ITO 17(3)(3), MUMBAI V. PARAMOUNT AUTO INDUSTRIES, MUMBAI

ITA 5080/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1378 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 23-06-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 07-09-2009
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SUTARIA
• Assessee Lawyers: M OHD IQBAL HINGORA
• Keywords: Business income; Difference of opinion
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C,MUMBAI BEFORE SHRI D.K. AGARWAL (JM) & SHRI R.K. PANDA (AM ) I.T.A.NO.5080/MUM/2009 (A.Y. 2005-06 INCOME-TAX OFFICR-17(3)(3), R.NO.613, PIRAMAL CHAMBERS, PAREL, MUMBAI-400 012. VS. M/S. PARAMOUNT AUTO INDUSTRIES, PLOT NO. 98, ROAD NO.16, ANDHERI (E), MUMBAI-400 093. APPELLANT RESPONDENT APPELLANT BY SHRI DEEPAK SUTARIA. RESPONDENT BY SHRI M OHD. IQBAL HINGORA. O R D E R PER R.K. PANDA, AM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 30-06- 2009 OF THE CIT(A)-XXVII, MUMBAI, RELATING TO ASSTT . YEAR 2005-06. 2. THE REVENUE IN ITS ONLY EFFECTIVE GROUND OF APPE AL HAS CHALLENGED THE ORDER OF CIT(A) IN CANCELING THE PENALTY OF RS.3,23 ,068/- LEVIED BY THE AO U/S. 271(1)(C) OF THE I.T. ACT. 3. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO IN THE ASSESSMENT U/S.143(3) OF THE I.T. ACT, FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF M/S. SHAMBHU INVESTMENT CO. LTD. REPORT ED IN 263 ITR 143, TREATED THE RENT RECEIVED BY THE ASSESSEE AS INCOME FROM H OUSE PROPERTY AS AGAINST BUSINESS INCOME DECLARED BY THE ASSESSEE. SUBSEQ UENTLY, IN PENALTY PROCEEDINGS, THE AO, IN ABSENCE OF ANY REPLY FROM T HE ASSESSEE, LEVIED PENALTY OF RS.3,23,068/- ON ACCOUNT OF THIS ADDITION U/S.27 1(1)(C) OF THE I.T. ACT. 4. IN APPEAL, IT WAS SUBMITTED THAT THE ASSESSEE HA S NOT MADE ANY INACCURATE PARTICULARS AND FULL DETAILS WERE FILED BEFORE THE AO. THE ADDITION WAS MADE ONLY ON ACCOUNT OF DIFFERENCE OF OPINION. IT WAS FURTHER SUBMITTED THAT IN EARLIER YEARS ITA 5080/M/09 PARAMOUNT AUTO INDUSTRIES 2 THE ASSESSEE HAS SHOWN SUCH RECEIPT AS INCOME FROM BUSINESS WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT. VARIOUS DECISIONS WERE CITED BEFORE THE CIT AND IT WAS SUBMITTED THAT THE ASSESSEE WAS UNDER A BONA FI DE BELIEF THAT SUCH INCOME WOULD BE TREATED AS INCOME FROM BUSINESS. 5. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE, THE CIT(A) DELETED THE PENALTY LEVIED BY THE AO. WHILE DOING SO, HE NOTED THAT THE ASSESSEE HAD CLAIMED THE RENTAL RECEIPT AS BUSINESS INCOME ON THE BASI S OF VARIOUS DECISIONS. FURTHER, TAX HAS BEEN DEDUCTED U/S.194-I. THEREFORE, IT CANN OT BE SAID THAT THE ASSESSEE HAS CONCEALED ITS PARTICULARS OF INCOME OR FURNISHE D INACCURATE PARTICULARS. THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL TO PROVE THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF ITS INCOME. FURTHER, THE I SSUE IS A DEBATABLE ONE. IT WAS FURTHER NOTED THAT THE INTENTION OF THE ASSESSEE CA NNOT BE DOUBTED AS THE ASSESSEE HAS SHOWN SUCH RENTAL INCOME AS BUSINESS INCOME SINCE EARLIER YEARS WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT. AGGRIEVE D WITH SUCH ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF AO AND CIT(A). WE FIND PENALTY HAS BE EN LEVIED BY THE AO ON ACCOUNT OF TREATMENT OF RENTAL RECEIPT AS INCOME FR OM HOUSE PROPERTY AS AGAINST BUSINESS INCOME TREATED BY THE ASSESSEE. WE FIND TH E CIT(A) CANCELLED THE PENALTY ON THE GROUND THAT THE ISSUE IS A DEBATABLE ONE, THE ASSESSEE WAS CLAIMING RENTAL RECEIPTS AS BUSINESS IN THE PAST WH ICH HAS BEEN ACCEPTED BY THE DEPARTMENT AND THERE WAS NEITHER CONCEALMENT OF IN COME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. I N OUR OPINION, THE CIT(A) WAS JUSTIFIED IN CANCELING THE PENALTY LEVIED BY THE A O U/S.271(1)(C) OF THE I.T. ACT. THE FINDING OF THE CIT(A) THAT THE ASSESSEES TREAT MENT OF RENTAL INCOME AS BUSINESS INCOME IN THE PAST HAS BEEN ACCEPTED BY TH E DEPARTMENT COULD NOT BE ITA 5080/M/09 PARAMOUNT AUTO INDUSTRIES 3 CONTROVERTED BY THE LD. D.R. FURTHER, THE ISSUE IS ALSO A DEBATABLE ONE. THEREFORE, WHEN THE ASSESSEE FILED THE RETURN TREATING THE REN TAL RECEIPT AS BUSINESS INCOME, IT CANNOT BE SAID THAT IT HAS CONCEALED ITS PARTICU LARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME OR WAS NOT UNDER A BONA FIDE BELIEF. 7. THE HONBLE SUPREME COURT IN A RECENT DECISION I N THE CASE OF RELIANCE PETROPRODUCTS LTD. (322 ITR 158) HAS HELD THAT THE WORDS INACCURATE PARTICULARS MEAN THAT THE DETAILS SUPPLIED IN THE RETURN ARE NO T ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. IN TH E ABSENCE OF A FINDING BY THE AO THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE, THERE WOULD BE NO QUESTION OF INVITING PENALTY U/S.271(1) OF THE I.T. ACT. IT HAS FURTHER BEEN HE LD THAT A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. IF THE CONTENTION OF THE REVENUE IS ACCEPTED, THEN, IN CASE OF EVERY RET URN, WHERE THE CLAIM MADE IS NOT ACCEPTED BY THE AO FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY U/S.271(1) OF THE I.T. ACT. THAT IS CLEARLY NOT TH E INTENTION OF THE LEGISLATURE. SINCE, IN THE INSTANT CASE, THE ASSESSEE HAS FURNIS HED FULL PARTICULARS IN RESPECT OF ITS INCOME AND SINCE SUCH TREATMENT OF RENTAL RECEI PT AS BUSINESS INCOME HAS BEEN ACCEPTED BY THE DEPARTMENT IN THE PAST, THEREF ORE MERELY BECAUSE THE AO REJECTED THE CLAIM OF THE ASSESSEE DURING THE YEAR, IN OUR OPINION, IT WILL NOT AMOUNT TO CONCEALMENT OF PARTICULARS OF INCOME OR F URNISHING OF INACCURATE PARTICULARS OF INCOME SO AS TO ATTRACT THE PROVISIO NS OF SEC. 271(1) OF THE I.T. ACT. IN THIS VIEW OF THE MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND ACCORDINGLY UPHOLD THE SAME. THE GROUND RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. ITA 5080/M/09 PARAMOUNT AUTO INDUSTRIES 4 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON THE 30TH DAY OF JUNE, 2010. SD/- SD/- (D.K. AGARWAL) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI:30TH JUNE , 2010. NG: COPY TO : 1.DEPARTMENT 2.ASSESSEE. 3 CIT(A)XXVII,MUMBAI. 4 CIT, CITY-17,MUMBAI. 5.DR,C BENCH,MUMBAI. 6. MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. ITA 5080/M/09 PARAMOUNT AUTO INDUSTRIES 5 DETAILS D ATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 23-06-2010 SR.PS/ 2 DRAFT PLACED BEFORE AUTHOR 24-06-2010 SR.PS/ 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER