SHRI RAVINDRA LAXMAN SATHE, MUMBAI V. THE ITO WD 26(2)(3), MUMBAI

ITA 2828/MUM/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2640 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 16-12-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 24-04-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A PRASADR N JHA
• Assessee Lawyers: RAVINDRA LAXMAN SATHE
• Keywords: Reasonable cause; TDS
• Section: 271(1)(c); 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI N.V. VASUDEVAN, J.M. AND SHRI A.L. GEHL OT, A.M. ITA NO. 2828/M/08 ASSESSMENT YEAR: 2001-02 SHRI RAVINDRA LAXMAN SATHE, APPELLANT G-12, INDRAVADAN SOCIETY, PADMABHAI THAKKAR ROAD, MAHIM, MUMBAI 400 016. VS. THE INCOME TAX OFFICER, RESPONDENT WARD 26(2)(3), K.G. MITTAL AAYURVEDIC HOSPITAL BUILDING, 6 TH FLOOR, CHARNI ROAD, MUMBAI 400 002. APPELLANT BY : MR. RAVINDRA LAXMAN SATHE RESPONDENT BY : MR. A. PRASAD/R.N. JHA ORDER PER A.L. GEHLOT, A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)-XXVIII, MUMBAI, ON 21.01.2008 FOR THE ASSE SSMENT YEAR 2001-02. 2. THE GROUND RAISED IN THE APPEAL IS IN RESPECT OF PENALTY U/S 271(1)(C) OF RS. 49,761/-. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS AN EMPLOYEE OF BHARAT PETROLEUM CORPORATION LTD. (BPCL ) HE HAD FILED HIS RETURN OF INCOME ON 18.7.2001 DECLARING TOTAL I NCOME OF RS. 4,62,700/-. HE CLAIMED INTEREST PAID ON BORROWED CA PITAL AS LOSS FROM HOUSE PROPERTY. ON VERIFICATION OF RETURNS OF EMPLO YEES OF BPCL IT WAS FOUND THAT EMPLOYEES IN A LARGE SCALE HAD FILED THE RETURN OF INCOME AS PER TDS SALARY CERTIFICATE IN FORM NO. 16 AND HAD NOT ITA NO. 2828/M/08 SHRI RAVINDRA LAXMAN SATHE 2 DISCLOSED THE LEASE RENT AND MAINTENANCE CHARGES RE CEIVED DURING THE PREVIOUS YEAR 2000-01. THESE EMPLOYEES, ON THE OTHE R HAND, CLAIMED INTEREST PAID ON LOAN TAKEN FOR ACQUISITION OF HOUS E PROPERTY TREATING THE RENTED {LEASE} PROPERTY AS SELF OCCUPIED PROPER TY (SOP) THEREBY CLAIMED REFUND. INFORMATION WAS THEREFORE CALLED FR OM BPCL. AFTER VERIFICATION OF THE INFORMATION RECEIVED FROM BPCL, IN RESPECT OF THE ASSESSEE, IT WAS FOUND THAT THE ASSESSEE HAD NOT SH OWN RECEIPT OF LEASE RENT, ARREARS OF LEASE RENT AND MAINTENANCE C HARGES OF RS. 46,080/- AND RS. 87,540/- AND RS. 20,736/- RESPECTI VELY. THEREFORE, AO AFTER RECORDING THE REASON IN WRITING IN ORDER S HEET, NOTICE U/S 148 OF THE IT ACT, 1961 WAS ISSUED ON 31.03.2006. THE A SSESSMENT HAD BEEN COMPLETED U/S 143(3) R.W.S. 147. 3.1 THE AO FOUND THAT FROM THE DETAILS FURNISHED BY THE BPCL AND DETAILS GATHERED DURING THE COURSE OF ASSESSMENT AV AILABLE ON RECORD, THE ASSESSEE HAD RECEIVED LEASE RENT OF RS. 46,080/ - DURING THE PREVIOUS YEAR AND THE ASSESSEE HAD NOT SHOWN THIS R ECEIPT AS HIS INCOME IN RESPECT OF INCOME OF LEASE RENT. THIS AMO UNT WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE TREATING THE SAME INCOME FROM HOUSE PROPERTY. 3.2 THE AO FURTHER NOTICED THAT FROM THE DETAILS F URNISHED BY THE BPCL AND DETAILS GATHERED DURING THE COURSE OF ASSE SSMENT, THE ASSESSEE HAD RECEIVED LEASE RENT OF RS. 87,540/-, W HICH HAD NOT SHOWN AS HIS INCOME. THEREFORE, THE AO ADDED THIS A MOUNT TO THE TOTAL INCOME BY TREATING IT AS INCOME FROM HOUSE P ROPERTY. 3.3 SIMILARLY, THE AO NOTICED THAT THE ASSESSEE HAD RECEIVED REIMBURSEMENT OF THE MAINTENANCE EXPENDITURE OF RS. 20,736/- DURING THE PREVIOUS YEAR, WHICH WAS ADDED TO THE TO TAL INCOME OF THE ASSESSEE TREATING IT AS INCOME FROM OTHER SOURCES. ITA NO. 2828/M/08 SHRI RAVINDRA LAXMAN SATHE 3 3.4 THE AO WAS OF THE VIEW THAT SINCE THE ASSESSEE HAD NOT SHOWN THE SAID RECEIPTS OF THE AMOUNTS IN HIS ORIGINAL RE TURN OF INCOME AND THE SAME WERE BROUGHT TO THE TAXATION AFTER THE DET ECTION BY THE DEPARTMENT AND AFTER CONFRONTING THE FACTS ABOUT RE CEIPT OF SUCH INCOME TO THE ASSESSEE, PENALTY PROCEEDINGS U/S 271 (1)(C) OF THE IT ACT HAD BEEN INITIATED FOR CONCEALING THE SAID INCO MES. THEREAFTER, THE AO LEVIED PENALTY U/S 271(1)(C) BY OBSERVING AS UND ER:- ASSESSEE FAILED TO MENTION ANY SATISFACTORY EXPLANA TION ABOUT ANY REASONABLE CAUSE FOR NOT OFFERING THESE RECEIPT AS INCOME. IT IS IMPORTANT TO NOTE THE FOLLOWING FACTS. A)THE ASSESSEE IS AN EDUCATED PERSON AND EMPLOYEE O F THE REPUTED COMPANY M/S BPCL. B) THE ASSESSEE ENTERED INTO A LEASE AGREEMENT WITH THE EMPLOYER AND WAS WELL AWARE OF THE SCHEME INTRODUCED BY THE EMPLOYER OF M/S BPCL ABOUT TAKING ASSESSEES OWN FLAT ON LEASE RENT BY THE EMPLOYER AND GIVING THE RENT TO THE ASSESSEE AND RE NT FREE ACCOMMODATION. IT IS THEREFORE THE ASSESSEE WAS FUL LY AWARE ABOUT THE RECEIPTS OF THE LEASE RENT WHICH HELPED H IM TO REPAY HIS LOAN TAKEN FOR THE ACQUISITION OF HIS PROPERTY. C) THE ASSESSEE CLAIMED THE INTEREST ON BORROWED CA PITAL UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND CLAIMING OF THE REFUND SHOWED THAT THE ASSESSEE HAS WITH DELIBERATE INTENT ION TO DEFRAUD THE REVENUE BY NOT ONLY SHOWING LEASE RENT RECEIVED BUT ALSO CLAIMING THE REFUND. THE ASSESSEE VERIFIED THE CLAIM OF REFUND IN HIS RETURN OF INCOME. D) THE ASSESSEE REGULARLY RECEIVED THE MAINTENANCE CHARGES AFTER SUBMITTING THE REQUIRED DETAILS TO THE EMPLOYER. TH E ASSESSEE FULLY AWARE OF THE RECEIPT OF REIMBURSEMENT OF MAIN TENANCE EXPENDITURE. HOWEVER, HE HAS NOT INCLUDED THE SAME IN HIS RETURN OF INCOME. THEREFORE, I AM SATISFIED THAT THE ASSESSEE HAS CON CEALED THE INCOME OF RS. 1,54,356/- (RS. 46,080 + 87,540 + 20, 736) AS DISCUSSED ABOVE AS WELL AS IN THE ASSESSMENT ORDER AND ASSESSEE HAS NO SATISFACTORY EXPLANATION FOR THE SH OW CAUSE NOTICE ISSUED TO HIM. HENCE IT IS A FIT CASE FOR LE VY OF PENALTY U/S 271(1)(C). THE MINIMUM PENALTY U/S 271(1)(C), LEVIABLE @100% A ND MAXIMUM @300% OF THE AMOUNT OF TAX SOUGHT TO BE EVA DED WHICH WORKS OUT TO RS. 49,761/- AND RS. 1,49,283/- RESPEC TIVELY. ITA NO. 2828/M/08 SHRI RAVINDRA LAXMAN SATHE 4 UNDER THE CIRCUMSTANCES OF THE CASE, I HEREBY LEVY MINIMUM PENALTY OF RS. 49,761/- AS PER THE PROVISIONS OF SE CTION 271(1)(C) OF IT ACT. 1961. 3.5 THE CIT(A) CONFIRMED THE PENALTY ON LEASE RENT OF RS. 46,080/- AND ARREAR LEASE RENT OF RS. 87,540/-. HOWEVER, HE CANCELLED THE PENALTY ON RS. 20,736/- TOWARDS REIMBURSEMENT EXPEN SES ON THE GROUND THAT THE ISSUE WAS DEBATABLE. 4. WE HAVE HEARD THE LEARNED DR AND THE ASSESSEE, W HO HIMSELF APPEARED BEFORE US. IN THE CASE UNDER CONSIDERATION SOME ADMITTED FACTS NOTICED ARE THAT THE ASSESSEE IS AN EMPLOYEE OF M/S BHARAT PETROLEUM CORPORATION LTD. (BPCL). BPCL INTRODUCED SCHEME OF SELF LEASING UNDER WHICH THE EMPLOYEES OF BPCL WERE EITH ER EXTENDED LOAN FROM BPCL ITSELF OR COULD TAKE LOAN FROM ANY BANK T O ACQUIRE HOUSE PROPERTY AND THE PROPERTY SO ACQUIRED WAS LEASED OU T TO BPCL ITSELF FOR AMOUNT OF LEASE RENT AND MAINTENANCE CHARGES AS LAID DOWN AS PER THE LEASE AGREEMENT WITH THE EMPLOYEE. THE PROPERTY IN TURN WAS GIVEN BACK TO THE SAME EMPLOYEE AS RENT FROM ACCOMM ODATION BY BPCL TREATING IT IS PERQUISITE IN THE HANDS OF THE EMPLOYEE BEING UNFURNISHED RENT FREE ACCOMMODATION. 4.1 THE CASE UNDER CONSIDERATION IS RELATED TO LEVY OF PENALTY UNDER SECTION 271(1)(C). THE SAID SECTION PROVIDES THAT IF THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMIS SIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISF IED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FUR NISHED INACCURATE PARTICULARS OF SUCH INCOME, HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY IN ADDITION TO TAX, IF ANY, PAYAB LE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT E XCEED [THREE TIMES], THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR THE FURNISHING OF I NACCURATE PARTICULARS OF SUCH INCOME. WE NOTICED PENAL PROVISIONS ARE APP LICABLE ONLY IN CASE ANY PERSON HAS CONCEALED THE PARTICULARS OF HI S INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. TH E APPLICABILITY OF ITA NO. 2828/M/08 SHRI RAVINDRA LAXMAN SATHE 5 THIS PENAL PROVISIONS HAVE BEEN EXAMINED BY THE ITA T, MUMBAI BENCH B-1 IN THE CASE OF MIMOSA INVESTMENT CO. PVT. LTD. , 28 SOT 470 [ITA NO. 2983/MUM/07 FOR AY 2004-05 ORDER DATED 15.01.09 ] WHERE IN IT WAS HELD THAT WHEN THE ASSESSEE HAS FURNISHED ALL THE MATERIAL FACTS FOR THE PURPOSE OF COMPUTATION OF TOTAL INCOME, THE AO IS DUTY BOUND TO CALCULATE CORRECT TOTAL INCOME IN ACCORDANCE WIT H LAW WHICH MAY BE DIFFERENT THAN THE TOTAL INCOME CALCULATED BY THE A SSESSEE; MERE FACT THAT THE AO WHILE DISCHARGING HIS DUTY HAS RECALCUL ATED THE TOTAL INCOME IN ACCORDANCE WITH LAW WHICH IS NOT THE SAME AS CALCULATED BY THE ASSESSEE, IT CANNOT BE HELD THAT THE ASSESSEE H AS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME OR THERE IS A DEEMED CONCEALMENT IN ACCORDAN CE WITH EXPLANATION1 OF SECTION 271(1)(C). WE MAY ALSO REFER TO THE FOLLOWING CBDT CIRCULAR:- TAX OFFICERS ROLE IN ASSISTING TAX PAYERS OFFICE RS OF THE DEPARTMENT MUST NOT TAKE ADVANTAGE OF IGNORANCE OF AN ASSESSEE AS TO HIS RIGHTS. IT IS ONE OF THEIR DUTIES TO ASSI ST A TAXPAYER IN EVERY REASONABLE WAY, PARTICULARLY IN THE MATTER OF CLAIMING AND SECURING RELIEFS AND IN THIS REGARD THE OFFICERS SH OULD TAKE THE INITIATIVE IN GUIDING A TAX PAYER WHERE PROCEEDINGS OR OTHER PARTICULARS BEFORE THEM INDICATE THAT SOME REFUND O R RELIEF IS DUE TO HIM. THIS ATTITUDE WOULD, IN THE LONG RUN, BENEF IT THE DEPARTMENT, FOR IT WOULD INSPIRE CONFIDENCE IN HIM THAT HE MAY BE SURE OF GETTING A SQUARE DEAL FROM THE DEPARTMENT. ALTHOUGH, THEREFORE, THE RESPONSIBILITY FOR CLAIMING REFUNDS AND RELIEFS RESTS WITH THE ASSESSEES ON WHOM IT IS IMPOSED BY LAW, OF FICERS SHOULD_ (A) DRAW THEIR ATTENTION TO ANY REFUNDS OR RELIEFS TO W HICH THEY APPEAR TO BE CLEARLY ENTITLED BUT WHICH THEY HAVE O MITTED TO CLAIM FOR SOME REASON OR OTHER; (B) FREELY ADVISE THEM WHEN APPROACHED BY THEM AS TO TH EIR RIGHTS AND LIABILITIES AND AS TO THE PROCEDURE TO B E ADOPTED FOR CLAIMING REFUNDS AND RELIEFS CIRCULAR NO. 14XL-35 ) OF 1955, DATED 11.4.1955 (EXTRACTED FROM CHOKSI METAL REFINE RY V. CIT [1977] 107 ITR 63 (GUJ.) ITA NO. 2828/M/08 SHRI RAVINDRA LAXMAN SATHE 6 4.2 ON CONSIDERATION OF ABOVE DISCUSSION AND RATIO LAID DOWN BY THE ITAT IN THE SAID CASE CITED SUPRA, WE ARE OF THE CO NSIDERED VIEW THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) . FROM THE ABOVE CIRCULAR, IT IS CLEAR THAT IN THE CASE UNDER CONSID ERATION, THE AO HAS DISCHARGED HIS DUTY OF ASSESSING CORRECT INCOME ON THE BASIS OF PARTICULARS AVAILABLE WITH THE DEPARTMENT WHICH MAY BE BY ISSUING NOTICE U/S 148 OF THE ACT. THE ASSESSEE CLAIMED THE INTEREST ON BORROWED CAPITAL AGAINST SOP INCOME AND OTHERS WHET HER THE SAME IS ALLOWABLE OR NOT OR WHAT SHOULD BE THE CORRECT INCO ME IN ACCORDANCE WITH THE ACT IS A DIFFERENT THING BUT CERTAINLY RE LEVANT SUFFICIENT PARTICULARS WERE ON RECORD, EITHER IN THE FILE OF A SSESSEE, FORM 16 OR IN THE FILE OF BPCL. THE AO MUST HAVE CONSIDERED THE R ELEVANT SCHEME AND ALL MATERIAL IN ASSESSMENT OF BPCL. UNDER THE P ECULIAR CIRCUMSTANCES, SUCH CONSIDERATION OF PARTICULARS IN THE CASE OF BPCL AMOUNTS PARTICULARS AVAILABLE ON RECORD IN CASES OF THE EMPLOYEES OF BPCL. THEREFORE SUCH CASES CANNOT BE SAID TO BE A CASE OF FURNISHING INACCURATE PARTICULARS OR INCOME OR CONCEALING OF A NY PARTICULARS OF INCOME PARTICULARLY WHEN ALL THE RELEVANT PARTICULA RS/MATERIAL AVAILABLE WITH THE DEPARTMENT. FURTHER, IT HAS BEEN NOTICED FROM PENALTY ORDER THAT THE AO NOTED THAT EMPLOYEES IN A LARGE SCALE HAD FILED RETURNS OF INCOME AS PER TDS SALARY CERTIFICA TE IN FORM NO. 16 AND HAD NOT DISCLOSED LEASE RENT & MAINTENANCE CHAR GES RECEIVED INCLUDING ASSESSEE. WHEN A LARGE NUMBER OF PERSONS FILED THEIR RETURNS OF INCOME BY SAME MISTAKE THAT MISTAKE CANN OT BE SAID TO BE A CASE WHERE PENALTY PROVISIONS U/S 271(1)(C) IS AP PLICABLE, CONTRARY IT SUPPORTS TO ASSESSEES BONAFIDE. 4.3 IN THE LIGHT OF ABOVE DISCUSSION, WE HEREBY CAN CEL THE PENALTY OF RS. 49,761/- U/S 271(1)(C) OF THE ACT. ITA NO. 2828/M/08 SHRI RAVINDRA LAXMAN SATHE 7 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. PRONOUNCED ON THIS 22 ND DAY OF DECEMBER, 2009. SD/- SD/- (N.V. VASUDEVAN) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED: 22 ND DECEMBER, 2009 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, D BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV S.NO. DESCRIPTION DATE INITLS 1. DRAFT DICTATED ON 18.12.09 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 21.12.09 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER