MEKAN JETHALAL GALA FAMILY TRUST, MUMBAI V. ITO 14(2)(3), MUMBAI

ITA 3539/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0776 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-04-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 19-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: HARI S RAHEJA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE S HRI B.R. BASKARAN (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 3539 /MUM/20 1 4 ASSESSMENT YEAR: 2007 - 2008 M/S MEKAN JETHALAL GALA - FAMILY TRUST, 93, DADISETH AGAIRY LANE, KALBADEVI ROAD, K ALBADEVI, MUMBAI - 400002 PAN: AAATT6353R VS. THE I.T.O. 14(2)(3), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HARI S RAHEJA (AR) RESPONDENT BY : SHRI M.C. OMI NINGSHEN (DR) DATE OF HEARING: 28 /04 / 201 7 DATE OF PRONOUNCEMENT: 19 / 0 5 /201 7 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 04/03/2014 PASSED BY LD. CIT (APPEALS ) - 25 , MUMBAI FOR THE A S S ESSMENT YEAR 2007 - 2008 , WHERE BY THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE FILED AGAINST PENALTY ORDER PASSED U/S 271 (1) (C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) AND CONFIRMED THE PENALTY OF RS. 1,43,500/ - LEVIED BY THE AO. 2. BRIEF FACTS OF THE CASE ARE T HAT THE ASSESSEE A FAMILY TRUST, FILED ITS RETURN OF INCOME FOR THE A.Y. 2007 - 08 DECLARING THE TOTAL INCOME OF RS. 59,678/ - . THE RET URN WAS PROCESSED U/S 143 (1) OF THE ACT AND AFTER SCRUTINY 2 ITA NO. 3539/MUM/2014 ASSESSMENT YEAR: 2007 - 2008 ASSESSMENT ORDER 143 (3) OF THE ACT WAS FRAMED DETERMINING THE T OTAL INCOME AT RS. 5,28,630/ - AFTER MAKING ADDITION OF RS. 7,17,930/ - AS RENT RECEIVED BY THE ASSESSEE FROM GALAS AT BHIWANDI ON THE BASIS OF RETURN OF INCOME FILED BY THE ASSESSEE OF THE A.Y. 2006 - 07. ACCORDINGLY , PROCEEDINGS U/S 271 (1) (C) OF THE ACT WA S INITIATED AND PENALTY OF RS. 1, 43 , 5 00 / - WAS LEVIED. IN APPEAL, THE LD. CIT (A) CONFIRMED THE ACTION OF THE AO. 3 . AGGRIEVED BY THE ORDER OF LD. CIT (APPEALS) , THE ASSESSE PREFERRED THIS APPEAL BEFORE US ON THE FOLLOWING EFFECTIVE GROUND: - 1. ON THE FA CTS AND CIRCUMSTANCES OF THE APPELLANTS CASE AND IN LAW THE LD. CIT (A) ERRED IN CONFIRMING THE PENALTY OF RS. 1,43,500/ - LEVIED BY THE LD. AO BY INVOKING PROVISIONS OF SECTION 271 (1)(C) OF THE INCOME TAX ACT 1961. 4. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD. CIT(A) HAS WRONGLY UPHELD THE ORDER OF THE AO. THE ADDITION MADE BY THE AO IS NOT BASED ON ANY EVIDENCE AND THE SAME HAS BEEN MADE ON THE BASIS OF THE AMOUNT SHOWN RECEIVED BY THE ASSESSEE DURING THE PREVIOUS ASSESS MENT YEAR. MOREOVER, THE ASSESSMENT ORDER WAS PASSED BY THE AO WITHOUT HEARING THE ASSESSEE. MOREOVER , THE ADDITION IS BASED ON ESTIMATION THE LD. CIT(A) OUGHT TO HAVE DELETED THE PENALTY LEVIED BY THE AO. 5. ON THE OTHER HAND, THE LD. DEPARTMENTA L REPRESENTATIVE (DR) RELYING ON THE CONCURRENT FINDINGS OF THE AUTHORITIES BELOW SUBMITTED THAT THE SINCE THE ASSESSEE FAILED TO EXPLAIN AS TO WHY THE RENT RECEIVED WAS SHOWN RS. 48,000/ - DURING THE ASSESSMENT YEAR UNDER CONSIDERATION AGAINST THE INCOME O F 7,17,930/ - SHOWN DURING THE PREVIOUS ASSESSMENT YEAR , THE AO HAS RIGHTLY LEVIED PENALTY U/S 271(1)(C) OF THE ACT. HENCE, THERE IS NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). 3 ITA NO. 3539/MUM/2014 ASSESSMENT YEAR: 2007 - 2008 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO GONE THROUGH THE MATERIAL PLACED BEFORE US. ASSESSEE WAS OWNER - IN - POSSESSION OF FOUR GALAS AT BHIWANDI. THE ASSESSEE IN HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION HAD SHOWN RENTAL INCOME FROM THE SAID GALAS AS RS. 48,000/ - AS AGAINST THE INCOME OF RS. 7,17,9 30/ - SHOWN IN THE PREVIOUS ASSESSMENT YEAR. SHOW CAUSE NOTICE WAS ACCORDINGLY ISSUED AS TO WHY THE DIFFERENCE SHOULD NOT BE TAKEN AS UNDISCLOSED RENTAL INCOME. THE ASSESSEE WAS ASKED TO FURNISH EXPLANATION IF ANY ON OR BEFORE 21.12.2009. SINCE, NO RESPONSE WAS RECEIVED FROM THE ASSESSEE, THE AO COMPLETED THE ASSESSMENT ORDER MAKING ADDITION IN QUESTION. THE CONTENTION OF THE ASSESSEE BEFORE THE AO WAS THAT DUE TO FLOODS AND OTHER REASONS THE GHAL A S REMAIN UNOCCUPIED DURING THE PREVIOUS YEAR. IN T HE FIRST AP PEAL THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO HOLDING THAT THE ASSESSEE HAS FAILED TO PRODUCE ANY MATERIAL OR EVIDENCE BEFORE THE AO AS WELL AS BEFORE HIM. 7. SINCE, THE ASSESSEE HAD FURNISHED THE REASONS FOR THE SUBSTANTIAL DECREASED IN RENTAL INC OME OF THE ASSESSEE, IT WAS THE DUTY OF AO TO VERIFY THE FACTS AND COLLECT CERTAIN EVIDENCE TO REBUT THE CONTENTION OF THE ASSESSEE. IT IS APPARENT FROM THE RECORD THAT NO ENQUIRY WAS CONDUCTED BY THE AO TO ASCERTAIN THE FACTUAL POSITION OR TO FALSIFY THE CONTENTION OF THE ASSESSEE . AS PER THE SETTLED LAW ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE DIFFERENT AND INDEPENDENT PROCEEDINGS AND CONFIRMATION OF AN ADDITION MADE DURING THE ASSESSMENT PROCEEDING DOES NOT IPSO FACTO MAKE THE ASSESSEE LIABLE F OR PENALTY U/S 271(1)(C) OF THE ACT. THE STANDARD OF PROOF REQUIRED FOR IMPOSITION OF PENALTY IS DIFFERENT FROM THAT ON WHICH AN ADDITION OF AN INCOME ON THE QUANTUM SIDE COULD BE SUSTAINED. IN ORDER TO IMPOSE PENALTY UNDER THE SAID SECTION , SATISFACTION O F THE AO THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME IS NECESSARY AND THE SATISFACTION MUST BE BASED ON EVIDENCE. BUT IN 4 ITA NO. 3539/MUM/2014 ASSESSMENT YEAR: 2007 - 2008 THE PRESENT CASE SATISFACTION OF THE AO DOES NO T APPEAR TO BE BASED ON EVIDENCE. THERE IS NO MATERIAL ON RECORD TO DISBELIEVE THE EXPLANATION OFFERED BY THE ASSESSEE THAT DUE TO FLOODS AND OTHER REASONS THE GHALAS REMAINED UNOCCUPIED DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION . SINCE, THE ADDI TION HAS BEEN MADE ON THE BASIS OF PRESUMPTION/ASSUMPTION, IN OUR CONSIDERED VIEW THE LD. CIT(A) HAS WRONGLY CONFIRMED THE PENALTY ORDER PASSED BY THE AO. WE, THEREFORE, ALLOW THE SOLE GROUND OF THE APPEAL OF THE ASSESSEE AND SET ASIDE THE IMPUGNED ORDER P ASSED BY THE LD. CIT(A ) . AO IS DIRECTED TO DELETE THE PENALTY. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 200 7 - 2008 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 19 TH MAY , 2017 . SD/ - S D/ - ( B.R. BASKARAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 19 / 0 5 / 2017 ALINDRA 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 . 5 ITA NO. 3539/MUM/2014 ASSESSMENT YEAR: 2007 - 2008 / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI