Masters Realty Pvt.Ltd, Pune V. Deputy Commissioner of Income-tax, Circle - 14, Pune

ITA 409/PUN/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3733 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-06-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 28-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: N O N E
• Keywords: Source of fund; Initiation of penalty proceedings; Set aside
• Section: 271(1)(c); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, J UDICIAL MEMBER . / ITA NO. 409 /PUN/201 8 / ASSESSMENT YEAR : 201 4 - 15 MASTERS REALTY PVT. LTD., 101, NAYAN APARTMENT, ICS COLONY, BHOSALE NAGAR, PUNE - 411007 PAN : AAECM1690H ....... / APPELLANT / V/S. DY. COMMISSIONER OF INCOME TAX, CIRCLE 14, PUNE / RESPONDENT ASSESSEE BY : N O N E REVENUE BY : SHRI S.P. WALIMBE / DATE OF HEARING : 08 - 06 - 2021 / DATE OF PRONOUNCEMENT : 08 - 06 - 2021 / ORDER PER S.S. VISWANETHRA RAVI, JM : THIS APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 30 - 11 - 2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 7, PUNE [CIT(A)] FOR ASSESSMENT YEAR 201 4 - 15. 2 ITA NO . 409/PUN/2018, A.Y. 2014 - 15 2. THE ASSESSEE RAISED 2 GROUNDS OF APPEAL AMONGST WHICH THE ONLY ISSUE EMANATES FOR OUR CONSIDERATION IS AS TO WHETHER THE CIT(A) JUSTIFIED IN CONFIRMING THE PENALTY IMPOSED BY THE AO U/ S. 271(1)(C) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. WE FIND THERE WAS NO REPRESENTATION ON BEHALF OF THE ASSESSEE NOR ANY APPLICATION FILED SEEKING ADJOURNMENT. THE ASSESSEE CALLED ABSENT AND SET EX - PARTE. THEREFORE, WE PROCEED TO D ISPOSE OF THE CASE BY HEARING THE LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 4. HEARD LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT AN ADDITION OF RS.3,87,540/ - WAS MADE ON ACCOUNT OF INTEREST INCOME BY THE AO IN THE ASSESS MENT PROCEEDINGS FOR A.Y. 2014 - 15. THE C ASE OF THE AO FOR INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT WAS THAT THE INTEREST INCOME RECEIVED BY THE ASSESSEE HAS NOT BEEN ADDED TO ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION AND THE REFORE, HELD THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF THE INCOME. ACCORDING TO AO, THE ASSESSEE HAS NOT SUBMITTED ANY EXPLANATION IN THE PENALTY PROCEEDINGS AND IN THE ABSENCE OF SUCH EXPLANATION HE PROCEEDED TO IMPOSE PENALTY OF RS.1,19,749/ - U/S. 271(1)(C) OF THE ACT. THE CIT(A) CONFIRMED THE SAME. 5. WE NOTE THAT THE ASSESSEE CONTENDED THAT THE AMOUNT SAID TO HAVE BEEN ADDED ON ACCOUNT OF INTEREST INCOME HAS BEEN DISCLOSED IN THE RETURN OF INCOME AS INCOME FROM OTHER SOURCES IN ADDITION TO INCOME FROM HOUSE 3 ITA NO . 409/PUN/2018, A.Y. 2014 - 15 PROPERTY AND INCOME FROM BUSINESS. FURTHER, IT WAS CONTENDED THAT THE SAID AMOUNT WAS ADJUSTED AGAINST THE BUSINESS LOSS AND IT IS NOT SUBJECTED TO TAX. WE NOTE THAT THE ASSESSEE FURTHER SUBMITTED BEFORE THE CIT(A) THAT IN THE EARLIE R YEARS ADJUSTMENT OF BUSINESS LOSS WITH OTHER SOURCES OF INCOME HAS BEEN ACCEPTED BY THE AO. THE CASE OF THE CIT(A) WAS THAT THE ASSESSEE HAS NO BUSINESS ACTIVITY EXCEPT RENTING THE PREMISES AND OFFERING THE SAME AS INCOME FROM HOUSE PROPERTY. WHEN THER E IS NO BUSINESS ACTIVITY THE ASSESSEE CANNOT CLAIM BUSINESS . LOSS AND THE ADJUSTMENT SO CLAIMED TO HAVE MADE AGAINST THE INCOME FROM OTHER SOURCES (INTEREST INCOME) IS NOT LEGALLY SUSTAINABLE. AS DISCUSSED ABOVE, THE AO INITIATED PENALTY PROCEEDINGS FOR FURNISHING INACCURATE PARTICULARS OF INCOME BUT HOWEVER, WE NOTE THAT THE CIT(A) TAKEN COGNIZANCE OF THAT THE ADDITION SO MADE ON WHICH PENALTY PROCEEDINGS INITIATED HAS BEEN SHOWN AS INCOME FROM OTHER SOURCES WHICH HELD TO BE NOT ADJUSTABLE AGAINST THE B USINESS LOSSES. THEREFORE, IT IS CLEARLY ESTABLISHED THAT THE ASSESSEE HAS DISCLOSED THE INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES IN THE RETURN OF INCOME AND THE PENALTY ON WHICH IT WAS IMPOSED FOR FURNISHING INACCURATE PARTICULARS OF INCO ME, IN OUR OPINION, IS NOT JUSTIFIED, MORE SO, IT IS A MERELY A CASE OF DISALLOWANCE ON WHICH THE PENALTY IMPOSED BY THE AO AS CONFIRMED BY THE CIT(A) IS NOT SUSTAINABLE. WE TAKE SUPPORT FROM THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE P ETROPRODUCTS (P) LTD. REPORTED IN 322 ITR 158 (SC) WHICH HELD MERELY MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS AND HELD THE PENALTY IMPOSED THEREON CANNOT BE SUSTAINED. 4 ITA NO . 409/PUN/2018, A.Y. 2014 - 15 THUS, THE ORDER OF CIT(A) IS NOT JUSTI FIED AND IT IS SET ASIDE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH JUNE, 2021. SD/ - SD/ - ( INTURI RAMA RAO ) ( S.S. VISWANETHRA RAVI ) ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 08 TH JUNE, 2021 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A) - 7, PUNE 4. THE PR. CIT - 6, PUNE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. // // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE