION 271(1)(C) SO AS TO ATTRACT THE PENAL PRO VISIONS CONTAINED THEREIN. 7.5 FROM THE ABOVE, IT IS CLEAR THAT THE TRIBUNAL H AD GIVEN A CATEGORICAL FINDING THAT THE ACTION OF THE A.O. IN TREATING THE PROFIT AS CAPITAL GAIN AS AGAINST BUSINESS INCOME CLAIMED BY THE ASSESSEE IS NOT WELL FOUNDED. THEREFORE, IN OUR OPINION, THE ABOVE DECISION IS ALSO WILL NOT HELP T HE ASSESSEE TO GET OUT OF THE RIGOURS OF THE PROVISIONS OF SECTION 271(1)(C) OF T HE I.T. ACT. 8. IN THIS VIEW OF THE DISCUSSIONS ABOVE, WE ARE OF THE CONSIDERED OPINION THAT IT IS A FIT CASE FOR LEVY OF PENALTY U/S 271(1 )(C) OF THE ACT. WE, THEREFORE, UPHOLD THE ORDER OF THE LD. CIT(A) AND THE GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS D ISMISSED. ORDER ORDER ORDER ORDER PRONOUNCED PRONOUNCED PRONOUNCED PRONOUNCED ON ON ON ON 15.6.2011 15.6.2011 15.6.2011 15.6.2011. .. . SD/- SD/- ( (( ( D MA D MA D MA D MANM NMNM NMOHAN OHAN OHAN OHAN ) )) ) VICE PRESIDENT ( (( ( R K PANDA R K PANDA R K PANDA R K PANDA ) )) ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 15 TH JJUNE, 2011 RK* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI 10 ITA NO.2613/MUM/2010 1 DRAFT DICTATED ON 6 APR 11, 1.6.11, 13.6.11 SR PS 2 DRAFT PLACED BEFORE AUTHOR ON 7 APR 11,2.6.11,13.6.11 SR PS 3 DRAFT PROPOSED & PLACE BEFORE THE 2 ND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY 2 ND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR PS 7 FILE SENT TO THE BENCH CLERK SR PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DESPATCH SR PS