ITO 1(2)(4), MUMBAI V. ORWO P. LTD, MUMBAI

ITA 5020/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92506 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 02-02-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 03-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMA N
• Keywords: Business income; Difference of opinion
• Section: 143(3)

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI C - BENCH , , BEFORE S/SH. I . P . BANSAL,JUDICIAL MEMBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO 5020 /MUM/201 3 , / ASSESSMENT YEAR - 200 3 - 04 ITO - 1(2)(4) ROOM NO. 527 , AAYAKAR BHAVAN MUMBAI - 20. VS M/S. ORWO PVT. LTD. BLOCK NO.1, STADIUM HOUSE VEER NARIMAN ROAD MUMBAI - 2 0 PAN:AAA CO 4147 M ( / APPELLANT ) ( / RESPONDENT ) /ASSESSEE BY :NONE / REVENUE BY :SHRI PREMA N AND J. / DATE OF HEARING : 30 - 04 - 2015 / DATE OF PRONOUNCEMENT : - 0 5 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(AC T) PER RAJENDRA, AM - CHALLENGING THE ORDER DT.17/4/2013 OF THE CIT(A) - 20,MUMBAI, ASSESSING OFFICER(AO) HAS RAISED FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN DELETING THE PENALTY U/S. 271(1)(C) OF THE ACT OF RS.6,17,234/ - WITHOUT APPRECIATING THE FACTS OF THE ASSESSEES CASE THAT DECLARING BUSINESS INCOME BY THE ASSESSEE AS AGAINST ASSESSABLE UNDER THE HEAD NCOME FROM HOUSE PROPER TY, AND I NCOME FROM OTHER SOURCES IS A DELIBERATE ACT FOR FILING INACCURATE PARTICULAR OF TOTAL INCOME WITHIN THE MEANING OF EXPLANATION (A) AND (B) OF SECTION 271(1)(C) OF THE I.T. ACT 1961. 2. THE EFFECTIVE GROUND OF APPEAL IS LEVY OF PENALTY U/S. 271 (1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME. WHILE COMPLETING THE ASSESSMENT U/S. 143(3) R.W.S. 147 OF THE ACT THE AO LEV I ED PENALTY OF RS.6,17,234/ - ON THE GROUND THAT THE ASSESSEE HAD SHOWN INCOME FROM HOUSE PROPERTY AS INCOME FRO M BUSINESS AND IT HAD WRONG L Y CLAIMED SALES TAX BEING LIABILITY OF F INANCIAL Y EARS 1982 - 83 AND 1990 - 91. ACCORDING TO THE AO THE CASE WAS REOPENED AND ESCAPEMENT ASSESSMENT WAS MADE ON 26.11.2008 DETERMINING ASSESSED INCOME AT RS.20.12 LACS, THAT THE ASSESS EE HAD RECEIVED INCOME FROM LEAVE AND LICENCE PROPERTY THAT THE SAID INCOME WAS NOT TO BE ASSESSED AS BUSINESS INCOME, THAT PROVISIONS OF SEC TION 22 - 24 OF THE ACT STIPULATED THAT RENT RECEIVED FROM LETTING OUT OF PROPERTY COULD BE TAXED AS INCOME FROM HOUS E PROPERTY ONLY. AS REGARDS SALES TAX THE A SSESSEE OBSERVED THAT IN THE YEAR UNDER CONSIDERATION NO PROVISION COULD BE MADE, THAT LIABILITY ASCERTAINED BY SALES TAX HAD BEEN PAID BY THE DAUGHTER OF THE PERSON WHO WAS LOOKING AFTER COMPANY AFFAIRS. THE AO F URTHER HELD THAT BOTH THE ADDITIONS WERE CONFIRMED BY THE FIRST APPE L LA TE AUTHORITY (FAA) THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND THEREBY HAD CONCEALED ITS INCOME. 2 5020/13 ORWO PVT. LTD.(03 - 04) 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFERRED AN AP PEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER AND THE PENALTY ORDER HE HELD THAT THERE WAS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME, THAT THE AO HAD IMPOSED PENALTY MERELY BECAUSE OF CHANGE OF HEAD OF INCOME FROM BUSINESS TO INCOME FROM HOUSE PROPERTY, THAT BUY ITSELF IT WAS NOT FURNISHING OF INACCURATE PARTICULARS OF INCOME, THAT SALES TAX LIABILITY CLAIM (RS.12.05 LACS) WAS MADE BECAUSE THE LIAB ILITY HAD CRYSTALLIZED DURING THE YEAR, THAT DISALLOWANCE O F EXPENDITURE DID NOT MEAN THAT THE ASSESSEE HAD FILED INACCURATE PARTICULARS OF INCOME, THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS. HE REFERRED TO THE ORDER OF KOTAK MAHINDRA GOLD MUTUAL (15 SO T 722) AND RELIANCE PETROPRODUCTS LTD. (323 ITR 158). FINALLY HE DELETED THE PENALTY LEVIED BY THE AO. 4. DURING THE COURSE OF HEARING BEFORE US THE DEPARTMENTAL REPRESENTATIVE(DR)SUPPORTED THE ORDER OF AO. AS STATED EARLIER, NONE APPEARED ON BEHALF OF TH E ASSESSEE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT WHILE COMPLETING THE ASSESSMENT THE AO HAD DISALLOWED SALES TAX LIABILITY AND HAD ALSO HELD THAT INCOME FROM LETTING OUT OF PROPERTY HAD TO BE TAXED UNDER TH E HEAD INCOME FROM HOUSE PROPERTY, THAT ASSESSEE HAD SHOWN BOTH THE DISPUTED AMOUNTS IN THE RETURN OF INCOME, THAT AN EXPLANATION ABOUT THE SALES TAX LIABILITY WAS FILED IN SCHDULE - 9 IN THE NOTES ON ACCOUNTS. AS FAR AS LEVYING OF CONCEALMENT PENALTY IS CON CERNED FOR CHANGE OF HEAD OF INCOME IS CONCERNED, WE ARE OF THE OPINION THAT IN SUCH CASES PROVISIONS OF SEC. 271(1)(C) OF THE ACT SHOULD NOT BE INVOKED. AN ADDITION MADE DURING THE ASSESSMENT PROCEEDINGS AND ITS CONFIRMATION BY THE FAA DURING THE APPELLAT E PROCEEDINGS SHOULD NOT RESULT IN AUTOMATIC LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. IN SHORT, DIFFERENCE OF OPINION BETWEEN AO AND THE ASSESSEE, UNDER WHICH AN ITEM OF INCOME SHOULD BE ASSESSED CANNOT BE BASE FOR IMPOSING PENALTY. AS STATED EARLIER THE ASSESSEE HAD FILED AN EXPLANATION OF SALES TAX LIABILITY OF EARLIER YEAR WHICH WAS CRYSTALLIZED DURING THE YEAR UNDER APPEAL. CONFIRMATION OF DISALLOWANCE MADE BY THE AO IN THAT REGARD COULD NOT BE EQUATED WITH FURNISHING OF INACCURATE PARTICULARS. IN THE CASE OF RELIANCE PETROPRODUCTS THE HON'BLE SUPREME COURT HAS HELD AS UNDER : - A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME - TAX ACT, 1961,SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INC OME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS F OUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTI - CULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO S TRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNIS H THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PE NALTY UNDER SECTION 271(1)(C) A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING 3 5020/13 ORWO PVT. LTD.(03 - 04) INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. RESPECTFULLY FOLLOWING THE ABOVE AND CONSIDERING THE FACTS AND CIRCUMSTA NCES OF THE CASE WE ARE OF THE OPINION THAT ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY. THEREFORE, CONFIRMING HIS ORDER WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,APPEAL FILED BY THE AO STANDS DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 8TH ,MAY,2015. 8 TH M AY, , 2015 SD/ - SD/ - ( /I . P . B ANSAL ) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 08 .05.2015 JV, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //T RUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.