ARCHANA KAPOOR, MUMBAI V. ITO 23(1)(4), MUMBAI

ITA 6037/MUM/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9374 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 11-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN
• Keywords: Gift; Revised return; Bonafide mistake

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI , , , BEFORE SHRI SANJAY ARORA , A M AND SHRI AMIT SHUKLA , J M ITA NO. 6037 /MUM/20 1 3 : ASST.YEAR 2008 - 2009 MRS.ARCHANA KAPOOR C/O.ISHA STEEL TREATMENT PVT. LTD. LBS MARG, VIKHROLI MUMBAI 400 083. PAN : AAXPK5540Q. / VS. THE INCOME TAX OFFICER WARD 23(1)(4) MUMBAI. ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : SHRI SHEKHAR GUPTA /RESPONDENT BY : SHRI ASGHAR ZAIN / DATE OF HEARING : 26.02.2015 / DATE OF PRONOUNCEMENT : 13 .03.2015. / O R D E R PER AMIT SHUKLA (JM) : THE AFORESAID APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 02.09.2013 , PASSED BY THE COMMI SSIONER OF INCOME - TAX (APPEALS) - 33 , MUMBAI, [`CIT(A) FOR SHORT] IN RELATION TO THE PENALTY PROCEEDINGS U/S 271(1)(C) , FOR THE ASSESSMENT YEAR 2008 - 2009 . THE ASSESSEE IS MAINLY AGGRIEVED BY THE LEVY OF PENALTY OF RS.34,917 , ON ACCOUNT OF RENTAL INCOME FROM FLAT OF RS.1,61,880, WHICH WAS OMITTED TO BE INCLUDED AT THE TIME OF FILING OF ORIGINAL RETURN OF INCOME. ITA NO. 6037 /MUM/201 3 M RS.ARCHANA KAPOOR. 2 2. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM HOUSE PROPERTY AND INTEREST INCOME. THE RETURN OF INCOME WAS FILED ON 29 TH JULY, 2008, DECLARING TOTAL INCOME OF RS.5,18,250. HOWEVER, AT THE TIME OF FILING OF RETURN OF THE INCOME, TH E ASSESSEE HAD FAILED TO DISCLOSE THE RENT RECEIVED FROM THE FLAT AT ATLANTIS BUILDING . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED A COPY OF REVISED RETURN ON 6 TH NOVEMBER, 2010 , SHOWING TOTAL INCOME OF RS.6,31,570 AFTER INCLUDING THE RENT RECEIPTS OF RS.1,61,880. HOWEVER, THE ASSESSING OFFICER (AO) HELD THAT SUCH A RETURN OF INCOME CANNOT BE SAID TO BE REVISED RETURN WITHIN THE MEANING OF SECTION 139(5), BECAUSE THE SAME SHOULD H AVE BEEN FILED AT ANY TIME BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEFORE THE COMPLETION OF ASSESSMENT, WHICHEVER IS EARLIER. HERE IN THIS CASE, THE REVISED RETURN HAS BEEN FILED AFTER THE EXPIRY OF THE SAID PERIOD. FU RTHER, IF THE ASSESSEE S CASE WOULD NOT HAVE BEEN SELECTED FOR SCRUTINY, THEN THE RENTAL INCOME OF RS.1,61,880 WOULD HAVE ESCAPED FROM TAXATION. ACCORDINGLY, HE INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C). 3. IN THE PENALTY PROCEEDINGS, THE ASSESSEE COULD NOT FILE ANY EXPLANATION AND ACCORDINGLY , THE AO LEVIED THE PENALTY OF RS.34,917 , BEING 100% OF THE TAX SOUGHT TO BE EVADED. 4. BEFORE THE CIT(A), THE ASSESSEE S SUBMISSION S WERE AS UNDER: - THE ASSESSEE IS HAVING RENTAL INCOME, DIVIDEND INCOME AND INTEREST INCOME. THE ASSESSEE FILED RETURN OF INCOME ON 29.07.2008 DECLARING TOTAL INCOME OF RS.5,18,250/ - . SUBSEQUENTLY, THE ASSESSEE FILED REVISED RETURN OF INCOME ON ITA NO. 6037 /MUM/201 3 M RS.ARCHANA KAPOOR. 3 06.11.2010 DECLARING INCOME O F RS.6,31,570/ - AND THE ASSESSMENT HAS BEEN COMPLETED ON A TOTAL INCOME OF RS.6,31,570/ - . THE ASSESSEE HAS FILED A REVISED RETURN OF INCOME SINCE HAD INADVERTENTLY OMITTED TO DECLARE RENTAL INCOME OF RS.1,61,880/ - FROM FLAT NO.6, 1 ST FLOOR, ATLANTIS BUILDING, KALYANI NAGAR, PUNE. WE HAVE TO SUBMIT THAT THE ASSESSEE HAS RECEIVED A GIFT OF FLAT NO.6, 1 ST FLOOR, ATLANTIS BUILDING, KALAYANI NAGAR, PUNE FROM HER MOTHER MRS.GEETA KAPOOR IN ASSESSMENT YEAR 2007 - 08. DURING THE ASSESSMENT YE AR 2007 - 08, THE SAID FLAT WAS GIVEN ON RENT AT A MONTHLY RENT OF RS.13,000/ - AND THE ASSESSEE HAS DECLARED RENTAL INCOME OF RS.39,000/ - DURING A.Y. 2007 - 08. THEREAFTER THROUGH OVERSIGHT THE ASSESSEE OMITTED TO DECLARE SUCH RENTAL INCOME I.E. RS.1,61,880/ - WHILE FILING RETURN FOR A.Y. 2008 - 09. DURING THE COURSE OF THE HEARING, THE SAID MISTAKE WAS DETECTED BY THE ASSESSEE HERSELF AND A REVISED RETURN WAS FILED TO SHOW THE RENTAL INCOME OF RS.1,61,880/ - . WE HAVE TO FURTHER SUBMIT THAT THE RENTAL INCOME WAS DE POSITED BY THE ASSESSEE IN HER BANK ACCOUNT WITH HDFC BANK BEARING ACCOUNT NO.005210000107744. THE INCOME WITH REGARD TO THE RENT WAS REFLECTED IN THE BANK STATEMENT AND IN NO WAY THE ASSESSEE COULD HAVE CONCEALED THE SAME. THE ASSESSEE HAS ALSO RECEIVED I NTEREST FROM HDFC BANK AND THE SAME HAS BEEN DECLARED. WE HAVE TO SUBMIT THAT SINCE THE ERROR WAS INADVERTENT, THE ASSESSEE HAS NOT FILED INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) AND AS SUCH, WE SHALL REQUEST YOUR GOODSELF T O KINDLY CANCEL THE PENALTY. 4.1 THE LEARNED CIT(A) NOTED THAT IN THE EARLIER YEAR, THE ASSESSEE HAD DISCLOSED THE RENTAL INCOME FROM THE SAID PROPERTY BUT FOR THE PRESENT ASSESSMENT YEAR, THE SAME HAS NOT BEEN INCLUDED IN THE RETURN OF INCOME. SINCE THE REVISED RETURN FILED BY THE ASSESSEE WAS BEYOND THE STATUTORY TIME LIMIT, AND THEREFORE, SUCH A RETURN WAS INVALID / NONEST RETURN IN THE EYES OF LAW . OTHERWISE ALSO, THE REVISED RETURN FILED BY THE ASSESSEE CANNOT BE SAID ITA NO. 6037 /MUM/201 3 M RS.ARCHANA KAPOOR. 4 TO BE VOLUNTARILY BECAUSE THE SA ID RETURN WAS FILED ONLY WHEN THE SCRUTINY PROCEEDINGS WERE STARTED. AFTER DISCUSSING VARIOUS LEGAL PROVISIONS AND CASE LAWS IN GREAT DETAIL, HE CONFIRMED THE PENALTY AS LEVIED BY THE AO. 5. BEFORE US, THE LEARNED COUNSEL SUBMITTED THAT, THE ASSESSEE DID NOT HAD ANY INTENTION OF NOT DISCLOSING THE RENTAL INCOME IN THE INCOME TAX RETURN , FIRSTLY BECAUSE , IN THE EARLIER YEAR, THE SAID INCOME WAS DULY DISCLOSED AND SECONDLY, THE ASSESSEE HAD CLAIMED REFUND IN THE RETURN OF INCOME. EVEN IF THE SAID INCOME WOULD HAVE BEEN INCLUDED, THEN ALSO THE TAX AFFECT WAS VERY NEGLIGIBLE . IT WAS DUE TO BONAFIDE MISTAKE THAT, SUCH AN INCOME WAS OMITTED TO BE INCLUDED WHILE COM PUTING THE INCOME. THE FIRST NOTICE ISSUED BY THE AO RAISING VARIOUS QUERIES AND ASKING FOR DETAILS, WAS ISSUED ON 01.06.2010. IN SUCH A NOTICE, THERE WAS NOT A WHISPER ABOUT NON - INCLUSION OF RENTAL INCOME. THE COPY OF SAID NOTICE HAVE BEEN FILED BEFORE US . WITHOUT THERE BEING ANY QUERY BY THE AO, THE ASSESSEE LATER ON REALIZED THAT THE RENTAL INCOME FROM THE SECOND FLAT HAS NOT BEEN SHOWN, THEREFORE, REVISED RETURN WAS FILED TO INCLUDE THE INCOME . EVEN IF THE REVISED RETURN IS TREATED AS NONEST, THEN ALSO THE ASSESSEE S REVISED COMPUTATION SHOULD HAVE BEEN TAKEN ON RECORD , WHEREIN THIS INCOME WAS DULY DISCLOSED. THE ERROR WAS RECTIFIED BY THE ASSESSEE SUO MOTO WITHOUT THERE BEING ANY SPECIFIC NOTICE ISSUED BY THE AO IN THIS REGARD. THEREFORE, NO PENALTY FOR FURNISHING OF INACCURATE PARTICULARS SHOULD BE LEVIED. FURTHER, IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE DECISION OF ITAT MUMBAI BENCHES IN THE CASE OF MS.PREMA GOPAL RAO V. DCIT, ITA NO.8653/MUM/2011, ORDER DATED 07.01.2015. ITA NO. 6037 /MUM/201 3 M RS.ARCHANA KAPOOR. 5 6. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE, STRONGLY RELIED UPON THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE REVISED RETURN OR REVISED COMPUTATION CANNOT BE SAID TO BE VOLUNTARILY , BECAUSE THE SAME WAS MADE ONLY WHEN ASSESSEE S CASE WAS SELECTED FOR SCRUTINY. THUS, PENALTY HAS RIGHTLY BEEN CONFIRMED BY THE CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, AND ALSO PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAD RENTAL INCOME FROM SECOND FLAT, WHICH SHE HAD OMITTED TO DISCLOSE IN HER RETURN OF INCOME. THE SAID RETURN OF INCOME WAS SELECTED FOR SCRUTINY VIDE NOTICE U/S 143(2) SERVED ON 22. 08.2009. THEREAFTER, THE AO HAD ASKED FOR THE DETAILS TO BE FURNISHED BY THE ASSESSEE, VIDE NOTICE DATED 01.06.2010, THE CO NTENT OF WHICH ARE REPRODUCED HEREUNDER: - AS YOU ARE AWARE YOUR CASE FOR THE A.Y.2008 - 09 HAS BEEN SELECTED FOR SCRUTINY. IN THIS CONNECTION YOU ARE REQUESTED TO FURNISH THE FOLLOWING DETAILS / INFORMATION IN ORDER TO FACILITATE THIS OFFICE TO COMPLETE T HE ASSESSMENT AT AN EARLY DATE: - 1. PLEASE FILE LETTER OF AUTHORITY IF YOU WISH TO APPEAR THROUGH AN AUTHORIZED REPRESENTATIVE. 2. PLEASE GIVE BRIEF NOTE ON BUSINESS ACTIVITIES CARRIED ON BY YOU. 3. DETAILS OF FAMILY MEMBERS WITH NATURE AND SOURCE OF INCOME AND DETAILS OF DRAWINGS. 4. LOAN CONFIRMATION IN RESPECT OF LOAN TAKEN AND GIVEN INCLUDING SQUARED UP. 5. PLEASE FILE COPY OF TAX AUDIT REPORT, BALANCE SHEET, P&L A/C AND PERSONAL BALANCE SHEET & CAPITAL A/C FOR THE YEAR ENDED 31.3.08 & COMPUTATIO N OF INCOME. 6. NAME AND ADDRESS OF THE SUNDRY DEBTORS AND CREDITORS WITH AGE - WISE. ITA NO. 6037 /MUM/201 3 M RS.ARCHANA KAPOOR. 6 7. GIVE DETAILS OF ALL BANK ACCOUNTS MAINTAINED BY YOU AND PRODUCE COPY OF BANK STATEMENT FOR VERIFICATION. 8. DETAILS OF INVESTMENT MADE DURING THE FINANCIAL YEAR 1.4.2 007 TO 31.3.2008. 9. MONTH - WISE PURCHASE & SALES MADE DURING THE YEAR. 10. PARTY - WISE PURCHASE & SALES EXCEEDS RS.50,000/ - . 11. DETAILS OF EXPENSES DEBITED TO THE P&L A/C. EXCEEDS RS.25,000/ - . 12. QUALITATIVE AND QUANTITATIVE DETAILS OF OP. AND CLOSING STOCK. 13. GIVE PROOF FOR THE ADDITION MADE TO THE FIXED ASSETS. 7.1 FROM THE PERUSAL OF THE ABOVE NOTICE, IT CAN BE SEEN THAT NOTHING HAS BEEN MENTIONED OR ASKED FROM THE ASSESSEE REGARDING RENTAL INCOME OF THE ASSESSEE, NOR ANY DETAILS OF FLATS OWNED BY THE ASSESSEE. LATER ON, WHEN THE ASSESSEE HAD FILED A REVISED RETURN ON 06.11.2010 INCLUDING THE RENTAL INCOME OF RS.1,61,880, THERE WAS NO SPECIFIC QUERY OR ENQUIRY BY THE AO PRIOR TO THIS DATE. NE I THER FROM THE ASSESSMENT ORDER NOR FROM THE RECORDS A S ARE AVAILABLE BEFORE US, IT IS BORNE OUT THAT THE ASSESSEE HAD OFFERED THE RENTAL INCOME FROM THE SECOND FLAT, ONLY WHEN SHE WAS CORNERED OR ENQUIRED BY THE AO . EVEN IF THE REVISED RETURN IS HELD TO BE INVALID, THEN ALSO THE REVISED COMPUTATION FILED WIT H THE REVISED RETURN DECLARING SUCH AN INCOME IS LIABLE TO BE HELD AS VOLUNTARILY, AND THEREFORE, SUCH AN OFFER OF INCOME DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS CANNOT LEAD TO A CONCLUSION THAT THE ASSESSEE IS LIABLE FOR PENALTY U/S 271(1)(C). THE FINDING OF THE CIT(A) THAT THE ASSESSEE HAD FILED INITIAL RETURN WITH A VIEW TO CONCEAL THE INCOME AND THE REVISED RETURN WAS OUT OF COMPULSION CANNOT BE HELD TO BE CORRECT BECAUSE NO SUCH COMPULSIO N IS BORNE OUT FROM THE RECORD S, THAT THE ASSESSEE CAME F ORWARD FOR OFFERING THE INCOME ONLY WHEN THE AO HAD CARRIED OUT ANY INQUIRY OR HAS CORNERED THE ASSESSEE ON THE ISSUE OF NON - ITA NO. 6037 /MUM/201 3 M RS.ARCHANA KAPOOR. 7 OFFER OF RENTAL INCOME IN THE ORIGINAL RETURN OF INCOME. THUS, THE PENALTY OF RS.34,917 LEVIED U/S 271(1)(C) IS DELETED AND THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 8 . IN THE RESULT, THE ASSESSEE S APPEAL IS ALLOWED . ORDER PRONOUNCED ON THIS 13 TH DAY OF MARCH, 2015 . SD/ - SD/ - ( SANJAY ARORA ) ( AMIT SHUKLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 13 TH MARCH, 2015 . DEVDAS* / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT , MUMBAI. 4. / CIT(A) - 33 , MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE.