USK HEALTHCARE PVT. LTD., NEW DELHI V. ITO, WARD- 27(2), NEW DELHI

ITA 6426/DEL/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7598 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 31-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief; Difference of opinion; TDS; Set aside
• Section: 271(1)(c); 20

Judgement Text

1 ITA NO. 6426/DEL/2019 IN THE INCOME TAX APPELLAT E TRIBUNAL DELHI BENCH: SMC -1 NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBE R AND MS SUCHITRA KAMBLE, JUDIC IAL MEMBER ITA NO. 6426/DEL/2019 ( A.Y 2015-16) (THROUGH VIDEO CONFEREN CING) USK HEALTHCARE PVT. LTD. E-172, DDA, NARAINA VIHAR, NEW DELHI AABCU0345G (APPELLANT) VS ITO WARD-27(1) NEW DELHI (RESPONDENT) APPELLANT BY SH. ANKIT GUPTA, ADV RESPONDENT BY SH. AJAY KUMAR, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 06/05/2019 PASSED BY CIT(A)-9, NEW DELHI FOR ASSESSMENT YEAR 2 015-16. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT THE NOTICE ISSUED U/S 271 (1) (C) AND ORDE R IMPOSING PENALTY OF RS.4,27,082.00 BY THE ASSESSING OFFICER UNDER SAID SECTION ARE ILLEGAL, BAD IN LAW, AND WITHOUT JURISDICTION AS ASSESSING OFFICER HAS NOT MENTIONED IN NOTICE U/S 271 (L)(C) UNDER WHICH VIOLATION HE HAS ISSUED NOTICE. 2. THAT IN VIEW OF THE FACTS AND CIRCUMSTANCE OF TH E CASE THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN IMPOSING THE PENALTY OF RS.4 ,27,082.00 U/S 271 (1) (C). DATE OF HEARING 14.01.2021 DATE OF PRONOUNCEMENT 21.01.2021 2 ITA NO. 6426/DEL/2019 3. THAT, THE PROVISIONS OF U/S 271(L)(C) ARE NOT AT ALL APPLICABLE, IN THE FACTS AND CIRCUMSTANCES, BECAUSE THE APPELLANT HAD NEITHE R CONCEALED PARTICULARS OF INCOME NOR HAD NOT FILED INACCURATE PARTICULARS OF INCOME AND THE CIT (A) HAS FAILED TO APPRECIATE THAT THE ADDITIONS ARE MAD E MERE ON PRESUMPTIONS AND MERE CHANGE OF HEAD OF INCOME. 4. THAT, THE CIT(A) HAS FAILED TO APPRECIATE THAT T HE ASSESSING OFFICER HAS MADE THE ADDITION OF RS.13,16,325.00 BY TREATING TH E RENTAL INCOME AS INCOME FROM OTHER SOURCES, WHICH IS HIGHLY ARBITRARY, UNJU ST AND BASELESS. 5. THAT, THE ASSESSING OFFICER HAS NOT RECORDED HIS SATISFACTION, REGARDING CONCEALMENT OF INCOME IN THE ASSESSMENT ORDER PASSE D. 6. THAT, THE EXPLANATION GIVEN EVIDENCE PRODUCED, M ATERIAL PLACED AND AVAILABLE ON RECORD HAS NOT BEEN PROPERLY CONSIDERE D AND JUDICIALLY INTERPRETED AND THE SAME DO NOT JUSTIFY THE PENALTY IMPOSED U/S 271 (L)(C) AT RS. 4,27,082.00. 7. THE ADDITION/DISALLOWANCE HAS BEEN MADE MERELY O N THE BASIS OF REJECTION OF EXPLANATION OF THE APPELLANT AND NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE AO IN SUPPORT OF SAID ADDITION/DISALLOWANCE HEN CE NO PENALTY U/S 271 (1 )(C) COULD BE LEVIED ON THE BASIS OF SUCH A DISALLO WANCE. 8. THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN NON-QUASHING OF PENALTY PROCEEDINGS U/S 271(L)(C) WHICH IS WRONGLY INITIATE D BY THE AO. 9. PENALTY PROCEEDINGS HAVE BEEN INITIATED WITHOUT ANY SPECIFIC CHARGES HENCE THE SAME ARE LIABLE TO BE SET ASIDE. 10. THAT IN ANY CASE THE PENALTY IMPOSED IS UNJUST, ARBITRARY AND HIGHLY EXCESSIVE. 3 ITA NO. 6426/DEL/2019 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADI NG IN MEDICINES AND FOOD SUPPLEMENTS AS WELL AS HAVE THE RENTAL INCOME. THE RETURN OF INCOME WAS FILED ON 28/10/2015 DECLARING INCOME OF RS. 3,50,801/-. THE ASSESSMENT WAS COMPLETED ON 22/11/2017 THEREBY MAKING AN ADDITION OF RS. 5,417/- TOWARDS INTEREST PAID ON TDS AND SALES TAX AS WELL AS ADDIT ION OF RS. 13,16,325/- RELATING TO RENTAL INCOME TREATED AS INCOME FROM OT HER SOURCES. THE ASSESSEE DID NOT FILE THE APPEAL AGAINST THE ASSESSMENT ORDE R AS THERE IS NO TAX EVASION. THEREAFTER, THE ASSESSING OFFICER INITIATED THE PEN ALTY PROCEEDINGS U/S 271(1)(C) AND IMPOSED PENALTY OF RS. 4,27,082/- VIDE ORDER DA TED 16/7/2018. 4. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSESS EE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF TH E ASSESSEE. 5. THE LD. AR SUBMITTED THAT THE ASSESSEE COMPANY H AS ALREADY DECLARED THE RECEIPT OF RS.2,40,00,000.00 AS RENTAL INCOME U NDER THE HEAD OF INCOME FROM HOUSE PROPERTY AND CLAIMED THE STANDARD DEDUCT ION @30% OF RS.72,00,000.00 U/S 24(1) OF THE INCOME TAX ACT, 19 61. THE ASSESSEE EXECUTED THE RENT AGREEMENT WITH THE TENANT, THE COPY OF SAM E WAS FILED DURING ASSESSMENT PROCEEDINGS. THE LD. AR FURTHER SUBMITTE D THAT THE YEAR UNDER CONSIDERATION IS THE FIRST YEAR OF RECEIPT OF THE R ENTAL INCOME DECLARED FROM THE HOSPITAL. IT IS UNDISPUTED FACT THAT THE ASSESSEE C OMPANY FURNISHED THE RENT AGREEMENT DURING ASSESSMENT PROCEEDINGS AND TDS WAS ALSO DEDUCTED BY THE TENANT U/S L94I OF THE INCOME TAX ACT, 1961. THE LD . AR SUBMITTED THAT THE ASSESSEE ALSO DISCLOSED THE FACT, THE LAND BELONGED TO THIRD PARTY AS CONTEMPLATED FROM THE AGREEMENT WITH DR. SARITA KAL RA, AND AFTER CONSTRUCTION, THE ASSESSEE COMPANY CAN GIVE THE CONSTRUCTED HOSPI TAL TO THIRD PARTY. THE LD. AR FURTHER SUBMITTED THAT, THE ASSESSEE COMPANY HAS SHOWN THE INVESTMENT IN CONSTRUCTION OF HOSPITAL AS NON CURRENT INVESTMENT IN THE BALANCE SHEET. IN VIEW OF THE ABOVE, THE ASSESSEE HAS TRULY AND FULLY DISCLOSED/ REPORTED ALL THE FACTS AND MATERIAL IN ITS RETURN OF INCOME, THEREFO RE, THE CHARGE OF FURNISHING 4 ITA NO. 6426/DEL/2019 INACCURATE PARTICULARS OF INCOME CHARGED BY THE ASS ESSING OFFICER IS ARBITRARY, UNJUST AND AGAINST THE FACTS AND CIRCUMSTANCES. THE LD. AR RELIED UPON THE DECISION OF HON'BLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. AMIT JAIN 351 ITR 74(DELHI). THE ADDITION MADE BY ASSESSING OFFICER IS DUE TO DIFFERENCE OF OPINION AND THE ASSESSEE IS UNDER THE BONAFIDE BELIEF THAT THE SAID INCOME IS RENTAL INCOME AND THE SAME IS TO BE ASSES SED UNDER THE HEAD OF INCOME FROM HOUSE PROPERTY, WHEREAS THE ASSESSING O FFICER IS OF THE VIEW THAT THE RECEIPT IS TO BE TAXED UNDER THE HEAD OF INCOME FROM OTHER SOURCES, THEREFORE, THE ADDITION IS MADE DUE TO CHANGE OF HE AD OF INCOME, WHICH IS NOT JUSTIFIABLE FOR IMPOSING THE PENALTY FOR THE CHARGE OF FURNISHING AN INACCURATE PARTICULARS OF INCOME. THE LD. AR RELIED UPON THE F OLLOWING DECISIONS:- A) ACIT VS. KRISHNA C. TANDON (HUF) IN ITA NO. 20 48/MUM/2016 (MUM. TRI.) B) CIT VS. BENNETT COLEMAN & CO. LTD. 33 TAXMANN.CO M 227(BOM. HC) C) PRICE WATERHOUSE COOPERS VS. CIT 348 ITR 306 ( SC) D) CIT VS. SOCIETEX ITA NO. 1190/2017 DATED 19.07.2 012 6. THE LD. DR RELIED UPON THE ORDER OF THE ASSESSIN G OFFICER AS WELL AS PENALTY ORDER AND ORDER OF CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE COMPANY FURNISHED RENT AGREEMENT DURING THE ASSESSMENT PROCEEDINGS AND TDS WAS DEDUCTED BY THE TENANT U/S 194I OF THE INCOME TAX ACT. THE ASSESSE E ALSO DISCLOSED THE FACT THAT THE LAND BELONG TO THIRD PARTY AND THE AGREEME NT WITH DR. SARITA KALRA AND AFTER CONSTRUCTION, THE ASSESSEE COMPANY CAN GIVE T HE CONSTRUCTED HOSPITAL TO THIRD PARTY. THE ASSESSEE COMPANY ALSO DISCLOSED T HE INVESTMENT IN CONSTRUCTION IN HOSPITAL AS NON CURRENT INVESTMENT IN BALANCE-SHEET. THUS, THE ASSESSEE FULLY AND TRULY DISCLOSED THE RETURN O F INCOME AND, THEREFORE, THE CHARGE OF FURNISHING INACCURATE PARTICULARS OF INCO ME BY THE ASSESSING OFFICER IS NOT VALID. THE RELIANCE OF DECISION IN CASE OF CIT VS. AMIT JAIN 351, ITR 74 5 ITA NO. 6426/DEL/2019 DELHI THAT OF JURISDICTIONAL HIGH COURT IS VERY APT IN THE PRESENT CASE. THEREFORE, THE CIT(A) WAS NOT RIGHT IN DISMISSING T HE CONTENTIONS OF THE ASSESSEE AND CONFIRMING THE PARTIAL PENALTY. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF JANUARY , 2021. SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED: 21/01/2021 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI