FALCON CREST CONDOMINIUM, MUMBAI V. ITO 17(3)(2), MUMBAI

ITA 485/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5697 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 20-01-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 23-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Wrong claim
• Section: 142(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI . . , , , BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEM BER . / ITA NO. 485 /MUM./ 2012 ( / ASSESSMENT YEAR : 20 07 0 8 ) M/S. FALCON CREST CONDOMINIUM G.D. AMBEDKAR, PAREL VILLAGE MUMBAI 400 012 .. / APP ELLANT V/S INCOME TAX OFFICER WARD 17(3) (2), MUMBAI .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AAAAF0115A / ASSESSEE BY: MR. MADHUR AGRAWAL / REVENUE BY : MR. RAVI PRAKASH / DATE OF HEARING 2 2 .0 1 .201 4 / DATE OF ORDE R 31.01.2014 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL HA S BEEN P REFERRED BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDER 9 TH NOVEMBER 2011 , PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX X IX , MUMBAI, FOR THE ASSESSMENT YEAR 2007 08, IN THE MATTER OF PENALTY LEVIED UNDER SECTION 271(1)(C) M/S. FALCON CREST CONDOMINIUM 2 FOR ` 2,00,204, BY THE ASSESSI NG OFFICER AND CONFIRMED BY THE LEARNED COMMISSIONER (APPEALS). 2 . FACTS IN BRIEF : THE ASSESSEE IS A HOUSING SOCIETY AND IS FORMED AS CONDOMINIUM OF RESIDEN TS RATHER THAN A CO OPERATIVE SOCIETY. THE STATUS OF THE ASSESSEE IS MORE OF AN ASSOCIATION OF PERSON S (FOR SHORT AOP ) , WHOSE MEMBERS CONTRIBUTE THEIR MONTHLY MAINTENANCE AND OTHER CHARGES TOWARDS COMMON CAUSE LIKE PROPERTY TAX, SECURITY CHARGES, WATER TAX, ETC. SINCE THE ENTIRE ACTIVITY IS AMONG THE MEMBERS WITH NO PROFIT MOTIVE, THE ASSESSEES CLAIM H AS BEEN THAT IT IS BASED ON CONCEPT OF MUTUALITY NOT LIABLE TO BE TAX VIS A VIS EXPENDITURE INCURRED. IN THE RETURN OF INCOME, THE ASSESSEE HAD SHOWN LOSS OF ` 50,530. THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS HELD THAT UNDER THE PROVISIONS OF SECTION 80P(2), THE FOLLOWING AMOUNTS ARE NOT ELIGIBLE FOR DEDUCTION I.E., (I) INTEREST RECEIVED ON FIXED DEPOSIT FROM BANK AT ` 1,39,137; (II) LICENCE FEE ON LETTING OUT OF IMMOVABLE PROPERTY ; AND (III) TRANSFER FEE , AS THE ASSESSEE ITSELF, VIDE LETTER DA TED 24 TH AUGUST 2009, OFFERED THE SAME FOR DISALLOWANCE . ACCORDINGLY, THE ASSESSING OFFICER HAD MADE FOLLOWING ADDITIONS IN THE ASSESSMENT ORDER. INTEREST OF FDR (SINCE THIS AMOUNT IS NOT COVERED U/S 90P(2) BENEFIT; ` 1,39,137 AMOUNT RECEIVED AS LICENCE FEE ON LETTING OUT OF IMMOVABLE PROPERTY; ` 6,31,793 TRANSFER FEE. ` 50,000 ` 8,20,930 3 . THEREAFTER, THE ASSESSEE DID NOT PREFER ANY APPEAL BEFORE THE LEARNED COMMISSIONER (APPEALS). IN THE PENALTY PROCEEDINGS, THE ASSESSING OFFICER LEVIED PENALTY ON S UCH DISALLOWANCE MAINLY ON THE M/S. FALCON CREST CONDOMINIUM 3 GROUND THAT THE ASSESSEE HIMSELF HAD COME FORWARD WITH A LETTER DATED 24 TH AUGUST 2009, DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS FOR DISALLOWING THE SAID DEDUCTION. THE LEARNED COMMISSIONER (APPEALS) TOO HAS CONFIRMED THE PENALTY MAINLY ON THE GROUND THAT SUCH A DISALLOWANCE WAS OFFERED ONLY WHEN THE CASE WAS SELECTED FOR SCRUTINY. THEREFORE, IT IS A CASE OF ADMITTED WRONG CLAIM OF DEDUCTION. 4 . BEFORE US, THE LEARNED COUNSEL, MR. MADHUR AGRAWAL, ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE VERY PREMISE OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80B IS WHOLLY ERRONEOUS , AS IN THE RETURN OF INCOME, THE ASSESSEE HAS NOT CLAIMED ANY SUCH DEDUCTION UNDER SECTION 80P. IN SUPPORT, HE DREW OUR ATTENTION TO THE COPY OF THE RETURN OF INCOME AND COMPUTATION OF INCOME AS PLACED IN THE PAPER BOOK AT PAGE 1 AND 2. HE FURTHER SUBMITTED THAT IN THIS CASE, THE ASSESSING OFFICER HAD SENT A NOTICE UNDER SECTION 142(1) , REQUIRING THE ASSESSEE TO FURNISH ONL Y THE FOLLOWING DOCUMENTS. I) COPY OF BANK ACCOUNT; II) COPY OF BALANCE SHEET FOR A.Y. 2006 07; III) DETAILS OF INVESTMENT MADE DURING THE YEAR; IV) DETAILS OF FAMILY ANTECEDENT & DRAWINGS; V) DETAILS OF INCOME FROM OTHER SOURCES. 5 . THERE WAS NO SUCH QUERY WITH REGARD TO THE DISALLOWANCE OF ANY CLAIM OF DEDUCTION. THE ASSESSEE, SUO MOTU, WITHOUT ANY QUERY BEING RAISED ON THIS ISSUE, VIDE LETTER DATED 24 TH MAY 2009, HAS OFFERED THE DISALLOWANCE ON THESE HEADS. THUS, THE ASSESSEE HAS HIMSELF MADE DISALLO WANCE WHICH DOES NOT WARRANT ANY PENALTY. MOREOVER, THE PREMISE OF THE ASSESSING OFFICER AS WELL AS THE LEARNED COMMISSIONER (APPEALS) IS FACTUALLY AND LEGALLY INCORRECT. M/S. FALCON CREST CONDOMINIUM 4 6 . ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IN ANY CA SE IF THE ASSESSEE HAS HIMSELF OFFERED FOR DISALLOWANCE, THEN THE REVENUE NEED NOT ESTABLISH CONCEALMENT OF INCOME FOR FURNISHING OF INACCURATE PARTICULARS. HE THUS, STRONGLY RELIED UPON THE ORDER OF THE LEARNED COMMISSIONER (APPEALS). 7 . WE HAVE HEARD THE R IVAL CONTENTIONS, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AS WELL AS THE MATERIAL AVAILABLE ON RECORD. IN THIS CASE, FIRST OF ALL, THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS) HAS PROCEEDED ON THE PREMISE THAT SUCH A CLAIM OF EXPENSES IS NOT LIABLE FOR DEDUCTION UNDER SECTION 80P(2). THIS VERY PREMISE ITSELF IS ERRONEOUS FROM THE RECORDS , AS THE ASSESSEE NEITHER, AT THE TIME OF FILING OF THE RETURN OF INCOME, NOR AT THE STAGE OF ASSESSMENT PROCEEDINGS, HAS CLAIMED THE DEDUCTION UNDER S ECTION 80P. IN THE NOTICE ISSUED UNDER SECTION 142(1) DATED 31 ST JULY 2009, THE ASSESSING OFFICER DID NOT RAISE ANY QUERY OR CALL FOR ANY DETAILS WITH REGARD TO THE CLAIM OF THE EXPENSES VIZ. INTEREST ON BANK FDR AND SAVING BANK ACCOUNT, LICENCE FEE ON LEA SED PROPERTY AND TRANSFER FEE , WHICH IS EVIDENT FROM THE CONTENTS OF THE DETAILS AROSE FROM THE NOTICE UNDER SECTION 142(1). THE ASSESSEE, SUO MOTU, VIDE LETTER DATED 24 TH AUGUST 2009, HAS GIVEN THE DETAIL REASON S FOR CLAIM OF EXPENDITURE AND WHY IT HAS OF FERED FOR DISALLOWANCE THE SAID EXPENDITURE S. SUCH A DISALLOWANCE HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. IT IS NOT A CASE WHERE THE ASSESSING OFFICER HAS CORNERED THE ASSESSEE OR EVEN RAISED ANY QUERY BEFORE THE ASSESSEE OFFERED FOR SUCH DISALLOWANCE. UNDER THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE OPINION THAT LEVY OF PENALTY IS NOT WARRANTED ON SUCH DISALLOWANCE OF EXPENDITURES, WHICH HAS BEEN OFFERED BY THE ASSESSEE ITSELF . MOREOVER, IT CANNOT BE THE CASE OF FURNISHING OF INACCURATE PARTICULARS O F INCOME AS ALL THE DETAILS WERE M/S. FALCON CREST CONDOMINIUM 5 FURNISHED AND THE REASONS WERE GIVEN WHY SUCH A CLAIM WAS MADE, THAT IS, ON PRINCIPLES OF MUTUALITY . ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND DELETE THE PENALTY CONFIRMED BY HIM. THUS, THE GROUND RAISED BY THE ASSESSEE IS TREATED AS ALLOWED. 8 . 7 . IN THE RESULT, ASSESSEES APPEAL IS TREATED AS ALLOWED . 31 ST JANUARY 2014 ORDER PRONOUNCED IN T HE OPEN COURT ON 31 ST JANUARY 2014 SD/ - . . R.C. SHARMA ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 31 ST JANUARY 2014 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI