ITO, CHENNAI V. M/s. R.P. Usha Enterprises, CHENNAI

ITA 2778/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7381 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 26-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: V S JAYAKUMAR
• Keywords: Business income; Bonafide belief
• Section: 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , ! . , % !& BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER, AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ ITA NO.2778/MDS/2016 / ASSESSMENT YEAR : 2007-08 THE INCOME TAX OFFICER, NON-CORPORATE WARD 2(3), CHENNAI 34 V. M/S. R P USHA ENTERPRISES, NO.39, HABIBULLAH ROAD, T. NAGAR, CHENNAI 600 017. PAN: AAIFR0955R ( /APPELLANT) ( /RESPONDENT) /APPELLANT BY : SHRI SHIVA SRINIVAS, JCIT /RESPONDENT BY : SHRI V.S. JAYAKUMAR, ADVOCATE /DATE OF HEARING : 09.03.2017 /DATE OF PRONOUNCEMENT : 22.03 .2017 / O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN ITA NO. 337/CIT(A)-2/2013-14 DATED 30.06.2016 PASSED U/S. 2 71(1)(C) OF THE ACT. 2. THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS AP PEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD. CIT(A ) HAS ERRED IN 2 I.T.A. NO.2778/MDS/2016 DELETING THE PENALTY OF RS.10,20,269/- LEVIED U/S. 271(1)(C) OF THE ACT BY THE LD. AO FOR WRONGLY CLAIMING THE INCOME OF HOUSE PROPERTY UNDER THE HEAD INCOME FROM BUSINESS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A FIRM FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 31.10.2007 ADMITTING NIL INCOME. INITIALLY THE RET URN WAS PROCESSED U/S.143(1) OF THE ACT AND THEREAFTER THE CASE WAS S ELECTED FOR SCRUTINY THROUGH CASS AND FINALLY ASSESSMENT WAS CO MPLETED U/S.143(3) OF THE ACT ON 31.12.2009, WHEREIN IT WA S REVEALED THAT THE ASSESSEE HAD DISCLOSED ITS INCOME FROM HOUSE P ROPERTY BEING THE RENT RECEIVED TOWARDS LEASING OF ITS FACTORY PR EMISES FOR WAREHOUSE PURPOSES AS BUSINESS INCOME. IT WAS O BSERVED BY THE LD. AO THAT THE ASSESSEE HAD SPLIT THE TOTAL LEASE AMOUNT AS RENT FOR AMENITIES AND RENT FOR LEASE IN ORDER TO SPLIT THE INCOME UNDER TWO HEADS OF INCOME. 4. ON APPEAL, THE LD. CIT(A) AFTER CONSIDERING THAT THE CASE OF THE APPELLANT DELETED THE PENALTY LEVIED BY THE LD. AO BY HOLDING THAT THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT IS NOT APPLICABLE SINCE THERE HAS BEEN NO ACTUAL CONCEALMENT OF INCOM E OR FURNISHING OF INACCURATE PARTICULARS. WHILE DECIDING THE ISSU E THE LD. CIT(A) 3 I.T.A. NO.2778/MDS/2016 RELIED ON THE DECISIONS OF THE HONBLE JURISDICTION AL HIGH COURT IN THE CASE OF CIT V. TM ABDUL AZEEZ & CO IN TC(A) NO. 1128/2006 DATED 19.07.2012 (UNREPORTED CASE), WHEREIN THE HON BLE HIGH COURT PLACING RELIANCE ON THE APEX COURT DECISION I N THE CASE OF CIT V. RELIANCE PETROPRODUCTS PVT. LTD., (2010) 322 ITR 158 HELD THAT IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION (I.E. PENALTY PROVISION), THE PENALTY PROVISION CANNOT BE INVOKED. FURTHER THAT, MERE MA KING A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WOULD N OT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. 5. BEFORE US THE LD. DR ARGUED BY STATING THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME BECA USE THE ASSESSEE HAD CLAIMED THE RENTAL INCOME UNDER THE HE AD BUSINESS INCOME IN ORDER TO AVOID TAX. IT WAS THEREFORE PL EADED THAT THE ORDER OF THE LD.AO MAY BE REINSTATED. THE LD. AR O N THE OTHER HAND RELIED ON THE ORDER OF THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CAS E IT IS APPARENT 4 I.T.A. NO.2778/MDS/2016 THAT THE ASSESSEE HAD DISCLOSED ITS ENTIRE INCOME. FURTHER ON THE BONAFIDE BELIEF THAT THE INCOME RECEIVED FOR PROVID ING AMENITIES COULD BE TREATED AS BUSINESS INCOME; THE ASSESSEE H AD CLAIMED IT UNDER THE HEAD INCOME FROM BUSINESS. THEREFORE I T CANNOT BE CONSTRUED THAT THE ASSESSEE HAD CONCEALED ITS INCOM E OR FURNISHED INACCURATE PARTICULARS OF INCOME AS RIGHTLY HELD BY THE LD. CIT(A). CONSIDERING THE FACTS AND CIRCUMSTANCE OF THE CASE, WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDER OF THE LD. CIT(A), WHO HAD RIGHTLY RELIED ON THE DECISION OF THE VARIOUS HIGHE R JUDICIARY AND THE HONBLE APEX COURT CITED SUPRA. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED ON 22 ND MARCH, 2017 AT CHENNAI. SD/- SD/- ( . ) )) ) (G. PAVAN KUMAR) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER /CHENNAI, /DATED, THE 22 ND MARCH, 2017. JR. /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( ) /CIT(A) 4. /CIT, 5. /DR 6. /GF.