ANITA KOHLI, MUMBAI V. ASST CIT CIR 21(1), MUMBAI

ITA 5799/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3284 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 15-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S C TIWARI
• Assessee Lawyers: AJAY R SINGH
• Section: 143(3); 154

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.5799 /MUM/2014 ( / ASSESSMENT YEAR : 2008-09) MRS. ANITA J. KOHLI, BUNGLOW NO. 16, VIKAS PARK, JALPANKI CO-OP. SOC., JUHU, TARA ROAD,, JUHU, MUMBAI 400 049. / V. ACIT 21(1), BKC, C-10, ROOM NO. 601, BANDRA (E), MUMBAI. ./ PAN : AALPK7060M ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI AJAY R. SINGH REVENUE BY : SHRI S.C. TIWARI / DATE OF HEARING : 15-6-2016 / DATE OF PRONOUNCEMENT : 09-09-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE , BEING ITA NO. 5799/MUM/2014, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 4 TH JULY, 2014 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 32, MUMBAI (H EREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2008-09, THE APPE LLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE PENALTY ORDER DATED 25-03-2013 PASSED BY THE LEARNED ASSESSING OFFICER (HEREINAFTER CALLE D THE AO) U/S 271(1)(C) OF THE INCOME TAX ACT,1961 (HEREINAFTER CALLED THE AC T). ITA 5799/MUM/2014 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- PENALTY U/S. 271(1)(C): 1. THE LEARNED CIT(A) ERRED IN UPHOLDING THE LEVY OF PENALTY U/S. 271 (L)(C) OF THE INCOME TAX ACT, WITHOUT APPRECI ATING THAT THERE WAS NO CONCEALMENT OF INCOME NOR INACCURATE PARTICULA R OF INCOME WAS FURNISHED BY THE ASSESSEE, MERELY BECAUSE OF DIFFER ENCE OF OPINION, LEVY OF PENALTY U/S. 271 (1 )(C) IS NOT JUSTIFIED. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE AP PELLANT HAS DISCLOSED EACH FACTS AT EVERY STAGE OF PROCEEDING MER ELY BECAUSE THE SAME WAS NOT ACCEPTED BY THE DEPT. IT CANNOT BE PRESU MED THAT THERE IS CONCEALMENT OF INCOME. 3. THE LEARNED CIT(A) OUGHT TO HAVE DECIDED THE ISSUE OF 'MINIMUM' OR 'MAXIMUM' LEVY OF PENALTY. THE AO HAS MENTIONED M INIMUM PENALTY HOWEVER LEVIED 'MAXIMUM' PENALTY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF DESIGNING AND SUPERVISION , AND HAD ALS O EARNED INCOME FROM HOUSE PROPERTY AND INTEREST INCOME. THE A.O. DURING COURSE OF QUANTUM ASSESSMENT PROCEEDINGS OBSERVED FROM THE BANK ACCOU NT OF THE ASSESSEE THAT SHE HAS RECEIVED RENTAL INCOME AMOUNTING TO RS. 11, 05,000/- FROM MUMBAI INTERNATIONAL AIR PORT PRIVATE LIMITED. ON PERUSAL OF THE COMPUTATION OF INCOME, IT WAS OBSERVED BY THE AO THAT THE ASSESSEE HAS ONLY OFFERED RENTAL INCOME OF RS. 8,28,750/- FROM THE SAID PARTY IN THE RETURN OF INCOME FILED WITH THE REVENUE. THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME AND IN REPLY THE ASSESSEE SUBMITTED THAT PART OF THE RENTAL INCO ME TO THE TUNE OF RS. 2,76,250/- WAS THE INCOME OF MR. VIVEK KOHLI I.E. S ON OF THE ASSESSEE AND HENCE THE BALANCE AMOUNT OF RS. 8,28,750/- WAS OFFE RED AS INCOME FOR TAXATION BY HER IN RETURN OF INCOME FILED WITH THE REVENUE. IN SUPPORT, THE ASSESSEE SUBMITTED THE COPY OF THE LEAVE AND LICENS E AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND M/S NICOLAS NOVACEK ON 14 TH SEPTEMBER, 2007 AND ITA 5799/MUM/2014 3 RECEIVED RENTAL INCOME FOR SIX MONTHS I.E. OF RS. 1 1,05,000/-. THE ASSESSEE WAS ASKED BY THE AO TO FILE THE RETURN OF INCOME OF HIS SON MR. VIVEK KOHLI TO PROVE THAT THE BALANCE RENT AMOUNT OF RS. 2,76,250/ - HAS BEEN OFFERED FOR TAXATION BY HER SON MR VIVEK KOHLI IN RETURN OF INC OME FILED WITH THE REVENUE. HOWEVER, THE ASSESSEE DID NOT SUBMIT THE RETURN OF INCOME OF HIS SON, MR VIVEK KOHLI BUT VIDE LETTER DATED 13 TH DECEMBER, 2010 THE ASSESSEE EXPLAINED THAT THE RENTAL INCOME OF RS.2,41,250/- WAS SHARE O F RENTAL INCOME OF HER SON MR VIVEK KOHLI WHICH WAS RECEIVED BY THE ASSESSEE I N HER BANK ACCOUNT AND SAME HAD BEEN SHOWN AS LIABILITY PAYABLE TO MR VIVE K KOHLI IN HER BALANCE SHEET AND SINCE HE IS OUT OF INDIA THE AMOUNT IS OU TSTANDING TO BE PAYABLE TO HIM . SINCE THE ASSESSEE FAILED TO BRING ON RECORD THAT H ER SON HAS INCLUDED THE SUM OF RS. 2,76,250/- IN HIS RETURN OF INCOME FILED WITH THE REVENUE AND THE SAID AMOUNT WAS SUBJECTED TO TAX AND ALSO THE ASSES SEE FAILED TO SUBMIT ANY SUBSTANTIVE DETAILS THAT THE SAID INCOME HAS TO BE PAID TO MR VIVEK KOHLI, THE A.O. MADE THE ADDITION OF RS. 2,76,250/- IN QUANTUM ASSESSMENT VIDE ASSESSMENT ORDER DATED 29-12-2010 PASSED BY THE AO U/S 143(3) OF THE ACT. ON APPEAL BEFORE THE LD. CIT(A) IN QUANTUM PROCEEDI NGS, THE LD. CIT(A) REJECTED THE CONTENTION OF THE ASSESSEE AND CONFIRM ED THE ADDITIONS MADE BY THE A.O. VIDE APPELLATE ORDERS DATED 16.12.2011. TH E SAID ORDER OF LEARNED CIT(A) W.R.T. QUANTUM PROCEEDINGS UPHOLDING AND SU STAINING THE ADDITION MADE BY THE LEARNED AO IS PLACED IN PAPER BOOK PAGE 70-72. THE MATTER WENT UP TO THE TRIBUNAL WITH RESPECT TO THE QUANTUM PROC EEDINGS AND BEFORE THE TRIBUNAL THE ASSESSEE REQUESTED TO GRANT PERMISSION FOR WITHDRAWAL OF THE QUANTUM APPEAL AND ACCORDINGLY THE TRIBUNAL DISMISS ED THE APPEAL AS WITHDRAWN IN ITA NO. 2054/MUM/2012 FOR THE ASSESSME NT YEAR 2008-09 VIDE ORDERS DATED 13 TH APRIL, 2015 IN QUANTUM.THE COPY OF THE TRIBUNAL OR DER IS PLACED IN PAPER BOOK PAGE 74-75. ITA 5799/MUM/2014 4 THE A.O. LEVIED THE PENALTY OF RS.1,97,184/- U/S 2 71(1)(C) OF THE ACT AS THE ASSESSEE HAS FAILED TO OFFER RENTAL INCOME OF RS. 2 ,76,250/- IN THE RETURN OF INCOME FILED BY HER WITH THE REVENUE AND THE ASSESS EE DID NOT PRODUCE ANY EVIDENCE TO PROVE THAT THE SHARE OF RENT OF MR. VIV EK KOHLI HAD BEEN OFFERED AS INCOME BY MR. VIVEK KOHLI, SON OF THE ASSESSEE IN T HE RETURN OF INCOME FILED WITH THE REVENUE AND THE SAID INCOME HAS SUFFERED T AXATION AND HENCE AN AMOUNT OF RS. 1,97,184/- WAS IMPOSED AS PENALTY U/S 271(1)(C) OF THE ACT BY THE AO ON THE ASSESSEE VIDE PENALTY ORDERS DATED 25 -03-2013 PASSED U/S. 271(1)(C) OF THE ACT, WHICH PENALTY ORDER WAS CONF IRMED BY THE LD. CIT(A) TO THE TUNE OF PENALTY AMOUNT OF RS. 65,728/- U/S 271( 1)(C) OF THE ACT FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME VID E APPELLATE ORDER DATED 04- 07-2014, AS IT HAS BEEN MENTIONED IN THE PENALTY OR DER DATED 25-03-2013 THAT THE A.O. INTENDED TO IMPOSE MINIMUM PENALTY OF RS. 65,728/- WHILE ACTUALLY IMPOSED PENALTY OF RS. 1,97,184/- U/S 271( 1)(C) OF THE ACT AND THE LEARNED CIT(A) DIRECTED THE AO TO LOOK INTO THE FAC TS OF THE CASE AND DIRECTED THE AO TO DISPOSE OF RECTIFICATION APPLICATION U/S 154 OF THE ACT FILED BY THE ASSESSEE WHEREBY THE AO PROCEED TO IMPOSE MINIMUM P ENALTY OF RS. 65,728/- BUT ENDED UP IN IMPOSING PENALTY OF RS. 1,97,184/- . 4. AGGRIEVED BY THE APPELLATE ORDERS DATED 04-07-20 14 PASSED BY THE LD. CIT(A) CONFIRMING PENALTY AS INDICATED ABOVE, THE A SSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEES SON MR. VIVEK KOHLI IS THE CO-OWNER OF THE PROPERTY AS AN A MOUNT OF RS. 25 LACS WAS INVESTED BY HIM ON THE SAME PROPERTY. THE LD. COUN SEL DREW OUR ATTENTION TO THE PAPER BOOK WHEREBY THE ASSESSEES BALANCE SHEET IS PLACED WHEREBY THE ASSESSEE HAS SHOWN AN INVESTMENT OF RS.66,96,000/- AS AT 31-03-2008 IN THE FLAT AT SHYAMKUNJ HELD JOINTLY WITH HER SON MR VIVE K KOHLI , AS AGAINST THE PURCHASE PRICE OF RS.90,00,000/- OF THE SAID FLAT( PAGE 11,37-51/PB).. THE LD. ITA 5799/MUM/2014 5 COUNSEL ALSO DREW OUR ATTENTION TO THE PURCHASE AGR EEMENT OF THE PROPERTY WHEREBY HE SUBMITTED THAT MR. VIVEK KOHLI IS THE CO -OWNER OF THE PROPERTY AND MR. VIVEK KOHLIS SHARE OF RENT OF RS. 2,76,250 /- HAS BEEN SHOWN AS LIABILITY PAYABLE TO MR. VIVEK KOHLI IN ASSESSEES BALANCE SHEET(PAGE 37- 51,11/PB). THE LD. COUNSEL SUBMITTED THAT SINCE MR . VIVEK KOHLI HAS INVESTED THE SUM OF RS. 25 LACS AND HENCE HE IS ENTITLED FOR RENTAL INCOME TO THE EXTENT OF PROPORTION OF HIS SHARE IN THE PROPERTY. IT WAS ALSO SUBMITTED THAT IN THE LEAVE AND LICENSE AGREEMENT DATED 14-09-2007 WITH N ICOLAS NOVACEK ENTERED INTO W.R.T. THE SAID FLAT AT SHYAMKUNJ, BOTH THE AS SESSSEE AND MR VIVEK KOHLI ARE THE LICENSORS OF THE SAID FLAT(PAGE 16-26/PB). IT IS ALSO SUBMITTED THAT MR VIVEK KOHLI IS NRI AND NO RETURN OF INCOME WAS FILE D BY HIM AS THERE IS NO OTHER INCOME OF THE SAID MR. VIVEK KOHLI. IT WAS AL SO SUBMITTED THAT THE AO INTENDED TO IMPOSE MINIMUM PENALTY OF RS. 65,728/- VIDE PENALTY ORDERS DATED 25-03-2013 U/S 271(1)(C) OF THE ACT BUT ACTUA LLY LEVIED PENALTY OF RS.1,97,184/- ERRONEOUSLY WHICH NEEDED TO BE CORREC TED. THE LEARNED CIT(A) HAS GIVEN DIRECTIONS TO CORRECT THIS ERROR. 6. THE LD. D.R. RELIED ON THE ORDERS OF THE AUTHORI TIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND ALS O PERUSED THE MATERIAL PLACED ON RECORD. WE HAVE OBSERVED THAT THE ASSESSE E IS CO-OWNER OF THE PROPERTY ALONG WITH HER SON, MR VIVEK KOHLI AS BORN E OUT FROM THE PROPERTY OWNERSHIP DOCUMENTS PLACED IN PAPER BOOK/PAGE 36-51 . WE HAVE OBSERVED THAT THE SAID PROPERTY WAS PURCHASED FOR RS.90,00,0 00/- AS BORNE OUT FROM PROPERTY OWNERSHIP AGREEMENT DATED 29-12-2007(PB/PA GE 36-51) AND THE ASSESSEE HAS REFLECTED RS. 66,96,000/- IN HER BALAN CE SHEET AS INVESTMENT IN THE SAID FLAT(PB/PAGE 11) AND STATED THAT THE ASSE SSEES SON MR. VIVEK KOHLI HAD INVESTED A SUM OF RS. 25 LACS OUT OF TOTAL ACQU ISITION COST OF RS. 90 LACS, AND CONSEQUENTLY HE IS ENTITLED FOR THE PART OF THE RENTAL INCOME IN ACCORDANCE WITH PROPORTION OF HIS SHARE IN THE SAID PROPERTY. HOWEVER, IT IS ITA 5799/MUM/2014 6 STATED THAT MR. VIVEK KOHLI IS AN NRI AND HAS NOT F ILED HIS RETURN OF INCOME AS HE IS NOT HAVING OTHER INCOME CHARGEABLE TO TAX IN INDIA. THUS, UNDER THE ABOVE CIRCUMSTANCES, THE QUANTUM ADDITIONS WERE UPH ELD BY THE LD. CIT(A) AND THE TRIBUNAL HAD DISMISSED THE APPEAL AS THE SA ME WAS WITHDRAWN BY THE ASSESSEE. IN OUR CONSIDERED VIEW, THE ASSESSEE HAS GIVEN BONAFIDE EXPLANATIONS FOR NON-INCLUSION OF RENTAL INCOME OF RS. 2,76,250/- IN HER RETURN OF INCOME AS THE SAID RENTAL INCOME WAS STAT ED TO BELONG TO THE SON OF THE ASSESSEE, MR VIVEK KOHLI AND WE FIND THE EXPLA NATION OFFERED BY THE ASSESSEE AS BONAFIDE AND QUITE REASONABLE KEEPING I N VIEW FACTUAL MATRIX AS CULLED OUT FROM RECORDS PLACED BEFORE US. THUS AS PER THE ASSESSEE , THE SUM OF RS. 2,76,250/- IS CHARGEABLE TO TAX AS INCOME IN THE HANDS OF MR. VIVEK KOHLI AND NOT IN THE HANDS OF THE ASSESSEE KEEPING IN VIEW THAT HE IS ALSO CO- OWNER OF THE PROPERTY. THUS, IN THE INSTANT CASE , THE PENALTY U/S 271(1)(C) OF THE ACT LEVIED BY THE AO AND TO THE EXTENT IT IS C ONFIRMED BY THE LD. CIT(A) IS NOT SUSTAINABLE IN VIEW OF BONAFIDE EXPLANATION GIV EN BY THE ASSESSEE IN ACCORDANCE WITH PROVISIONS OF SECTION 271(1)(C) OF THE ACT AS THE INSTANT CASE IS COVERED BY EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT AS THE ASSESSEE HAS COME OUT WITH A BONAFIDE EXPLANATION TO EXPLAIN THE REASONS FOR NON-INCLUSION OF RENTAL INCOME OF RS. 2,76,250/- IN HER RETURN OF INCOME FILED WITH THE REVENUE ON THE GROUNDS THAT THE SAID RENTAL INCOME BELONGED TO THE CO-OWNER OF THE SAID FLAT MR. VIVEK KOHLI. THUS, IN OUR CONS IDERED VIEW, THE PENALTY LEVIED ON THE ASSESSEE U/S 271(1)(C) OF THE ACT IN THE INSTANT CASE BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE IS NOT SUST AINABLE AND IS THEREFORE ORDERED TO BE DELETED. WE ORDER ACCORDINGLY. ITA 5799/MUM/2014 7 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN I TA NO. 5799/MUM/2014 FOR THE ASSESSMENT YEAR 2008-09 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH SEPTEMBER, 2016. # $% &' 09-09-2016 ( ) SD/- SD/- (MAHAVIR SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 09-09-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI A BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI