M/S. K.R.ENTERPRISES, MUMBAI V. THE INCOME TAX OFFICER-20(1)(4), MUMBAI

ITA 6305/MUM/2008

• Counselvise Citation: 630519914 RSA 2008
• Duration Of Justice: 3 year(s) 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-07-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 24-10-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K B MENON
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER. I.T.A. NO. 6305/MUM/2008 ASSESSMENT YEAR : 2001-02. K.R. ENTERPRISES, THE INCOME-TAX OFFIC ER, 203, ANAND VIHAR, NEAR SHANTIVAN, VS. 20(1)(4), MHADA, OSHIWARA, ANDHERI (W), MUMBAI. MUMBAI-400 053. PAN AAEFK 5869P APPELLANT. RESPON DENT APPELLANT BY : SHRI SANJAY PARIKH. RESPONDENT BY: SHRI P. K. B.MENON. DATE OF HEARING : 20-12-2011. DATE OF PRONOUNCEMENT : 23-12-2011. O R D E R. PER P.M. JAGTAP, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LEARNED CIT(APPEALS)-XX, MUMBAI DATED 29-08-2008 WHEREBY HE CONFIRMED THE PENALTY OF RS.1,36,291/- IMPOSED BY THE AO U/S 271(1)(C). 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 20-08-2001 DECLARING TOTAL INCOME OF RS.81,470/-. IN THE SAID RETURN, INCOME O F RS.2,79,465/- WAS SHOWN BY 2 ITA NO.6305/MUM/2008 ASSESSMENT YEAR:2001-02. THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROP ERTY AND AFTER ADJUSTING THE LOSS OF RS.1,97,998/- SHOWN UNDER THE HEAD PROFITS & GAINS OF BUSINESS OR PROFESSION, THE NET TOTAL INCOME OF RS.81,470/- WA S DECLARED BY THE ASSESSEE. IN THE ASSESSMENT COMPLETED U/S 143(3), THE AO DID NOT ACCEPT THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF RS.49,210/- ON ACCOUNT OF SOCIETY MAINTENANCE CHARGES MADE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AN D THE SAME WAS DISALLOWED BY HIM. SIMILARLY EXPENSES CLAIMED BY THE ASSESSEE ON ACCOUNT OF INTEREST, CAR MAINTENANCE AND CAR DEPRECIATION AMOUNTING TO RS.2, 12,584/-, RS.34,198/- AND RS.64,000/- RESPECTIVELY WERE DISALLOWED BY THE AO ON THE GROUND THAT THE BUSINESS OF DEVELOPERS AND CONTRACTORS IN RESPECT O F WHICH THE SAID EXPENSES WERE CLAIMED, HAD NOT BEEN CARRIED ON BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. THE AO ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1 )(C) AND SINCE THE EXPLANATION OFFERED BY THE ASSESSEE IN RESPONSE TO SHOW CAUSE N OTICE ISSUED DURING THE COURSE OF THE SAID PROCEEDINGS WAS NOT FOUND ACCEPTABLE BY HIM, THE AO IMPOSED A PENALTY OF RS.1,36,291/- U/S 271(1)(C) BEING 100% OF THE TAX EVADED BY THE ASSESSEE IN RESPECT OF ADDITIONS OF RS.3,47,680/- M ADE IN THE ASSESSMENT HOLDING THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICUL ARS OF ITS INCOME TO THAT EXTENT. ON APPEAL, THE LEARNED CIT(APPEALS) CONFIRMED THE S AID PENALTY IMPOSED BY THE AO. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(APPEA LS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE ADDITIO NS IN RESPECT OF WHICH THE IMPUGNED PENALTY HAS BEEN IMPOSED U/S 271(1)(C) WER E DISPUTED BY THE ASSESSEE IN AN APPEAL FILED IN THE QUANTUM PROCEEDINGS AND THE SAID APPEAL BEING IT(SS)A. NO. 39/MUM/2006 HAS BEEN DISPOSED OF BY US BY AN ORDER OF EVEN DATE. BY THE SAID ORDER PASSED IN THE QUANTUM PROCEEDINGS, WE HAVE AL READY DELETED THE ADDITION 3 ITA NO.6305/MUM/2008 ASSESSMENT YEAR:2001-02. MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(APP EALS) ON ACCOUNT OF DISALLOWANCE OF ASSESSEES CLAIM FOR DEDUCTION ON A CCOUNT OF SOCIETY CHARGES WHILE COMPUTING INCOME FROM HOUSE PROPERTY. AS NOTED BY U S IN THE SAID ORDER, THE ISSUE RELATING TO DISALLOWANCE OF INTEREST HAS ALREADY BE EN RESTORED BY THE LEARNED CIT(APPEALS) TO THE FILE OF THE AO FOR CONSIDERING THE ASSESSEES ALTERNATIVE CLAIM FOR DEDUCTION ON ACCOUNT OF INTEREST UNDER THE HEAD INCOME FROM OTHER SOURCES. KEEPING IN VIEW THIS OUTCOME IN THE QUANTUM PROCEED INGS, WE ARE OF THE VIEW THAT THE PENALTY IMPOSED U/S 271(1)(C) IN RESPECT OF THE SE TWO ADDITIONS CANNOT BE SUSTAINED AS THE VERY BASIS THEREOF NO MORE SURVIVE S. AS REGARDS THE REMAINING TWO ADDITIONS MADE TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF DISALLOWANCE OF CAR EXPENSES AND CAR DEPRECIATION, IT IS OBSERVED T HAT ALTHOUGH THE SAID ADDITIONS HAVE BEEN CONFIRMED BY THE TRIBUNAL IN THE QUANTUM PROCEEDINGS, THERE IS NO ALLEGATION THAT HAS BEEN MADE BY THE AO THAT ANY P ARTICULARS FILED BY THE ASSESSEE IN RESPECT OF ITS CLAIM FOR CAR EXPENSES AND CAR DE PRECIATION WERE INCORRECT OR INACCURATE. IN THE CASE OF RELIANCE PETRO PRODUCTS P. LTD. 322 ITR 158 THE HONBLE SUPREME COURT HAS HELD THAT A MERE MAKING OF THE CL AIM WHICH IS NOT FOUND TO BE SUSTAINABLE BY ITSELF WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE AND JUST BECAU SE THE ASSESSEES CLAIM FOR DEDUCTION HAS NOT BEEN ACCEPTED BY THE REVENUE, PEN ALTY U/S 271(1)(C) COULD NOT BE ATTRACTED. KEEPING IN VIEW THE DECISION OF THE H ONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS P. LTD. (SUPRA) AND TAKING INTO CONSIDERATION THE RELEVANT FACTS OF THE CASE, WE ARE OF THE VIEW THAT IT IS NOT A FIT CASE TO IMPOSE PENALTY U/S 271(1)(C). IN THAT VIEW OF THE MATTER, WE CANCEL THE PENALTY IMPOSED BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) AN D ALLOW THIS APPEAL OF THE ASSESSEE. 4 ITA NO.6305/MUM/2008 ASSESSMENT YEAR:2001-02. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF DEC.,2011. SD/- SD/ - (R.S.PADVEKAR) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED : 23 RD DEC., 2011. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, A-BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI. WAKODE