M/s Gitanjali Finvest Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 5101/DEL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6666 (ITAT-DELHI)
• Duration Of Justice: 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 17-11-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 28-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K MADAN
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC-1 : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER ITA NO.5101/DEL/2016 ASSESSMENT YEAR : 2012-13 GITANJALI FINVEST PVT. LTD., 40-41, UA BUNGALOW ROAD, JAWAHAR NAGAR, NEW DELHI. PAN : AAACG4949D VS. ITO, WARD 10(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.K. MADAN, CA RESPONDENT BY: SHRI ANIL SHARMA, SR.DR DATE OF HEARING : 17.11.2016 DATE OF PRONOUNCEMENT: 18.11.2016 ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 22.7.2016 AFFIRMING THE PENALTY IMPOSED B Y THE ASSESSING OFFICE U/S 271(1)(C) OF THE ACT IN RELATION TO ASSE SSMENT YEAR 2012-13. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THA T THE ASSESSEE IS ENGAGED IN LETTING OUT OF MULTIPLEX AT GWALIOR AND EARNING REN TAL INCOME THEREFROM. NO OTHER BUSINESS ACTIVITY WAS CARRIED ON DURING TH E YEAR. ON A PERUSAL OF ITA NO.5101/DEL/2016 2 NOTE 3.2 TO PROFIT & LOSS ACCOUNT, THE AO NOTICED T HAT THE ASSESSEE EARNED RENTAL INCOME TO THE TUNE OF RS.1,00,76,400/- FROM ITS LET OUT MULTIPLEX AT GWALIOR AND THERE WAS NO OTHER BUSINESS INCOME EXCE PT INTEREST RECEIVED ON INCOME-TAX REFUND. ON GOING THROUGH THE COMPUTATIO N OF INCOME, IT WAS OBSERVED THAT THE ASSESSEE HAD SET OFF BUSINESS LOS S OF RS.25,75,427/- AGAINST HOUSE PROPERTY INCOME OF RS.14,67,716/- AND HAD ALSO CARRIED FORWARD REMAINING BUSINESS LOSS OF RS.11,07,711/-. SINCE THE ASSESSEE DID NOT CARRY ON ANY BUSINESS, THE AO HELD THAT NO EXPE NDITURE WAS ALLOWABLE. WHEN CONFRONTED, THE ASSESSEE ADMITTED THAT THERE W AS NO BUSINESS INCOME AND, HENCE, NO LOSS ON ACCOUNT OF BUSINESS WAS ALLO WABLE. THE AO, THEREFORE, REFUSED TO ALLOW BUSINESS LOSS OF RS.25. 75 LAC AND ALSO DID NOT ALLOW ITS CARRY FORWARD. PENALTY U/S 271(1)(C) OF THE ACT WAS IMPOSED ON THIS ACCOUNT WHICH WAS CONFIRMED IN THE FIRST APPEA L. THE ASSESSEE IS AGGRIEVED AGAINST THE CONFIRMATION OF PENALTY. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, I FIND THAT THE ASSESSEE SET OF F THE BUSINESS LOSS AGAINST THE HOUSE PROPERTY INCOME AND ALSO CARRIED FORWARD THE REMAINING BUSINESS LOSS IN THE COMPUTATION OF INCOME, A COPY OF WHICH IS ON RECORD. THE LOSS ITA NO.5101/DEL/2016 3 WAS INCURRED DUE TO CERTAIN EXPENSES, INCLUDING A M AJOR CHUNK TOWARDS INTEREST EXPENDITURE AND OTHER ESTABLISHMENT EXPENS ES. THE LD. AR CONTENDED THAT INSTEAD OF CLAIMING DEDUCTION FOR FU LL AMOUNT OF INTEREST AGAINST THE RENTAL INCOME, THE ASSESSEE INADVERTENT LY TOOK SOME PART OF INTEREST PAID TO ITS COMPUTATION UNDER THE HEAD PR OFIT AND GAINS OF BUSINESS OR PROFESSION. THIS CONTENTION HAS NOT BEEN CONTRO VERTED BY THE LD. DR. IT, THEREFORE, BECOMES CLEAR THAT SUCH AMOUNT OF INTERE ST EXPENDITURE SHOULD HAVE BEEN OTHERWISE ALSO ALLOWABLE TO THE ASSESSEE IN THE COMPUTATION OF INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. APART FROM THAT, THERE ARE CERTAIN EXPENSES WHICH WERE INCURRED BY T HE ASSESSEE TO MAINTAIN ITS CORPORATE STRUCTURE. THE MERE FACT THAT THE ASS ESSEE AGREED FOR NOT CLAIMING BENEFIT OF LOSS COMPUTED UNDER THE HEAD P ROFIT AND GAINS OF BUSINESS OR PROFESSION IN THE ASSESSMENT PROCEEDIN GS CANNOT PER SE BE A REASON TO IMPOSE PENALTY U/S 271(1)(C) OF THE ACT. PARAMETERS FOR MAKING AN ADDITION IN QUANTUM PROCEEDINGS ARE NOT SIMILAR TO THE PARAMETERS REQUIRED FOR BRINGING A CASE WITHIN THE FOUR CORNER S OF SECTION 271(1)(C). IT IS TRUE THAT THE FINDINGS GIVEN IN THE QUANTUM PROC EEDINGS ON A PARTICULAR POINT ARE RELEVANT IN PENALTY PROCEEDINGS, BUT, ARE NOT DECISIVE. WHEN I ADVERT TO THE FACTS OF THE INSTANT CASE, IT CLEARLY EMERGES THAT THE ASSESSEE ITA NO.5101/DEL/2016 4 DID NOT HAVE ANY INTENTION OF CONCEALING THE INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME AND THE AO CHANGED THE STRUCTURE OF INCOME AND DISALLOWED BUSINESS LOSS ON THE BASIS OF COMPUTATION MADE BY THE ASSESSEE IN ITS RETURN OF INCOME. THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158 (SC) HAS HELD THAT SIMPLY FOR THE REASON THAT THE AO DID NOT FIND THE CLAIM OF THE ASSESSEE TO BE SUSTAINABLE IN LAW UP TO A CERTAIN EXTENT, CA NNOT JUSTIFY PENALTY U/S 271(1)(C), MORE SO, WHEN PARTICULARS FURNISHED BY T HE ASSESSEE WERE NOT FOUND TO BE INACCURATE. UNDER THE GIVEN CIRCUMSTAN CES, I AM OF THE CONSIDERED OPINION THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN IMPOSING AND CONFIRMING THE PENALTY U/S 271(1)(C) OF THE ACT , WHICH IS HEREBY ORDERED TO BE DELETED. 4. IN THE RESULT, THE APPEAL FILED BY THE ASS ESSEE IS ALLOWED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 18 TH NOVEMBER, 2016. SD/- (R.S. SYAL) ACCOUNTANT MEMBER DATED: 18 TH NOVEMBER, 2016. DK ITA NO.5101/DEL/2016 5 COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI