M/s Holy Shrine Hotels Pvt Ltd, Jammu V. The Dy. Commissioner of Income-tax (CPC), Jammu

ITA 275/ASR/2015

• Counselvise Citation: 27520914 RSA 2015
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2002-2003
• Appeal Filed On: 03-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SHARDA
• Assessee Lawyers: P N ARORA
• Keywords: Business income; Wrong claim; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR (SMC) (CAMP : JAMMU) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NOS. 274 TO 276 (ASR)/2015 ASSESSMENT YEARS:2001-02, 2002-03 & 2003-04 PAN: AAACH-3988H M/S. HOLY SHRINE HOTELS PVT. LTD., VS. DY. COMMR. O F INCOME TAX, NARWAN BALA, CIRCLE-1, JAMMU. JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.P.N.ARORA, ADV. RESPONDENT BY:SH. R.K.SHARDA, DR DATE OF HEARING: 02/12/2015 DATE OF PRONOUNCEMENT: 14/12/2015 ORDER THESE ARE THE ASSESSEES APPEALS FOR THE ASSESSMEN T YEARS 2001-02 TO 2003-04 AGAINST THE LEVY OF PENALTIES OF RS.1,16 ,597/-, RS.1,78,519/- AND RS.77,373/-, FOR FURNISHING INACCURATE PARTICUL ARS OF INCOME FOR ALL THESE YEARS. THE FACTS REMAIN THE SAME FOR ALL THES E YEARS AND THESE APPEALS ARE BEING DECIDED JOINTLY BY THIS COMPOSITE ORDER. 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY WAS IN CORPORATED UNDER THE COMPANIES ACT, 1956 FOR CONSTRUCTION OF H OTEL AS ITS MAIN OBJECT. HOWEVER, THE COMPANY NEVER FUNCTIONED AS A HOTEL AND ALLOTTED DIFFERENT SPACES TO OTHERS FOR USE AND RENT WAS BEI NG RECEIVED BY THE ASSESSEE. THE ASSESSEE CLAIMED THE RENT AS BUSINES S INCOME. HOWEVER, THE AO TREATED IT AS INCOME FROM HOUSE PROPERTY. I T WAS IN PURSUANCE OF THIS, THAT THE PENALTIES WERE LEVIED. THE LD. CIT(A ) CONFIRMED THE SAME. ITA NOS. 274 TO 276(ASR)/2015 ASSESSMENT YEAR : 2001-02 TO 2003-04 2 3. BEFORE ME, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE AUTHORITIES BELOW HAVE ERRED IN LEVYING THE PENALTI ES FOR THE ALLEGED OFFENCE OF FURNISHING INACCURATE PARTICULARS OF IN COME. THE ASSESSEE, ON THE OTHER HAND, DID NOT EVER FURNISH ANY INACCURATE PARTICULARS OF ITS INCOME. RATHER, IT IS ONLY A CASE OF DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE TAXING AUTHORITIES. THE ASSESSEE C OMPANY, THOUGH IT WAS INCORPORATED FOR THE SOLE PURPOSE OF CONSTRUCTI ON OF A HOTEL, IT COULD NOT EVER FUNCTION AS A HOTEL, AS DUE TO DENIAL OF B AR LICENSE, THE PROPERTY COULD NOT BE UTILIZED FOR THE PURPOSE OF HOTEL. IT WAS, THEREFORE, THAT DIFFERENT SPACES WERE ALLOTTED BY THE ASSESSEE TO T HE GOVT. DEPARTMENTS AND OTHERS FOR USE ON RENT. DIFFERENCE OF OPINION R EGARDING THE HEADS OF INCOME CANNOT LEAD TO LEVY OF PENALTIES FOR FURNIS HING INACCURATE PARTICULARS OF INCOME. RELIANCE IN THIS REGARD HAS BEEN PLACED ON THE FOLLOWING CASE LAWS: I) CIT VS. RELIANCE PETRO PRODUCTS (P) LTD., 322 ITR 158 (SC). II) CIT VS. BAL KISHAN DHAWAN HUF, 86 CCH 065 (P &H) III) CIT VS. THE SHAHABAD CO-OP. SUGAR MILLS LTD., 322 ITR 73 (P&H), AND IV) SH. VIKRAMADITYA SINGH VS. DCIT, ITA NO.188(ASR)/ 2014, DATED 06.11.2015 (ITAT, AMRITSAR BENCH). 4. ON THE OTHER HAND, THE LD. DR HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDERS, CONTENDING THAT AS RIGHTLY OBSERVE D BY THE LD. CIT(A), THE DEDUCTION UNDER THE HEAD OF HOUSE PROPERTY IS D IFFERENT, I.E., AT THE FLAT RATE OF 30%, WHEREAS UNDER THE HEAD OF BUSINES S INCOME, ONLY LEGITIMATE EXPENSES CAN BE CLAIMED. THE ASSESSEE, I NSTEAD OF TREATING THE INCOME AS RENT FALLING UNDER THE HEAD OF INCOME FRO M HOUSE PROPERTY, TREATED IT AS BUSINESS INCOME. THEREFORE, DEFINITEL Y, INACCURATE PARTICULARS OF INCOME WERE FURNISHED BY THE ASSESSE E AND HENCE, THE PENALTIES FOR ALL THE THREE YEARS UNDER CONSIDERATI ON HAVE RIGHTLY BEEN LEVIED AND CONFIRMED. RELIANCE HAS ALSO BEEN PLACED ON THE DECISION OF ITA NOS. 274 TO 276(ASR)/2015 ASSESSMENT YEAR : 2001-02 TO 2003-04 3 THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS . ZOOM COMMUNICATION PVT. LTD., 327 ITR 510 (DEL.) 5. THE FACTS ARE NOT DISPUTED. THE ASSESSEE COMPANY WAS INCORPORATED FOR THE SOLE PURPOSE OF CONSTRUCTION OF HOTEL. HOWEVER, THE PROPERTY COULD NOT BE UTILIZED AS SUCH, FOR DENIAL OF BAR LICENSE. IT WAS, THEREFORE, THAT THE ASSESSEE HAD TO LET OUT THE DIF FERENT SPACES TO THE GOVERNMENT AND OTHERS ON RENT. IT IS A CASE OF WRON G CLAIM HAVING BEEN MADE BY THE ASSESSEE. 6. IN THIS REGARD, THE HONBLE SUPREME COURT, IN C IT VS. RELIANCE PETRO PRODUCTS (P) LTD. (SUPRA), HAS HELD THAT MAK ING OF AN INCORRECT CLAIM CANNOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS. AS PER THIS DECISION, MERELY BECAUSE THE ASSESSEE CLAIMED A DEDUCTION WHICH HAS NOT BEEN ACCEPTED BY THE REVENUE, PENALTY U/S 2 71(1)(C) OF THE ACT IS NOT ATTRACTED. IT IS PERTINENT TO NOTE THAT THE HONBLE APEX COURT HELD THAT IF THE CONTENTION OF THE REVENUE IN THIS REGAR D WERE TO BE ACCEPTED, THE ASSESSEE WOULD BE LIABLE FOR PENALTY U/S 271(1) (C) OF THE ACT, IN EVERY CASE, WHERE THE CLAIM MADE BY THE ASSESSEE IS NOT ACCEPTED BY THE AO FOR ANY REASON, WHICH CLEARLY IS NOT THE INTENDMEN T OF THE LEGISLATURE. IN THE PRESENT CASE, AS IN RELIANCE PETRO PRODUCTS (P ) LTD. (SUPRA), NO INFORMATION GIVEN IN THE RETURN OF INCOME FILED WAS FOUND TO BE INCORRECT OR INACCURATE. THE HONBLE SUPREME COURT HAS HELD T HAT MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSE LF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE IN COME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO INAC CURATE PARTICULARS. IN THE PRESENT CASE, THE ASSESSEE HAS FURNISHED ALL THE DETAILS OF ITS EXPENDITURE IN ITS RETURN, WHICH DETAILS, IN THEMSE LVES, WERE NOT FOUND TO BE INACCURATE, NOR COULD BE VIEWED AS CONCEALMENT OF INCOME. IT IS UPTO THE AUTHORITIES TO ACCEPT THE CLAIM IN THE RETURN O R NOT. MERELY BECAUSE THE ASSESSEE HAS CLAIMED THE EXPENDITURE, WHICH CL AIM WAS NOT ACCEPTED ITA NOS. 274 TO 276(ASR)/2015 ASSESSMENT YEAR : 2001-02 TO 2003-04 4 OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT, BY ITSE LF, WOULD NOT ATTRACT THE PENALTY U/S 271(1)(C) OF THE ACT. 7. APROPOS RELIANCE OF THE DEPARTMENT OF RELIANCE PETRO PRODUCTS (P) LTD. (SUPRA), THE SAME IS ENTIRELY UNCALLED FOR. T HE VERY ARGUMENTS STRESSED BY THE DEPARTMENT HERE WERE NOT AGREED TO BY THE HONBLE SUPREME COURT AND FOR THE FACT THAT THE ASSESSEE HA D FURNISHED ALL THE DETAILS FOR ITS EXPENDITURE AS WELL AS INCOME IN IT S RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE, NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON THE ASSESSEES PART, A S HELD BY THEIR LORDSHIPS. 8. RELIANCE PETRO PRODUCTS (P) LTD. (SUPRA), HAS BEEN REFERRED TO AND CONSIDERED IN CIT VS. BAL KISHAN DHAWAN HUF, 86 C CH 065 (P&H). IN THIS LATTER DECISION RENDERED BY THE HONBLE P & H HIGH COURT, CIT VS. ZOOM COMMUNICATION PVT. LTD., 327 ITR 510(DEL.), R ELIED ON BY THE DEPARTMENT HAS ALSO BEEN TAKEN INTO CONSIDERATION. THEREIN, IT HAS BEEN HELD THAT IF AN ASSESSEE IS UNABLE TO EXPLAIN AS T O IN WHAT CIRCUMSTANCES OR ON ACCOUNT OF WHOSE MISTAKE, DEDUCTIONS WERE CLA IMED, IT WOULD AMOUNT TO RAISING A MALAFIDE CLAIM THAT WOULD INVIT E A PENALTY. THIS WAS AGREED TO IN BAL KISHAN DHAWAN HUF (SUPRA). HOWEV ER, ON FACTS, CIT VS. ZOOM COMMUNICATION PVT. LTD. (SUPRA), WAS HELD TO BE NOT APPLICABLE. HERE ALSO, FIRSTLY, ALL NECESSARY PARTI CULARS WERE DULY FURNISHED BY THE ASSESSEE IN THE RETURN OF INCOME, AS NOTICED. THEN, IT WAS A CASE WHERE, UNLIKE HEREIN, THE ASSESSEE WAS UNABLE TO EXPLAIN THE CIRCUMSTANCES IN WHICH, OR THE MISTAKE ON WHOSE CO UNT, THE WRONG CLAIM WAS MADE. 9. FURTHER, THE HONBLE P & H HIGH COURT, IN CIT VS. THE SHAHABAD CO-OP. SUGAR MILLS (SUPRA), HAS HELD THAT MAKING OF WRONG CLAIM IS NOT AT PAR WITH CONCEALMENT OR GIVING OF INACCURATE INF ORMATION, WHICH MAY CALL FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. ITA NOS. 274 TO 276(ASR)/2015 ASSESSMENT YEAR : 2001-02 TO 2003-04 5 10. FOR THE ABOVE DISCUSSION, FINDING FORCE IN THE GRIEVANCE SOUGHT TO BE RAISED BY THE ASSESSEE, THE SAME IS ACCEPTED. TH E LEVY OF PENALTIES, AS CONFIRMED BY THE LD. CIT(A) ARE, HENCE, SET ASIDE AND CANCELLED. 11. IN THE RESULT, ALL THE THREE APPEALS OF THE ASS ESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14TH DEC EMBER, 2015. SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 14/12/2015 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. HOLY SHRINE HOTELS PVT. LTD., JAMMU. 2. THE DCIT, CIRCLE-1, JAMMU 3. THE CIT(A), JAMMU. 4. THE CIT,, JAMMU. 5. THE SR. DR, ITAT, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR.