THE ITO RG 3(1)(1), MUMBAI V. M/S. AIPITA MARKETING P. LTD, MUMBAI

ITA 404/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8548 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-04-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 19-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRAVAN KUMAR
• Assessee Lawyers: D V LAKHANI
• Keywords: Business income; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI R.S. SYAL (AM) AND SMT ASHA VIJAYARAGHA VAN (JM) ITA NO. 404/MUM/2009 (ASSESSMENT YEAR-2003-04) THE ITO, RANGE-3(1)(1), AAYAKAR BHAVAN, MUMBAI-400 020 VS. M/S. AIPITA MARKETING PVT. LTD., 83, JOLLY MAKER CHAMBERS II, NARIMAN POINT, MUMBAI-400 021 PAN-AABCA 2721Q (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SRAVAN KUMAR RESPONDENT BY: SHRI D.V. LAKHANI O R D E R PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE LD. CIT(A)-XXVII MUMBAI DATED 24.10.2008 FOR THE A. Y.2003-04. 2. THE ITO HAS PASSED PENALTY ORDER U/S. 271(1)(C) OF THE ACT LEVYING PENALTY OF RS. 3,67,139/-. THE ASSESSEE HA S OFFERED ITS INCOME FOR TAXATION UNDER THE HEAD INCOME FROM BUSINESS O R PROFESSION. HOWEVER, THE AO HAS ASSESSED THE SAID INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ON ACCOUNT OF THE CH ANGE IN THE HEAD OF INCOME, THERE HAS BEEN AN ADDITION TO THE TOTAL INCOME OF THE ASSESSEE AS CERTAIN EXPENSES CLAIMED BY THE ASSESSE E HAVE BEEN DISALLOWED WHILE ASSESSING THE INCOME UNDER THE HEA D INCOME FROM HOUSE PROPERTY. 3. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE T HE LD. CIT(A) AND CONTENDED AS FOLLOWS: ITA NO. 404/M/09 2 THE PENALTY ORDER PASSED BY THE AO U/S. 271(1)(C) IS BAD IN LAW AND VOID AB INITIO AS THE SAID PENALTY ORDER DO ES NOT GIVE THE DATE ON WHICH IT HAS BEEN PASSED. WITHOUT PREJUDICE TO THE ABOVE THE APPELLANT SUBMITTED THAT THE APPELLANT HAS OFFE RED ITS INCOME FOR TAXATION UNDER THE HEAD INCOME FROM BUSINESS O F PROFESSION. HOWEVER THE AO HAS ASSESSED THE SAID INCOME UNDER T HE HEAD INCOME FROM HOUSE PROPERTY. ON ACCOUNT OF THE CH ANGE IN THE HEAD OF INCOME THERE HAS BEEN AN ADDITION TO THE TO TAL INCOME OF THE APPELLANT AS CERTAIN EXPENSES CLAIMED BY THE AP PELLANT HAVE BEEN DISALLOWED WHILE ASSESSING THE INCOME UNDER TH E HEAD INCOME FROM HOUSE PROPERTY. IT IS SUBMITTED THAT THE ADDITION TO THE TOTAL INCOME OF THE APPELLANT ON ACCOUNT OF THE CHANGE IN THE HEAD OF INCOME CANNOT LEAD TO THE CONCLUSION THAT T HE APPELLANT HAS CONCEALED ITS INCOME OR FURNISHED INACCURATE PA RTICULARS OF SUCH INCOME. FURTHER, THERE IS NO INTENTION ON THE PART OF THE APPELLANT TO DEFRAUD THE REVENUE. IT IS ONLY THE I NTERPRETATION OF THE FACTS AND LAW ON ACCOUNT OF WHICH THE ADDITION HAS BEEN MADE TO THE TOTAL INCOME OF THE APPELLANT. IT IS ALSO S UBMITTED THAT WHEN THE APPELLANT HAS DISCLOSED THE ENTIRE TRANSACTION IN ITS RETURN, IT CANNOT BE SAID THAT THE APPELLANT HAS EITHER CONCEA LED THE INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THE APPELLANT HAS OFFERED A DETAILED EXPLANATION FOR INCLUDING TH E AFORESAID INCOME UNDER THE HEAD INCOME FROM BUSINESS DURING THE COURSE OF ASSESSMENT PROCEEDINGS, BUT THE AO HAS IGNORED I TS SUBMISSION AND TREATED THE EXPLANATION GIVEN BY IT TO BE FALSE . SINCE THERE IS NO FINDING BY THE AO THAT EXPLANATION OFFERED BY TH E APPELLANT IS FALSE NO PENALTY CAN BE IMPOSED. IT IS FURTHER STAT ED THAT THE AO HAS FAILED TO RECORD IN THE ASSESSMENT ORDER THE SA TISFACTION TO THE EFFECT THAT THE APPELLANT HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME AND HENCE THE PROVISIONS OF SEC. 271(1)(C) CANNOT BE APPLIED. 4. THE LD. CIT(A) DISMISSED THE REVENUES APPEAL B Y OBSERVING AS UNDER: I HAVE GONE THROUGH THE FACTS OF THE CASE, SUBMISS ION MADE AND ALSO THE PENALTY ORDER. I HAVE NOTED THAT IN T HE INSTANT CASE THE APPELLANT HAS SHOWN RENTAL INCOME AS BUSINESS I NCOME AND ALSO CLAIMED CERTAIN DEDUCTION. HOWEVER, THE AO HA S TREATED THE RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PRO PERTY AND REFUSED CERTAIN DEDUCTION. THUS ASSESSMENT OF CERT AIN INCOME UNDER CERTAIN HEAD HAS BEEN DISPUTED. WHILE CLAIMI NG SUCH RENTAL INCOME AS BUSINESS INCOME THE APPELLANT HAS NOT C ONCEALED ANY INCOME IN THE RETURN. THUS THE ISSUE IS DEBATABLE AND IT CANNOT BE SAID THAT THE APPELLANT HAS FURNISHED INACCURATE PA RTICULAR UNDER ITA NO. 404/M/09 3 THE PROVISIONS OF SEC. 27(1)(C). IN THIS CONNECTIO N RELIANCE IS PLACED ON CIT VS HARSHVARDHAN CHEMICALS & MINERAL LTD. 133 TAXMANN 320 (RAJ). I HAVE ALSO NOTED THAT THE APPELLANT HA S CLAIMED THE INCOME AS INCOME FROM BUSINESS AND NOT INCOME FR OM HOUSE PROPERTY. THE AO HAS ON THE OTHER HAND TREATED TH E SAID INCOME AS INCOME FROM HOUSE PROPERTY RESULTING IN ADDITI ON TO THE INCOME OF THE APPELLANT. THIS FACT ITSELF DOES NOT LEAD T O THE CONCLUSION THAT THE APPELLANT HAS FURNISHED INACCURATE PARTICU LARS OF SUCH INCOME. IT IS ALSO NOTED THAT THE APPELLANT HAS DI SCLOSED THE ENTIRE TRANSACTION IN ITS I.T. RETURN AS WILL BE EVIDENT F ROM THE STATEMENT OF ACCOUNTS FURNISHED BY THE APPELLANT ALONGWITH TH E RETURN OF INCOME. I HAVE ALSO NOTED THAT THE APPELLANT HAS O FFERED A DETAILED EXPLANATION AS TO THE INCLUSION OF THE AFO RESAID INCOME UNDER THE HEAD INCOME FROM BUSINESS. THUS THE AD DITION MADE IN THE ASSESSMENT ORDER WAS NOT ON ACCOUNT OF CONCE ALMENT OF INCOME BUT ON ACCOUNT OF DIFFERENCE OF OPINION. IN VIEW OF THE ABOVE, I FIND THE PROVISIONS OF SEC. 271(1)(C) OF T HE I.T. ACT CANNOT BE INVOKED. IT IS ALSO NOTED IN THIS REGARD THAT O N SIMILAR ISSUE THE PENALTY PROCEEDINGS INITIATED BY THE AO FOR A.Y. 20 00-01 AND 2002-03 HAVE BEEN DROPPED BY THE AO. 5. AGGRIEVED REVENUE IS IN APPEAL BEFORE US AND RAI SED THE FOLLOWING GROUND: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING PENALTY U/S. 2 71(1)(C) AMOUNTING TO RS. 3,67,139/- EVEN THOUGH THE ASSESSE E HAS FURNISHED INACCURATE PARTICULARS IN HIS RETURN OF I NCOME AND QUANTUM ADDITION OF THAT INCOME BY THE AO HAS BEEN CONFIRMED BY THE CIT(A). 6. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON TH E ORDER OF THE AO. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE R ELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE HAS OFFERED ITS INCOME FOR TAXATION UNDER THE HEAD INCOME FROM BUSINESS O R PROFESSION AND THE ASSESSING OFFICER HAS ASSESSED THE SAID INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSEE HAS DIS CLOSED THE ENTIRE TRANSACTION IN THE I.T. RETURNS AS WELL AS ALL MATE RIALS CAN BE GATHERED ITA NO. 404/M/09 4 FROM THE STATEMENT OF ACCOUNTS FURNISHED BY THE ASS ESSEE ALONGWITH RETURN OF INCOME. 8. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETRO PRODUCTS PVT. LTD (2010) 322 ITR 158 (SC) HAS HELD THAT MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSEL F WILL NOT ATTRACT PENALTY U/S. 271(1)(C). THE HONBLE SUPREME COURT FURTHER HELD THAT WHEN THE ASSESSEE FURNISHED ALL THE MATERIAL IN RET URN WHICH WAS NOT FOUND TO BE INCORRECT, IT WAS UPTO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT BUT THE SAME COULD NOT BE CONSIDE RED AS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. IN OUR CONSIDERED OPINION THE RATIO DECIDE NDI OF THIS JUDGEMENT IS FULLY APPLICABLE TO THE FACTS OF THE I NSTANT CASE. WE, THEREFORE, OVERTURN THE IMPUGNED ORDER AND DIRECT T HE DELETION OF PENALTY. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON THIS 9 TH DAY OF FEBRUARY, 2011 SD/- SD/- (R.S. SYAL) ( ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL M EMBER MUMBAI, DATED 9 TH FEBRUARY, 2011. RJ COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CENTRAL - I CONCERNED 5. THE DR A BENCH TRUE COPY BY ORDER ASST. REGISTRAR, I.T.A.T, MUMBAI ITA NO. 404/M/09 5 DATE INITIALS 1 DRAFT DICTATED ON: 7.02.2011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 7.02.2011 ______ SR. PS/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. PS/PS: SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: ______ SR. PS/PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: ______ 9 DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER: ______