SUPERB ROYAL TRAVELS & TOURS P. LTD, MUMBAI V. ITO 7(2)(4), MUMBAI

ITA 4147/MUM/2012

• Counselvise Citation: 414719914 RSA 2012
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 08-01-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 13-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Assessee Lawyers: VIMAL PUNMIYA
• Keywords: Depreciation; Difference of opinion
• Section: 15

Judgement Text

` IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI . . , !' #'' ' , $ % BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : 4147 / / 2012 A.Y. 2005-06 ITA NO. : 4147/MUM/2012 (ASSESSMENT YEAR: 2005-06) M/S SUPERB ROYAL TRAVELS AND TOURS PVT LTD, 130/131, NATIONAL FILM GODWAN MAGUL LANE, MAHIM, MUMBAI -400 016 PAN: AAACS 8023 J VS INCOME TAX OFFICER7(2)(4), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIMAL PUNMIYA RESPONDENT BY : SHRI M L PERUMAL /DATE OF HEARING : 08-01-2014 / DATE OF PRONOUNCEMENT : 15-01-2014 ( O R D E R #'' ' , : PER VIVEK VARMA, JM: THE INSTANT APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A) 13, MUMBAI, DATED 21.01.2012. 2. THE SOLITARY ISSUE PERTAINS TO THE SUSTAINING OF PENALTY OF RS. 1,27,995/- U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. THE BASIC FACTS ARE THAT THE ASSESSEE RECEIVED RENT FROM: SOUTH INDIAN COOPERATIVE BANK RS. 15,75,000 INDIAN BANK RS. 1,89,540 RS. 17,64,540 4. AGAINST SUCH RENTAL INCOME, THE ASSESSEE CLAIMED EXPE NSES SUCH AS SOCIETY CHARGES, CONVEYANCE, REPAIRS & MAINTENANCE, RA TES & TAXES, M/S SUPERB ROYAL TRAVELS AND TOURS PVT LTD ITA NO. 4147/MUM/2012 2 INTEREST, DEPRECIATION, AGGREGATING TO RS. 14,58,890/-. THE AO REQUIRED THE ASSESSEE TO EXPLAIN, AS TO WHY THE INCOME FROM REN T BE NOT TREATED AS INCOME FROM HOUSE PROPERTY. THE ASSESSEE ON SUCH AC TION BY THE AO, ACCEPTED THE INCOME TO BE UNDER THE HEAD HOUSE PROPERTY. 5. THE AO THUS TREATED THE VARIANCE OF INCOME, AS CONS EQUENCE OF THE CHANGE IN HEAD OF INCOME, AS AN ADDITION AND ASSESSED THE SAME AT RS. 5,41,724/-. AS A CONSEQUENCE THEREOF, THE AO INFERRED T HAT PENALTY WAS EXIGIBLE AND THUS INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) AND LEVIED THE PENALTY AT RS. 1,27,995/-. 6. THE ASSESSEE APPROACHED THE CIT(A) SEEKING RELIEF ON T HE LEVY OF PENALTY U/S 271(1)(C), BUT THE CIT(A) SUSTAINED THE ACTION OF THE AO AND SUSTAINED THE PENALTY. 7. AGGRIEVED, THE ASSESSEE IS NOW BEFORE THE ITAT. 8. BEFORE US, THE AR SUBMITTED THAT NEITHER THIS WAS A C ASE OF CONCEALMENT OF PARTICULARS OF INCOME NOR THE CASE OF FURNISH ING OF INACCURATE PARTICULARS OF INCOME AND NOR IS A CASE WHERE THE AO HAS INFERRED A FINDING, WHICH WOULD ATTRACT PENAL PROCEEDINGS. THE AR ALSO SUBMITTED THAT PENALTY CANNOT BE LEVIED ON A CHANGE OF H EAD OF INCOME OR WHERE THE CLAIM OF THE ASSESSEE IS NOT ACCEPTED BY T HE REVENUE AUTHORITY. THE AR CITED THE FOLLOWING DECISIONS FROM THE VARIOUS FORA: 1. RELIANCE PETROPRODUCTS VS CIT 322 ITR 158 (SC) : MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW DOE S NOT ATTRACT PENALTY UNDER SECTION 271(1)(C). 2. CIT VS INDERSONS LEATHER P. LTD. 328 ITR 167 (HONBLE P&H HIGH COURT) : THERE CANNOT BE ANY PENALTY WHEN THE AO TREATS RENT AL RECEIPT UNDER A DIFFERENT HEAD. 3. M/S EUROLINK TRADING P. LTD. VS INCOME TAX OFFICER-9(1) (3) [ITAT J BENCH, MUMBAI ITA NO. 2925/MUM/2010(AY: 2004-05) : THERE CAN BE GENUINE DIFFERENCE OF OPINION IN APPRECIAT ING THE PRINCIPLES OF LAW BUT IT DOES NOT MEAN THAT THE ASSESSEE DELIBERATELY T RIED TO CONCEAL THE INCOME. UNDER THE FACTS OF THE PRESENT CASE THERE IS NO SCOP E FOR CONSIDERING THAT THERE IS CONCEALMENT OF INCOME. IN THE SAME WAY, THERE IS NO C ASE FOR FURNISHING INACCURATE PARTICULARS AS ALL THE DETAILS INCLUDING THE AG REEMENT WERE PLACED ON RECORD. THEREFORE, WE HAVE NO HESITATION IN CANCELING TH E PENALTY. 4. DHANANJAY V. GUPTA, MUMBAI VS DEPARTMENT OF INCOME T AX ON 8 MAY, 2013 [ITA 3719/MUM/2011] : IT WAS HELD THAT MERELY BECAUSE THE ASSESSEE HAD MADE A CLAIM WHICH WAS NOT ACCEPTED OR ACCEPTABLE TO THE REVENUE, THAT BY ITSEL F COULD NOT ATTRACT THE PENALTY U/S 271(1)(C). AS NOTED BY THE LD. CIT(A) IN HIS IMPUGNED ORDERS IN THIS REGARD, FULL DISCLOSURE WAS MADE BY THE ASSESSEE REGAR DING THE NATURE OF HIS M/S SUPERB ROYAL TRAVELS AND TOURS PVT LTD ITA NO. 4147/MUM/2012 3 INCOME WHICH WAS ALSO REFLECTED IN THE CERTIFICATE ISSUED BY THE EMPLOYER. EVEN THE GENUINENESS OF THE EXPENDITURE CLAIMED TO BE INCURR ED BY THE ASSESSEE FOR EARNING COMMISSION INCOME ETC. WAS NOT DOUBTED BY THE AO. THE ASSESSEE THUS CANNOT BE SAID TO BE GUILTY OF FURNISHING INACCURATE PART ICULARS OF HIS INCOME AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT LTD. (SUPRA) AND THE CORRESPONDING ADDITION MADE TO H IS TOTAL INCOME BEING MERELY THE RESULT OF CHANGE OF HEAD OF INCOME, WE FIN D OURSELVES IN AGREEMENT WITH THE LD. CIT(A) THAT IT WAS NOT A FIT CASE TO IMPO SE PENALTY U/S 271(1)(C). WE THEREFORE UPHOLD THE ORDER OF THE LD. CIT(A) CANCELING T HE PENALTY IMPOSED BY THE AO U/S 271(1)(C). 5. M/S CROWN TRADELINK PVT LTD VS ASST. CIT (ITA NO. 276 8/AHD/2012] 2768/AHD/2012] : THE ADDITION WAS MADE MERELY BECAUSE OF A CHANGE IN TH E HEAD OF INCOME. IN THE ABSENCE OF INACCURACY IN THE BOOKS OF ACCOUNTS OR CONCEALMENT OF FACTS, PENALTY U/S 271(1)(C) CANNOT BE LEVIED. 6. DY. CIT VS JMD ADVISORS PVT. LTD. (08.02.2008 ITAT DELHI) : A MERE CHANGE OF HEAD OF INCOME BY THE AO IN THE ASSE SSMENT CANNOT BE CONSTRUED AS CONCEALMENT AS ENVISAGED IN SEC. 271(1)(C ) SO AS TO ATTRACT THE PENAL PROVISIONS CONTAINED THEREIN. 7. SABARA IMPEX LIMITED C/O. G.P. MEHTA AND CO. VS INCO ME TAX OFFICER (05.10.2011 ITAT MUMBAI) : IN CASE, AS A RESULT OF THE RELATED ADJUSTMENT, THERE WAS NO CONCEALMENT OF INCOME, BUT ONLY CHANGE OF HEAD, CLEARLY THERE COULD NO T BE AN OCCASION TO IMPOSE CONCEALMENT PENALTY U/S 271(1)(C). 8. PFIZER PHARMACEUTICALS VS DCIT 49 DTR (MUM)(TRI)16 : NO PENALTY CAN BE LEVIED FOR MERE CHANGE IN THE HEAD O F INCOME. 9. CIT VS SHYAM TEX INTERNATIONAL LTD. [43 DTR (DEL)19] : NO PENALTY CAN BE LEVIED FOR MERE CHANGE IN THE HEAD O F INCOME. 10. INDUSTRIAL DEVELOPMENT BANK OF INDIA LTD. VS DY. CIT 42 SOT 325 : A LEGAL CLAIM PER SE, RIGHT OR WRONG, CANNOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. 11. CEMENT MARKETING CO. OF INDIA LTD VS AST. CST 1980 1 24 ITR 15 SC CIT V. AHMED TEA CO. (P) LTD. (1978) 113 ITR 74 (GAU) ADL. CIT V. SAWAN MOTOR STORES 109 ITR 660 (AP) UNLESS THE FILING OF RETURN IS ACCOMPANIED BY A GUILTY MIND , PENALTY U/S 271(1)(C) CANNOT BE LEVIED. 12. VEEJAY SERVICE STATION V ASST. CIT 112 TTJ 824 (DELHI) : WHERE ASSESSEE HAD DISCLOSED COMPLETE FACTS BEFORE AO AND IT HAD ADOPTED A PARTICULAR COMPUTATION OF THE CAPITAL GAIN WHICH DID NOT NEED APPROVAL OF AO THAT WOULD NOT MEAN THAT ASSESSEE HAD FURNISHED INADE QUATE PARTICULARS. 13. WHERE THE ADDITION IS MADE ON THE BASIS OF DIFFERENCE OF OPINION BETWEEN THE AO AND THE ASSESSEE, PENALTY U/S 271(1)(C) CANNOT BE LE VIED. ITO VS. OASIS SECURITIES LTD (2010) 37 SOTR 63 CIT (CENTRAL) LUDHIANA VS. SANITARY IMPROVEMENT & TILES MFG. CO. 133 ITR 334 : 9. THE AR, THEREFORE, PLEADED THAT NO PENALTY IS EXIGIBLE O N THE GIVEN SET OF FACTS AND PLACED RELIANCE ON THE ABOVE DECISIONS. 10. THE DR, RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 11. WE HAVE HEARD THE ARGUMENTS AND HAVE PERUSED TH E FACTS AND THE ORDERS OF THE REVENUE AUTHORITIES AND THE CASE LAWS CITED BEFORE US. AT THE OUTSET, IT IS A MATTER OF FACT THAT THE ASSESSEE WAS CLAIMING INCOME UNDER ONE HEAD AND THE REVENUE AUTHORITIES ASSE SSED THE ASSESSEE UNDER A DIFFERENT HEAD. IN SO FAR AS FURNISHING OF PRIMARY MATERIAL, THERE WAS NEITHER ANY DISPUTE, NOR AN ADVERSE ALLEGATION. THE M/S SUPERB ROYAL TRAVELS AND TOURS PVT LTD ITA NO. 4147/MUM/2012 4 ONLY DISPUTE IS THAT THE REVENUE AUTHORITIES TREATED TH E INCOME NOT FROM RENT BUT FROM HOUSE PROPERTY, THIS BY ITSELF CANNOT FO RM THE BASIS FOR THE LEVY OF PENALTY, AS HELD BY THE ABOVE MENTIONED D ECISIONS AND OTHER CATENA OF DECISIONS ON THE ISSUE OF CANCELLATION OF PENALTY, WHEN THE REVENUE AUTHORITIES CHANGE THE HEAD OF INCOME. 12. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, WE ARE OF TH E OPINION THAT UNDER THE GIVEN SET ASIDE CIRCUMSTANCES, PENALTY IS NOT EXIGIBLE. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO CANCEL THE PENALTY. 13. IN THE RESULT, THE APPEAL, AS FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JANUARY, 2014. SD/- SD/- ( . . ) ( #'' ' ) (R. C. SHARMA) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 15 TH JANUARY, 2014 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT (A)-13, MUMBAI. 4) THE CIT -7, MUMBAI, 5) !'# $ , % $ , &'( / THE D.R. E BENCH, MUMBAI. 6) #) * COPY TO GUARD FILE. %+,- / BY ORDER / / TRUE COPY / / . / / '0 % $ , &'( DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *23/ . . * CHAVAN, SR. PS