NARAYAN DEVAPPA SHETTY, MUMBAI V. ITO (IT) 2(1), MUMBAI

ITA 3160/MUM/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3427 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-05-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 08-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMAND J
• Keywords: Business income; Difference of opinion; Change of opinion
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. 3160/MUM/2012,(A. Y : 2002-03) ITA NO. 3161/MUM/2012,(A. Y : 2003-04) NARAYAN DEVAPPA SHETTY, 803, MARATHON GALAXY, LBS MARG, MULUND (W), MUMBAI 400 080 PAN: AYGPS 4502D ... APPELLANT VS. THE I.T.O (I.T) -2(1), GROUND FLOOR, SCINDIA HOUSE, BALLARD PIER, NM ROAD, MUMBAI 400 038 .... RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SHRI PREMAND J. DATE OF HEARING : 10/05/2016 DATE OF PRONOUNCEMENT : 18/05/2016 ORDER PER MAHAVIR SINGH, J.M: THESE APPEALS BY ASSESSEE ARE ARISING OUT OF ORDE R OF CIT(A)-11 MUMBAI IN APPEAL NOS. CIT(A)-11/IT/RG.2(1)2010-11/245& CIT (A)-11/IT/RG.2(1)2010- 11/246 ORDER DATED 01/12/2011 . ASSESSMENTS WERE F RAMED BY ITO (IT)2-(1) MUMBAI FOR THE ASSESSMENT YEARS 2002-03 & 2003-04 U NDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREAFTER REFERRED AS THE ACT) VIDE HIS ORDER DATED 17/06/2010. 2 ITA NO. 3160/MUM/2012,(A. Y : 2002-03) ITA NO. 3161/MUM/2012,(A. Y : 2003-04) 2. THE ONLY COMMON ISSUE IN THESE TWO APPEALS OF AS SESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE LEVY OF PENALTY BY A SSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT ON ACCOUNT OF DIFFERE NCE OF OPINION AS TO UNDER WHICH HEAD PARTICULAR INCOME HAS TO BE TAXED, WHETH ER INCOME FROM HOUSE PROPERTY OR INCOME FROM BUSINESS. 3. BRIEFLY STATED, THE FACTS ARE THAT DURING THE CO URSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2002-03 AND 2003-04 THE ASSESSING OFFICER ASSESSED THE LEASE RENTALS RECEIVED BY THE ASSESSEE ON ACCOUNT OF LEASED PREMISES AT HOTEL SEA QUEEN AT LUISWADI, THANE AS INCOME FROM HOUSE PROPERTY AS AGAINST INCOME DECLARED BY THE ASSESSEE AS BUSINESS INCOME. THE ASSESSEE HAS ALLOWED ONE MRS. JEEVANVANAKSHI KARIA SHETTY TO CONDUCT BUSINESS FROM THIS PREMISES AT HOTEL SEA QUEEN AT LUISWADI ON A MONTHLY RENT OF RS.30,000/-. THE ASSESSING OFFICER TREATED THE SAME AS INCOME FROM HOUSE PROPERTY. THE CIT(A) HAS ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN BOTH THE YEARS. THEREAFTER THE ASSESSING OFFICER S TARTED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AND LEVIED PENAL TY FOR ASSESSMENT YEAR 2002-03 AT RS.51,000/- AND FOR ASSESSMENT YEAR 2003 -04 AT RS.53,000/-. AGGRIEVED AGAINST THE ORDERS OF ASSESSING OFFICER A SSESSEE PREFERRED APPEAL BEFORE CIT(A) IN BOTH THE YEARS. THE CIT(A) HAS AL SO CONFIRMED THE ACTION OF THE ASSESSING OFFICER LEVYING PENALTY BY OBSERVING IN PARA-2.3 AS UNDER:- 2.3 IN THIS CASE, THE ASSESSEE HAS NOT EXPLAINED WHY AND UNDER WHAT CIRCUMSTANCES INCOME ASSESSABLE UNDER THE HEAD 'INC OME FROM HOUSE PROPERTY' WAS SHOWN UNDER THE HEAD 'INCOME FROM BUS INESS & PROFESSION' AND THEREBY DUE TAXES HAS BEEN UNDERPAI D. THUS, THIS IS A CASE OF 'FURNISHING INACCURATE PARTICULARS OF INCOM E' AND ALSO A CASE, WHERE NO VALID EXPLANATION WITH VERIFIABLE EVIDENCE HAS BEEN FURNISHED. THEREFORE, THE ORDERS OF THE AO LEVYING PENALTY UND ER SECTION 271(1)(C) ARE UPHELD AND APPEALS ARE DISMISSED. 3 ITA NO. 3160/MUM/2012,(A. Y : 2002-03) ITA NO. 3161/MUM/2012,(A. Y : 2003-04) AGGRIEVED, IN BOTH THE YEARS, THE ASSESSEE IS IN S ECOND APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE T HROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE FACTS OF THE CASE THAT THE ASSESSEE HAS FILED COMPLETE PARTICULARS OF INCOME AND THERE IS A MERE CHANGE OF HEAD OF INCOME I.E FROM BUSINESS INCOME TO INCOME FROM HOUS E PROPERTY BY THE ASSESSING OFFICER. WE FIND THAT THE COMPLETE PARTI CULARS IN RESPECT OF INCOME AND OTHER DETAILS WERE FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ITS RETURN OF INCOME ALSO. THERE IS NO CONCEALMENT OF PARTICULARS OF INCOME OR CONCEALM ENT OF INCOME BY THE ASSESSEE. HON'BLE SUPREME COURT IN THE CASE OF CI T VS. RELIANCE PETROPRODUCTS PVT. LTD., 322 ITR 158 (SC) ON THE ISSUE OF FURNISH ING OF INACCURATE PARTICULARS OF INCOME HAS CONSIDERED AS UNDER:- 9. WE ARE NOT CONCERNED IN THE PRESENT CASE WITH T HE MENS REA. HOWEVER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A MATTER OF FACT, THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS. IN WEBSTER'S DICTIONARY, THE WORD 'INA CCURATE' HAS BEEN DEFINED AS:- 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TR UTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRANSCRIPT'. WE HAVE ALREADY SEEN THE MEANING OF THE WORD 'PARTI CULARS' IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, THEY MU ST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORREC T, NOT ACCORDING TO TRUTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO Q UESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS N OT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. 10. IT WAS TRIED TO BE SUGGESTED THAT SECTION 14A OF THE ACT SPECIFICALLY EXCLUDED THE DEDUCTIONS IN RESPECT OF THE EXPENDITURE INCURRED B Y THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. IT WAS FURTHER POINTED OUT THAT THE DIVIDENDS FROM THE SHARES DID NOT FORM THE PART OF THE TOTAL INCOME. IT WAS, THEREFORE, REITERATED BEFORE US THAT THE ASSESSING OFFICER HAD CORRECTLY REACHED THE CONCLUSION THAT SINCE THE ASSESSEE HAD CLAIMED EXCE SSIVE DEDUCTIONS KNOWING THAT THEY ARE INCORRECT; IT AMOUNTED TO CONCEALMENT OF INCOME . IT WAS TRIED TO BE ARGUED THAT THE 4 ITA NO. 3160/MUM/2012,(A. Y : 2002-03) ITA NO. 3161/MUM/2012,(A. Y : 2003-04) FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FO RMS; (I) AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) AN ITEM OF EXPENDITUR E MAY BE FALSELY (OR IN AN EXAGGERATED AMOUNT) CLAIMED, AND BOTH TYPES ATTEMPT TO REDUCE T HE TAXABLE INCOME AND, THEREFORE, BOTH TYPES AMOUNT TO CONCEALMENT OF PARTICULARS OF ONE'S INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE DO NOT AGREE, AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT IT S CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, W HICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY UNDER SECTION 271(1)(C) . IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN I N CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTE D BY ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C) . THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. 11. IN THIS BEHALF THE OBSERVATIONS OF THIS COURT M ADE IN SREE KRISHNA ELECTRICALS V. STATE OF TAMIL NADU & ANR . [(2009) 23VST 249 (SC)] AS REGARDS THE PENALTY AR E APPOSITE. IN THE AFOREMENTIONED DECISION WHICH PERTAINED TO THE PENA LTY PROCEEDINGS IN TAMIL NADU GENERAL SALES TAX ACT, THE COURT HAD FOUND THAT THE AUTHORITIES BELOW HAD FOUND THAT THERE WERE SOME INCORRECT STATEMENTS MADE IN THE RE TURN. HOWEVER, THE SAID TRANSACTIONS WERE REFLECTED IN THE ACCOUNTS OF THE ASSESSEE. THIS COURT, THEREFORE, OBSERVED: 'SO FAR AS THE QUESTION OF PENALTY IS CONCERNED TH E ITEMS WHICH WERE NOT INCLUDED IN THE TURNOVER WERE FOUND INCORPORATED IN THE APPELLANT'S ACCOUNT BOOKS. WHERE CERTAIN ITEMS WHICH ARE NOT INCLUDED I N THE TURNOVER ARE DISCLOSED IN THE DEALER'S OWN ACCOUNT BOOKS AND THE ASSESSING AUTHORITIES INCLUDE THESE ITEMS IN THE DEALER'S TURNOVER DISALL OWING THE EXEMPTION, PENALTY CANNOT BE IMPOSED. THE PENALTY LEVIED STAND S SET ASIDE.' THE SITUATION IN THE PRESENT CASE IS STILL BETTER A S NO FAULT HAS BEEN FOUND WITH THE PARTICULARS SUBMITTED BY THE ASSESSEE IN ITS RETURN . 5. WE FIND FROM THE FACTS OF THE PRESENT CASE AND T HE PROPORTION OF LAW LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF RELIAN CE PETROPRODUCTS PVT. LTD. (SUPRA), WHEREIN IT IS HELD THAT A MERE MAKING OF T HE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MA DE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. IN THE PRESE NT CASE BEFORE US ALSO THE ASSESSEE CLAIMED THAT HE BEING A NON-RESIDENT AND U NABLE TO ATTEND THE BUSINESS EXIGENCIES, HE ENTRUSTED WITH RESPONSIBILI TY TO THE CONDUCTOR FOR RUNNING THE DAY-TODAY BUSINESS TO MRS. JEEVANVANA KSHI KARIA SHETTY AS SHE 5 ITA NO. 3160/MUM/2012,(A. Y : 2002-03) ITA NO. 3161/MUM/2012,(A. Y : 2003-04) WAS MORE EFFICIENT IN THIS LINE OF BUSINESS. THE A SSESSEE HAS FILED COMPLETE PARTICULARS REGARDING HIS BUSINESS AND CLAIMED THE SAME AS BUSINESS INCOME. FURTHERMORE, THE ASSESSEE HAS FILED COMPLETE RECE IPTS FROM BUSINESS WHICH WAS TREATED BY THE AO AS RENTAL RECEIPTS. THIS IS MERELY A CHANGE OF OPINION AND IT DOES NOT TANTAMOUNT TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. RESPECTFULLY FOL LOWING THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LT D. (SUPRA), WE DELETE THE PENALTY IN BOTH THE YEARS AND ALLOW THE APPEALS OF THE ASSESSEE. 6. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/05/2016. SD/- SD/- (RAJESH KUMAR) (MAHAVIR SINGH) ACCOUNTNAT MEMBER JUDICIAL M EMBER MUMBAI, DATED 18/05/2016 VM , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI