SHREE PRABHA TRADE & FINANCE CO, MUMBAI V. ITO 14(2)(3), MUMBAI

ITA 530/MUM/2014

• Counselvise Citation: 53019914 RSA 2014
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: E
• Assessment Year: 2002-2003
• Appeal Filed On: 22-01-2014
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Keywords: Business income; Wrong claim; Difference of opinion; Bonafide mistake; Change of opinion

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ./ ITA NO . 529 - 531 / MUM/20 1 4 ( / ASSESSMENT YEAR S : 2001 - 02 TO 20 0 3 - 0 4 ) M/S SHREE PRABHA TRADE & FINANCE CO., LAXMI BHAVAN, 4 TH FLOOR, 158/164, KALBADEVI ROAD, MUMBAI - 400002 VS. ITO - 14(2)(3), MUMBAI ./ ./ PAN/GIR NO. : A A AF S 653 3 L ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI VIMAL PUNMIYA /REVENUE BY : SHRI NEIL PHILIP / DATE OF HEARING : 30 /0 6 / 2015 / DATE OF PRONOUNCEMEN T 30/06 /2015 / O R D E R PER R.C.SHARMA (A.M) : TH ESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) , MUMBAI , FOR THE ASSESSMENT YEAR S 2001 - 02 TO 2003 - 04 , IN THE MATTER OF IMPOSITION OF PENALTY U/S.271(1)(C) OF THE I.T.ACT . 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN TRADING IN TEXTILES AND MONEY LENDING AS PER THE PARTNERSHIP DEED, IT WAS AUTHORIZED TO CARRY ON THE BUSINESS OF MONEY LENDING, F INANCING AND OTHER BUSINESS TO EARN INTEREST AND BUSINESS TO EARN RENT. THE ASSESSEE HAD SHOWN RENT/LICENSE FEES AND COMPENSATION FROM SUB - LETTING OF PROPERTIES AS WELL ITA NO S . 529 - 531 /1 3 2 AS INTEREST & COMMISSION INCOME UNDER THE HEAD INCOME FROM BUSINESS/PROFESSION SINCE F ROM INCEPTION. AFTER CLAIMING EXPENDITURE ALLOWABLE UNDER BUSINESS HEAD THE ASSESSEE H AD OFFERED INCOME UNDER BUSINESS HEAD. THE ASSESSMENT WAS COMPLETED TREATING THE RENT/LICENSE FEES AND THE COMPENSATION FROM SUB - LETTING OF LEASED PROPERTY AS WELL AS INT EREST INCOME AS INCOME FROM OTHER SOURCES AFTER ALLOWING THE DEDUCTION AS ALLOWABLE U/S.57. THE AO ALSO LEVIED PENALTY U/S.271(1)(C) FOR SUCH CHANGE IN HEAD OF INCOME. 3. LD. AR PLACED ON RECORD ORDER OF THE TRIBUNAL DATED 2 - 2 - 2015, IN ASSESSEES OWN CAS E FOR ASSESSMENT YEARS 2001 - 02 TO 2002 - 03 AND 2005 - 06 TO 2006 - 07, PASSED IN ITA NOS.3611TO 3614/MUM/2012, WHEREIN FOR THE SIMILAR CHANGE OF HEAD OF INCOME, PENALTY IMPOSED WAS DELETED BY THE TRIBUNAL AFTER HAVING FOLLOWING OBSERVATIONS : - 2.1. WE HAVE CONS IDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SINCE, THE FACTS AND THE ISSUE ARE IDENTICAL AND PERTAINS TO THE SAME ASSESSEE FOR DIFFERENT ASSESSMENT YEARS, THEREFORE, THESE APPEALS CAN BE DISPOSED OF BY A COMMON AND CONSOLIDAT ED ORDER FOR THE SAKE OF BREVITY. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE, A PARTNERSHIP FIRM, IS ENGAGED IN TRADING IN TEXTILES AND MONEY LENDING. THE ASSESSEE SHOWED RENT/LICENSE FEE AND COMPENSATION FROM SUB - LETTING PROPERTIES AS WELL AS INTEREST INC OME UNDER THE HEAD INCOME FROM BUSINESS. HOWEVER, THE LD. ASSESSING OFFICER TREATED THE RENT/LICENSE FEE AND COMPENSATION FROM SUB - LETTING OF THE LEASE PROPERTY AS WELL AS INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. UP TO THE TRIBUNAL LEV EL, THE QUANTUM ADDITION WAS DECIDED AGAINST THE ASSESSEE, AGAINST WHICH NO CONTRARY DECISION FROM ANY HONBLE HIGHER FORUM WAS PRODUCED BEFORE US, MEANING THEREBY, THE DECISION OF THE TRIBUNAL ON QUANTUM ADDITION STANDS AS ON DATE. THE LD. ASSESSING OFFIC ER INITIATED/LEVIED PENALTY PROCEEDINGS U/S 271(1)(C) READ WITH EXPLANATION, THERETO OF THE ACT FOR FILING INACCURATE PARTICULARS OF INCOME. ON APPEAL, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE PENALTY ON THE GROUND THAT THERE WAS A CHANGE OF OPINION AND THE ASSESSEE CONCEALED ITS ITA NO S . 529 - 531 /1 3 3 INCOME BY FILING INACCURATE PARTICULARS. THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. 2.2. UNDER THE FACTS, NARRATED HEREINABOVE, NOW QUESTION ARISES, WHETHER THERE IS CONCEALMENT OF INCOME OR FURNISH ING OF INACCURATE PARTICULARS OF INCOME. FACT REMAINS THAT THE ASSESSEE MADE FULL DISCLOSURE OF INCOME/FACTS AND AS SUCH THERE WAS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. IT SEEMS THAT THERE WAS MERELY DIFFERENCE OF OPINION BETWEE N THE ASSESSEE AND THE DEPARTMENT WITH RESPECT TO UNDER WHICH HEAD THE INCOME IS TAXABLE. IN SUCH A SITUATION, IT IS NOT PROVED THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OR CONCEALED ITS INCOME RESULTING INTO TAX EVASION. IN OUR VIEW, MERELY CHANG ING THE HEAD BY THE DEPARTMENT AUTOMATICALLY DOES NOT LEAD TO THE CONCLUSION THAT EITHER THE ASSESSEE FURNISHED INACCURATE PARTICULARS OR CONCEALED ITS INCOME. IT MAY BE A GOOD CASE FOR QUANTUM ADDITION BUT CERTAINLY NOT A CASE FOR IMPOSING OF PENALTY U/S 271(1)(C) OF THE ACT. IN THE PRESENT APPEALS, THE ASSESSMENT OF INCOME UNDER DIFFERENT HEAD IS DUE TO DIFFERENCE OF OPINION, THUS, IT DOES NOT IPSO - FACTO WARRANT LEVY OF PENALTY, BECAUSE FOR IMPOSING PENALTY U/S 271(1)(C) OF THE ACT EITHER THERE SHOULD BE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF ITS INCOME. IDENTICALLY, THE TRIBUNAL, VIDE ORDER DATED 16/05/2012, IN THE CASE OF DCIT VS DOSSAL ESTATE DEVELOPMENT PVT. LTD., DECIDED IN FAVOUR OF THE ASSESSEE. THE RATIO LAID DOWN IN CIT V S BENNETT COLEMAN & CO LTD. (2013) 33 TAXMAN.COM 227 (BOMBAY), THE HONBLE JURISDICTIONAL HIGH COURT, WHEREIN, THE ASSESSEE CLAIMED DEDUCTION OF INTEREST ON TAX FREE BONDS, THERE WAS A RECORDING OF FACTS BY THE TRIBUNAL THAT THERE WAS AN INADVERTENT MISTAK E OF THE ASSESSEE FOR CLAIMING INTEREST RECEIVED ON GOVERNMENT OF INDIA CAPITAL INDEX BONDS AS INTEREST RECEIVED ON TAX FREE BONDS, IT WAS HELD THAT PENALTY IS NOT LEVIABLE U/S 271(1)(C) OF THE ACT. 2.3. WE NOTE THAT FOR ASSESSMENT YEAR 2001 - 02, THE ASSE SSEE SHOWED RECEIPT OF INTEREST AS BUSINESS RECEIPT AND CLAIMED VARIOUS EXPENSES AGAINST INTEREST INCOME UNDER BUSINESS HEAD. LIKEWISE, FOR ASSESSMENT YEAR 2002 - 03, THE ASSESSEE SHOWED RECEIPT OF COMMISSION AND INTEREST AS BUSINESS RECEIPT AND THEREFORE CL AIMED VARIOUS EXPENSES. LIKEWISE, ASSESSMENT YEAR 2005 - 06, THE PENALTY WAS LEVIED BY THE ASSESSING OFFICER BY STATING THAT THE ASSESSEE WRONGLY CLAIMED EXPENSES BY WRONGLY OFFERING INCOME UNDER BUSINESS HEAD AGAINST OTHER SOURCES. IDENTICAL IS THE SITUATIO N FOR ASSESSMENT YEAR 2006 - 07. IT IS NOT THE CASE THAT NO DISCLOSURE WAS MADE BY THE ASSESSEE AND IF THE ASSESSING OFFICER FINDS THAT IT COMES UNDER DIFFERENT HEAD, IT CANNOT BE A GOOD GROUND FOR IMPOSING PENALTY U/S 271(1)(C) MERELY ON THE BASIS OF CHANGE OF OPINION. THE ASSESSING OFFICER IS HOWEVER, WITHIN HIS RIGHT TO MAKE ADDITION UNDER THE CORRECT HEAD, BUT AT THE SAME TIME, IT IS NOT A GOOD GROUND FOR IMPOSING THE PENALTY UNLESS AND UNTIL THE INGREDIENTS I.E. (A) FURNISHING INACCURATE PARTICULARS (B) CONCEALMENT OF INCOME, ENSHRINED IN SECTION ARE PROVED BY THE REVENUE, MORE SPECIFICALLY, WHEN THE NECESSARY DETAILS WERE DULY FURNISHED BY THE ITA NO S . 529 - 531 /1 3 4 ASSESSEE. FOR IMPOSING PENALTY U/S 271(1)(C) OF THE ACT, A DEFINITE FINDING BY THE ASSESSING OFFICER FOR CONCEAL MENT IS NECESSARY AS WAS HELD BY HONBLE MADRAS HIGH COURT IN CIT VS K. R. CHINNI KRISHNA CHETTY (2000) 246 ITR 121 (MAD.). EVEN IT IS PRESUMED THAT A WRONG CLAIM WAS MADE BY THE ASSESSEE BY CLAIMING UNDER DIFFERENT HEAD STILL IT DOES NOT TANTAMOUNT TO FUR NISHING INACCURATE PARTICULARS. THE RATIO LAID DOWN IN CIT VS RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (SC) FROM HONBLE APEX COURT COMES TO THE RESCUE OF THE ASSESSEE. EVEN IF, WE FIND THAT IT IS A BONAFIDE MISTAKE OF THE ASSESSEE THEN ALSO THE DECIS ION IN NORTH LAND DEVELOPMENT AND HOTEL CORPORATION VS CIT 210 TAXMAN 249 (SC) AND PRICE WATERHOUSE COOPERS (P.) LTD. VS CIT (2012) 25 TAXMAN.COM 400/211 TAXMAN 40 (SC) AND CIT VS. SKYLINE AUTO PRODUCTS PVT. LTD. (2004) 271 ITR 335 (MP) COMES TO THE RESCUE OF THE ASSESSEE. IN VIEW OF THESE FACTS/JUDICIAL PRONOUNCEMENTS, WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY SO IMPOSED. FINALLY, THESE APPEALS OF THE ASSESSEE ARE ALLOWED. 4. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE TRIBUNAL AND FOUND THAT PENALTY SO IMPOSED WAS DELETED BY THE TRIBUNAL BY OBSERVING THAT THERE WAS NO FURNISHING OF INACCURATE PARTICULARS BY ASSESSEE NOR ANY CONCEALMENT OF INCOME. AFTER RELYING ON DECISION OF HON BLE SUPREME COURT IN THE CASE OF RELIANCE PETROCHEM LTD., 3 22 ITR 158, HOTEL CORPORATION, 210 TAXMAN 249(SC) AND PRICE WATERHOUSE COOPERS (P) LTD., 25 TAXMANN.COM 400 , THE TRIBUNAL HAS DELETED THE PENALTY. WE ALSO FOUND THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF BENNETT COLEMAN & CO. LTD., 33 TAXMANN.COM 227, WHEREIN IT WAS HELD THAT NO PENALTY IS IMPOSABLE FOR CHANGE OF HEAD OF INCOME. 5. RESPECTFULLY FOLLOWING, THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE VIS - - VIS ORDER OF THE JURISDICTIONAL HIGH COURT AS DISCUSSED ABOVE, WE DO NOT FIND ANY MERIT IN THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. ITA NO S . 529 - 531 /1 3 5 6 . IN THE RESULT, ALL APPEAL S OF THE ASSESSEE ARE ALLOWED . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 30/06 / 201 5 . SD/ - SD/ - ( ) ( SANJAY GARG ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 16/07 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / G UARD FILE. //TRUE COPY//