SMT.SONAL SANJAY MEHTA, MUMBAI V. ITO WARD 19(3)(4), MUMBAI

ITA 4332/MUM/2018

• Counselvise Citation: [2020] 108 COUNSELVISE.COM (IT) 8610 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Appeal Filed On: 29-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S KHALSA
• Assessee Lawyers: MRUGAKSHI
• Keywords: Set aside
• Section: 271(1)(c); 143(3); 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.4332/M/2018 ASSESSMENT YEAR: 2013-14 SMT. SONAL SANJAY MEHTA, 5, HANVANT BHAVAN, 80/E, NAPEAN SEA ROAD, MUMBAI 400 026 PAN: AFNPM 5714E VS. ITO WARD 19(3)(4), ROOM NO.210, 2 ND FLOOR, MATRU MANDIR, TARDEO, MUMBAI 400 007 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : MS. MRUGAKSHI, A.R. REVENUE BY : SHRI T.S. KHALSA, D.R. DATE OF HEARING : 08.12.2020 DATE OF PRONOUNCEMENT : 28.12.2020 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 23.05.2018 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2013-14. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THIS IS AN APPEAL AGAINST THE ORDER OF THE LEARNED CIT (A) - 54 WHO HAS CONFIRMED THE PENALTY LEVIED BY THE LEARNED AO U/S. 271(L)(C) OF RS.4,54,2797-. 2. THE LEARNED CIT(A) - 54 ERRED IN NOT ACCEPTING THE SUBMISSION OF THE APPELLANT MADE VIDE LETTER DATED 25.04.2018 AND ALSO ERRED IN NOT CONSIDERING THE AFFIDAVIT GIVEN BY SHRI. NALIN DESAI, ACCOUNTANT OF THE APPELLANT IN PROPER PERSPECTIVE. THE APPELLANT FURTHER CRAVES LEAVE TO ADD, ALTER OR AMEND THE GROUNDS OF APPEAL. ITA NO.4332/M/2018 SMT. SONAL SANJAY MEHTA 2 3. THE ASSESSEE ALSO FILED THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL: 1. WITHOUT PREJUDICE TO THE GROUNDS OF APPEAL RAISED, THE LEARNED AO 85 CIT (A) ERRED IN LEVYING PENALTY U/S 271(L)(C) WHEN IN THE SHOW CAUSE THE CHARGE OF CONCEALMENT OR FILING OF INACCURATE PARTICULARS WAS NOT STRUCK OFF BY THE AO 85 HENCE THE AO & CIT (A) DID NOT APPLY THEIR MIND BEFORE LEVYING AND CONFIRMING THE CONCEALMENT PENALTY, AS UNDER WHAT CHARGE THE PENALTY WAS BEING INITIATED WAS NOT ASCERTAINED. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND THE GROUNDS OF APPEAL AT OR BEFORE THE HEARING OF THE APPEAL. 4. THE ONLY ISSUE RAISED BY THE ASSESSEE IS AGAINST THE ORDER OF LD. CIT(A) CONFIRMING THE PENALTY OF RS.4,54,279/- BY LD. CIT(A) AS LEVIED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT. 5. THE FACTS IN BRIEF ARE THAT THE ASSESSMENT IN THIS CASE WAS FRAMED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 07.03.2016 ASSESSING THE TOTAL INCOME AT RS.29,32,810/- AS AGAINST THE RETURNED INCOME OF RS.14,62,650/- AS PER THE RETURN OF INCOME FILED ON 28.09.2013. WHILE FRAMING THE ASSESSMENT ORDER THE AO MADE THREE ADDITIONS. ONE IN RESPECT OF CHANGE OF HEADS OF INCOME OF RS.6,49,600/- WHICH WAS OFFERED BY THE ASSESSEE UNDER THE HEAD OF OTHER SOURCES. THE ASSESSEE RECEIVED COMPENSATION OF RS.9,28,000/- AND AFTER DEDUCTION OF EXPENSES OFFERED AN AMOUNT OF RS.1,78,889/- UNDER THE HEAD INCOME FROM OTHER SOURCES WHICH WAS REJECTED BY THE AO AND THE COMPENSATION WAS TREATED AS RENT RECEIVED AND AFTER ALLOWING STANDARD DEDUCTION OF 30% OF RS.2,78,400/- THE INCOME OF RS.6,49,600/- WAS TREATED AS FROM HOUSE PROPERTY. SECOND ADDITION MADE BY THE AO HAS WAS OF RS.5,51,012/- WHICH WAS CLAIMED BY THE ASSESSEE AS INTEREST EXPENSES IN THE RETURN OF INCOME. THE SAID AMOUNT OF RS.5,51,012/- WAS DEBITED TO THE CAPITAL ACCOUNT AND CLAIMED FROM INCOME FROM OTHER SOURCES AT ITA NO.4332/M/2018 SMT. SONAL SANJAY MEHTA 3 THE TIME OF COMPUTATION OF INCOME WHEREAS THIS WAS NOT INTEREST ON LOAN BUT IN FACT SELF ASSESSMENT TAX PAID BY THE ASSESSEE. WHEN THIS WAS POINTED OUT TO THE ASSESSEE, THE SAME WAS REPLIED BY THE LD. A.R. THAT THIS WAS A TYPO ERROR AND WRONGLY WRITTEN AS INTEREST EXPENSES. THE THIRD AND FINAL ITEM OF ADDITION MADE BY THE AO WAS RS.4,48,439/- WHICH WAS ADDED BY THE AO ON THE GROUND THAT ASSESSEE HAS BORROWED FUNDS AT A HIGHER RATE AND ADVANCED MONEY AT A LOWER RATE. THEREAFTER, THE AO VIDE ORDER DATED 27.09.2016 LEVIED A PENALTY OF RS.4,54,279/- UNDER SECTION 271(1)(C) OF THE ACT BEING EQUAL TO 100% OF THE TAX SOUGHT TO BE EVADED ON BOTH THE CHARGES FOR CONCEALMENT OF INCOME AS WELL AS FILING INACCURATE PARTICULARS OF INCOME. THE ASSESSEE CHALLENGED THE ORDER OF AO BEFORE THE LD. CIT(A) WHO ALSO DISMISSED THE APPEAL OF THE ASSESSEE. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THIS CASE UNDISPUTEDLY THE AO HAS MADE THREE ADDITIONS AS HAVE BEEN DISCUSSED ABOVE WHILE FRAMING THE ASSESSMENT. IN THE CASE OF FIRST TWO ITEMS OF ADDITIONS, THE AO HAS STATED IN THE ASSESSMENT ORDER THAT PENALTY IS INITIATED FOR CONCEALMENT OF INCOME AND INACCURATE PARTICULARS OF INCOME AND IN RESPECT OF THIRD ITEM OF ADDITION AO HAS NOT STATED ANYTHING AT ALL IN THE ASSESSMENT ORDER. WE HAVE ALSO PERUSED AND EXAMINED THE NOTICE ISSUED UNDER SECTION 271(1)(C) READ WITH SECTION 274 OF THE ACT AND FIND THAT AO HAS NOT STATED THE ONE OF THE TWO LIMBS ON WHICH THE PENALTY WAS PROPOSED TO BE LEVIED. SIMILARLY, AT THE TIME OF LEVYING THE PENALTY, THE AO HAS LEVIED THE SAME IN A MECHANICAL MANNER ON BOTH THE CHARGES WHICH IS AGAINST THE PROVISIONS OF LAW AND THE JUDICIAL PRECEDENTS. UNDER THESE CIRCUMSTANCES, WE ARE NOT IN A ITA NO.4332/M/2018 SMT. SONAL SANJAY MEHTA 4 POSITION TO SUSTAIN THE ORDER OF LD. CIT(A) UPHOLDING THE PENALTY. ACCORDINGLY, WE ARE INCLINED TO SET ASIDE THE ORDER OF LD CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY. 7. APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.12.2020. SD/- SD/- ( RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 28.12.2020. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.