ASST. CIT 14(3), MUMBAI V. PRADEP B VASA, MUMBAI

ITA 5984/MUM/2010

• Counselvise Citation: 598419914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 30-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S C MITTAL
• Keywords: Business income; Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI D. MANMOHAN (VICE PRESIDENT) & SHRI R.S. SYAL (ACCOUNTANT MEMBER) I.T.A. NOS. 5983 & 5984/MUM/2010 (A.YS. 2005-06 & 2006-07) ASSTT. COMMR. OF INCOME-TAX-14(3), 6 TH FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI-400 021. VS. SHRI PRADEEP B. VASA, 213A, MAKER TOWER A, CUFFE PARADE, MUMBAI-400 005. PAN: AABPV 1009 R. APPELLANT RESPONDENT APPELLANT BY SHRI S.C. MITTAL. RESPONDENT BY NONE. DATE OF HEARING 27 - 10 - 2011 DATE OF PRONOUNCEMENT 28 - 10 - 2011 O R D E R PER R.S. SYAL, AM : THESE TWO APPEALS BY THE REVENUE ARISE OUT OF THE S EPARATE ORDERS PASSED BY THE LD. CIT(A) IN RELATION TO ASSESSMENT YEARS 2 005-06 AND 2006-07 DELETING THE PENALTY IMPOSED BY THE AO U/S. 271(1)(C). A.Y. 2005-06: 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF INDUSTRIAL OIL. LOSS W AS RETURNED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. THE ASSESSEE GAVE ITS FACTORY BUILDING & MACHINERY ON RENT O M/S.FUCHS LUBRICANTS (I) LTD. SINCE 2000. RENT OF RS.8,40,000/- WAS RECEIVED IN THE CURRENT YEAR WHIC H WAS TREATED BY THE ITA NOS.5983 & 5984/MUM/2010 PRADEEP B. VASA 2 ASSESSEE AS BUSINESS INCOME. NOT CONVINCED, THE A O HELD THAT RENTAL INCOME WAS REQUIRED TO BE TAXED UNDER THE HEAD INCOME FRO M HOUSE PROPERTY. FURTHER, THE ASSESSEES CLAIM FOR INTEREST AMOUNTIN G TO RS.1,28,207/- ON UNSECURED LOANS WAS NOT ACCEPTED. THE AO ALSO DISAL LOWED SALARY & WAGES OF RS.4,00,800/- ON THE GROUND THAT THERE WAS A NOMINA L TRADING ACTIVITY. PENALTY OF RS.3,75,984/- WAS LEVIED BY THE AO U/S.271(1)(C) WH ICH CAME TO BE DELETED BY THE LEARNED FIRST APPELLATE AUTHORITY BY RELYING ON THE VIEW TAKEN BY HIS PREDECESSOR IN ASSESSMENT YEAR 2003-04. 3. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATER IAL ON RECORD. THERE IS NO APPEARANCE FROM THE SIDE OF THE ASSESSEE. IT IS SEEN THAT IN SO FAR AS THE TREATMENT OF RENTAL INCOME FALLING UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION OR INCOME FROM HOUSE PROPERTY IS C ONCERNED, IT MAY BE A GROUND FOR SHIFTING THE HEAD UNDER WHICH THE ASSESSEE DECL ARED, BUT CANNOT CALL FOR PENALTY U/S.271(1)(C). IT IS SO FOR THE REASON THAT A VALID AND GENUINE CLAIM MADE BY THE ASSESSEE WAS NOT ACCEPTED AS FALLING UNDER A PARTICULAR HEAD. IT IS NOT AS IF THE ASSESSEE FAILED TO OFFER ANY INCOME OR CLAIMED BOGUS EXPENDITURE. IT IS A SIMPLE CASE IN WHICH THE REVENUE HAS HELD THE INCOM E DECLARED BY THE ASSESSEE AS FALLING UNDER ONE HEAD TO BE FALLING UNDER ANOTH ER DIFFERENT HEAD. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS P. LTD. (2010) 322 ITR 158 (SC) HAS HELD THAT A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT ATTRACT PENALTY U/S.271(1) (C). IT HAS BEEN HELD IN THIS CASE THAT IN ORDER TO ATTRACT THE PROVISIONS OF SECTION 271(1)(C), THERE HAS TO BE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME BY THE ASSESSEE. MERE DISALLOWANCE OF A CLAIM FOR DEDUCTIO N HAS BEEN HELD TO BE NOT A GOOD GROUND FOR IMPOSING PENALTY. WE ARE CONFRONTED WITH A SITUATION IN WHICH THE ASSESSEE CONSIDERED HIS INCOME AS BUSINESS INCO ME, BUT AS PER THE IT WAS ITA NOS.5983 & 5984/MUM/2010 PRADEEP B. VASA 3 LIABLE TO BE CONSIDERED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ALL NECESSARY PARTICULARS IN RESPECT OF SUCH INCOME WER E DULY DECLARED BY THE ASSESSEE. THE FALLING OF INCOME UNDER ONE HEAD OR T HE OTHER CANNOT BE CONSIDERED AS A CASE OF CONCEALMENT OF INCOME OR FU RNISHING OF INACCURATE PARTICULARS OF INCOME. IN OUR CONSIDERED OPINION TH E LD. CIT(A) WAS JUSTIFIED IN OVERTURNING THE PENALTY ORDER ON THIS ASPECT. 4. IN SO FAR AS PENALTY ON DISALLOWANCE OF CERTAIN EXPENSES IS CONCERNED, WE FIND THAT THE SAME AGAIN CANNOT BE CONSIDERED FOR I MPOSING PENALTY FOR THE OBVIOUS REASON THAT THE ASSESSEE CLAIMED SUCH EXPEN DITURE TO HAVE BEEN INCURRED FOR HIS BUSINESS PURPOSE. THE AO HAS HELD THESE EXPENSES TO BE NOT ALLOWABLE BY CONSIDERING THAT THERE WAS A NOMINAL T RADING ACTIVITY CONDUCTED BY THE ASSESSEE. THERE IS NOTHING TO SHOW THAT THE ASS ESSEE LODGED A WRONG CLAIM OR WAS NOT PROPERLY SUBSTANTIATED WITH EVIDENCE. IN OU R CONSIDERED OPINION, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY ON THI S SCORE AS WELL. 5. IT IS FURTHER OBSERVED FROM THE IMPUGNED OR DER THAT THE LD. CIT(A), WHILE DELETING THE PENALTY, HAS RELIED ON THE ORDER PASSE D BY HIS PREDECESSOR FOR ASSESSMENT YEAR 2003-04. NO MATERIAL HAS BEEN PLACE D ON RECORD TO INDICATE THAT THE SAID ORDER OF THE CIT(A) HAS BEEN REVERSED BY T HE TRIBUNAL IN ANY MANNER. IN VIEW OF THE FOREGOING REASONS, WE UPHOLD THE IMPUGN ED ORDER. A.Y. 2006-07: 6. THE LD. D.R. FAIRLY CONCEDED THAT THE FACTS AND CIRCUMSTANCES OF THIS APPEAL ARE MUTATIS MUTANDIS SIMILAR TO THOSE FOR THE ASSESSMENT YEAR 2005-06. ITA NOS.5983 & 5984/MUM/2010 PRADEEP B. VASA 4 FOLLOWING THE VIEW TAKEN HEREINABOVE, WE UPHOLD THE IMPUGNED ORDER AND SUSTAIN THE DELETION OF PENALTY. 7. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED ON THE 28TH DAY OF OCTOBER, 2011. SD/- SD/- (D. MANMOHAN) (R.S. SYAL) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI: 28TH OCTOBER , 2011. NG: COPY TO : 1. DEPARTMENT. 2.ASSESSEE. 3 CIT(A)-25,MUMBAI. 4 CIT-14,MUMBAI. 5.DR,C BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. ITA NOS.5983 & 5984/MUM/2010 PRADEEP B. VASA 5 DETAILS DATE INITIALS DESIGN ATION 1 . DRAFT DICTATED ON 27 - 10 - 2011 SR.PS/ 2 . DRAFT PLACED BEFORE AUTHOR 27 - 1 0 - 2011 SR.PS/ 3 . DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 . DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAF T 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 O N WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER &