Anjali Gill, Chandigarh V. ITO, Chandigarh

ITA 678/CHANDI/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5034 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 18-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGHDR
• Keywords: Bonafide belief
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, SMC, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER ITA NO.678/CHD/2017 ASSESSMENT YEAR: 2009-10 SMT. ANJALI GILL, VS. THE ITO, HOUSE NO. 27, WARD 1(3), SECSTOR 2-A, CHANDIGARH. CHANDIGARH. PAN NO. AAUPG4012G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.R.SHARMA RESPONDENT BY : SHRI MANJIT SINGH,DR DATE OF HEARING : 24.05.2017 DATE OF PRONOUNCEMENT : 13.07.2017 ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASSAILIN G THE CORRECTNESS OF THE ORDER DATED 25.01.2017 OF CIT(A)-2 A MRITSAR CAMP AT CHANDIGARH PERTAINING TO 2009-10 ASSESSMENT YEAR ON THE FOLLOWING GROUND : 1. THAT THE ORDER OF THE ASSESSING OFFICER AS UPHEL D BY THE COMMISSIONER OF INCOME TAX (APPEALS) AMRITSAR IS BAD IN LAW AND IS BEYOND ALL THE CANNONS OF LAW AND JUSTICE. 2 . THAT THE ORDER OF THE ASSESSING OFFICER AS UPHELD B Y THE COMMISSIONER OF INCOME TAX (APPEALS) AMRITSAR LEVYING PENALTY U/S271(L)(C) AMO UNTING TO RS. 89660/-ON THE DISALLOWANCE OF CLAIM U/S 24(A) AT RS. 2,63,7687- O F THE INCOME TAX ACT, IS BAD IN LAW AND NEEDS TO SET -ASIDE 2. THE RELEVANT FACTS OF THE CASE ARE FOUND DISCUSSED AT PAGE 2 AN D 3 OF THE IMPUGNED ORDER. FOR THE SAKE OF CONVENIENCE, THEY ARE EXTRACTED HE REUNDER : IN THE RETURN OF INCOME THE ASSESSEE HAD DECLARED I NCOME UNDER HEAD INCOME FROM HOUSE PROPERTY. DURING THE ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT ASSESSEE WAS ALLOTTED FLAT NO. 801, ON THE 8 TH FLOOR OF COMMERCIAL COMPLEX KNOWN AS UNIVERSAL TRA DE TOWER FOR AN AMOUNT OF RS 12,00,000/- SIMILARLY UNIT NO. 30 ON T HE GROUND FLOOR OF TOWER B, OF VIPUL TECH SQUARE WAS ALLOTTED TO THE ASSESSEE BY M/S VIP UL LTD FOR AN AMOUNT OF RS 40,04,756/- AS PER MOU DATED 06-07-2006 WITH THE ASSESSEE. WHEN CONFRONTED THE ASSESSEE ADMITTED THAT THE PAYMENT RECEIVED FROM M/S UNIVERSAL BUILDW ELL PVT LTD MAY BE CONSIDERED AS INTEREST INCOME AS ERE WAS NO RENT DEED. THE ASSESS EE WAS ASKED TO FURNISH THE COPY OF DETAILS OF TENANTS AND COPY OF RENT DEED OR LEASE A GREEMENT WITH RESPECT TO PAYMENT RECEIVED FROM M/S VIPUL LTD BUT THE REPLY WAS NOT R ECEIVED. THE AO MADE ENQUIRY FROM M/S VIPUL LTD U/S 133(6) BUT NO RESPONSE WAS RECEIVED T HEREFROM. THEREFORE THE AO HELD THAT THE PAYMENT RECEIVED BY ASSESSEE FROM M/S VIPUL LTD AMOUNTING TO RS 459,225/- IS INTEREST INCOME AGAINST THE DEPOSIT MADE BY THE ASSESSEE WIT H M/S VIPUL LTD. THE AO HELD THAT THE RENTAL INCOME CANNOT ARISE UNLESS AND UNTIL THE PRO PERTY IS READY FOR USE, POSSESSED BY ASSESSEE AND RENTED OUT TO THE TENANTS. THE PENALTY PROCEEDINGS U/S 271(L)(C) WAS INITIATED FOR THE SAME. ITA 678/CHD/2017 A.Y. 2009-10 PAGE 2 OF 4 3. THE FINDINGS OF THE AO WERE CONFIRMED IN APPEAL BY THE CIT(A). THE ISSUE WAS CARRIED FURTHER IN APPEAL BEFORE THE ITAT AND W AS ALSO CONCLUDED AGAINST THE ASSESSEE. IN THE AFOREMENTIONED PECULIAR FACTS AND CIRCUMSTANCES, PENALTY PROCEEDINGS HAVING BEEN INITIATED BY THE AO. CONS IDERING EXPLANATION OF THE ASSESSEE, THEY CULMINATED IN THE LEVY OF PENALTY U/ S 271(1)(C) OF THE ACT ON THE GROUNDS THAT THE ASSESSEE HAD CONCEALED PART ICULARS OF INCOME AND ALSO DELIBERATELY FURNISHED INACCURATE PARTICULARS OF INCOME. SAID FINDING WAS CONFIRMED IN APPEAL BY THE CIT(A). 4. THE LD. AR ASSAILING THE ORDERS SUBMITTED THAT NO DOUB T THAT THE ISSUE IN THE QUANTUM PROCEEDINGS STOOD DECIDED AGAINST THE AS SESSEE, HOWEVER, LEVY OF PENALTY IS NOT AUTOMATIC. INVITING ATTENTION TO THE PEN ALTY ORDER, IT WAS SUBMITTED THAT THE AO HAS TAKEN NOTE OF THE FACT THAT THE ASSESSEE ON BEING CONFRONTED DURING THE ASSESSMENT PROCEEDINGS, HAD NOT P LACED ANY DETAILS OF TENANTS OR COPY OF RENT DEED OR SALES AGREEMENT RECEIV ED FROM M/S VIPUL LTD., HOWEVER, AS PER THE TDS CERTIFICATE ISSUED BY M/S VIP UL LTD., THE DEDUCTION OF PAYMENT HAS BEEN MADE U/S 194I OF THE ACT . IT WAS SUBMITTED THAT NO DOUBT, THE AO CONSIDERING THIS EVIDENCE WROTE A LETTER TO M/S VIPUL LTD. U/S 133(6) OF THE ACT AND ASKED THE BUILDER TO SPEC IFICALLY GIVE THE NATURE OF PAYMENT WITH EVIDENCE AND COPY OF LEASE AGREEMENT AN D INSTRUMENT OF TRANSFERRING THE PROPERTY. THE BUILDER, AS PER RECORD, DID NOT REPLY. HOWEVER, AS FAR AS BONAFIDE OF THE ASSESSEE ARE CONCERNED, IT WAS SUBMITTED, IT IS NOT A CASE OF FILING OF INACCURATE PARTICULARS OF INCOME OR CONCEALME NT. IT WAS SUBMITTED THAT EVEN WHILE ARRIVING AT A CONCLUSION, THE AO AT PAGE 5 IN THE PENULTIMATE SENTENCE OF PARA 5 AGAIN MAKES A REFERENCE T O THIS FACT AND EVIDENCE ON RECORD NAMELY THAT, INSTEAD, THE ASSESSEE REPLIED UPON TDS CERTIFICATE ISSUED BY M/S VIPUL LTD., WHICH REFLECTS THE TAX DEDUCTED AT SOURCE U/S 194-1 OF THE ACT. DEDUCTOR OF TAX AT SOURCE IS NOT THE APPROPRIATE AUTHORITY TO CATEGORIZE THE HEAD OF ACCRUAL OF INCOME . THUS, IT WAS HIS SUBMISSION THAT IT IS NOT A CASE OF FILING INACCURA TE PARTICULARS OR CONCEALMENT. ATTENTION WAS INVITED TO FORM NO. 16A ISSUED BY THE BUILDER WHICH DISCLOSED THIS FACT THAT TDS HAS BEEN DEDUCTE D U/S 194I-RENT. THIS FACT, IT WAS SUBMITTED HAS BEEN NOTED BY THE AO ALS O IN THE ASSESSMENT PROCEEDINGS IN PARA 2.1. 4.1 THE AO HAS TAKEN NOTE OF THE FOLLOWING FACT, M/S VIPUL LTD. HAS SHOWN THE PAYMENTS GIVEN TO THE ASSESSEE AS RENT AND DEDU CTED TAX U/S 194-I OF THE ACT. HOWEVER, NATURE OF PAYMENT SHOWN BY THE PAYEE IS IMMATERIAL IN SO FAR AS THE ACTUAL PAYMENTS ARE CONCERNED AS DISCUSSED HEREU NDER. IN THE SAID ITA 678/CHD/2017 A.Y. 2009-10 PAGE 3 OF 4 BACKGROUND, IT WAS HIS SUBMISSION THAT IT IS NOT A CASE OF THE DEPARTMENT THAT IT IS AN AFTER THOUGHT. IN THE CIRCUMSTANCES, IT WAS HIS P RAYER THAT THE PENALTY ORDER MAY BE QUASHED. 5. THE LD. SR.DR RELYING UPON THE IMPUGNED ORDER SUBMITTE D THAT ON FACTS, THE SPECIFIC INCOME WAS NEVER THE RENTAL INCOME AND THIS FACT HAS BEEN UPHELD RIGHT UPTO THE ITAT. IN THE CIRCUMSTANCES, IT WAS HIS SU BMISSION THE PENALTY HAS CORRECTLY BEEN IMPOSED UPON THE ASSESSEE. THE E XPLANATION HAS BEEN CONSIDERED AND THE FACTS ARE NOT IN DISPUTE. ACCORDINGL Y, IT WAS HIS PRAYER THAT THE ORDER MAY BE UPHELD. 6. I HAVE HEARD THE SUBMISSIONS AND PERUSED THE MATER IAL AVAILABLE ON RECORD. ON A CONSIDERATION THEREOF, I FIND THAT NO DOUB T THE ISSUE IN THE QUANTUM PROCEEDINGS WAS CONCLUDED AGAINST THE ASSESSEE UPTO THE ITAT. THE INCOME RETURNED IS 'INCOME FROM OTHER SOURCES' AND IS NO T RENTAL INCOME. HOWEVER, THE ISSUE IN THE PENALTY PROCEEDINGS IS THAT COU LD THE ASSESSEE ON THE BASIS OF MATERIAL ON RECORD HAVE FORMED A BONAFIDE BELIE F THAT IT WAS RENTAL INCOME OR IS IT A CASE OF CONCEALMENT OR OF FILING OF INACCURATE PARTICULARS. T HE FACTS ON RECORD ARE THAT THE ASSESSEE HAS RELIED UPON TDS CERTIFICATE ISSUED BY THE BUILDER M/S VIPUL LTD. WHICH DISCLOSED THE DEDUCTION HAS BEEN MADE U/S 194-I. THE ASSESSEE AS PER RECORD ENTERED INTO A GREEMENT FOR PURCHASE OF SPECIFIC COMMERCIAL PROPERTY FOR RENTAL PURPOSES AND RECEIV ED SOME REGULAR PAYMENTS UNDERSTOOD TO BE ON ACCOUNT OF LEASED PROPER TY. THIS HAS BEEN THE CONSISTENT CLAIM OF THE ASSESSEE BEFORE THE TAX AUTHORIT IES EVEN IN THE QUANTUM PROCEEDINGS. THE TDS CERTIFICATES ISSUED BY THE BUILDER, NO DOUBT CANNOT DETERMINE THE NATURE OF INCOME, HOWEVER, THEY VER Y WELL CAN CONTRIBUTE TO THE FORMATION OF A BONAFIDE BELIEF OF THE TAX P AYER THAT THE RECEIPTS WERE RENTAL RECEIPTS FOR THE PROPERTY. IT IS WE LL ACCEPTED THAT QUANTUM PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND D ISTINCT AND MERELY BECAUSE THE ADDITION HAS BEEN MADE IN THE QUANTUM PRO CEEDINGS, THIS FACT ALONE CANNOT BE THE BASIS FOR HOLDING THAT A CASE OF PEN ALTY IS MADE OUT. LEVY OF PENALTY IS NOT AUTOMATIC. THE ASSESSEE CONSISTENTLY R IGHT FROM THE ASSESSMENT STAGE AND THROUGH OUT THE PENALTY PROCEED INGS HAS RELIED UPON THE TDS CERTIFICATE ISSUED BY THE BUILDER WHICH DISCLOSED TH AT TAX HAS BEEN DEDUCTED U/S 194-I. THE RECORD SHOWS THAT THE ASSES SEE HAD DEPOSITED A SPECIFIC AMOUNT WITH M/S UNIVERSAL BUILDWELL PVT. LTD. AND HAD BEEN ALLOTTED UNIT MENTIONED AS FLAT NO. 801 ON THE 8 TH FLOOR OF THE UPCOMING COMMERCIAL COMPLEX AS UNIVERSAL TRADE TOWER AND ALSO ANOTHER NAME D AS M/S VIPUL LTD. FOR WHICH THE ASSESSEE HAD PROVISIONALLY BEEN ALLOTTED UNIT NO. 30 ON THE ITA 678/CHD/2017 A.Y. 2009-10 PAGE 4 OF 4 GROUND FLOOR OF TOWER-B OF VIPUL TAX SQUARE AS PER MEMORA NDUM OF UNDERSTANDING MADE ON 06.07.2006 WITH M/S VIPUL LTD. THE PAYMENTS CORRECTLY HAVE BEEN HELD TO BE 'INCOME FROM OTHER SOUR CES' AND NO DOUBT, BUILDER IS NOT THE AUTHORITY TO DECIDE WHETHER PAYMENTS WERE ON ACCOUNT OF RENT OR OTHERWISE. THE FACT THAT THE BUILDER ISSUED CERT IFICATE DEDUCTING TAX U/S 194-I SUPPORTS THE CONSISTENT CLAIM OF THE ASSESSE E. THE INCOME WAS UNDERSTOOD AND ACCEPTED TO BE LEASE RENTAL BY THE AS SESSEE. IN THE ABSENCE OF ANY CONTRARY FACT WHICH WOULD DEMONSTRATE THAT IN THESE PECULIAR FACTS AND CIRCUMSTANCES, THE ASSESSEE COULD NOT HAVE HAD A BONAFID E BELIEF THAT IT WAS RENTAL INCOME, I AM OF THE VIEW THAT PENALTY IN THESE PECU LIAR FACTS AND CIRCUMSTANCES, COULD NEITHER HAVE BEEN IMPOSED ON THE GR OUNDS OF FILING OF INACCURATE PARTICULARS NOR ON THE GROUND OF CONCEALMENT. BEING SATISFIED WITH CONSISTENT EXPLANATION OFFERED, SUPPORTED BY DOCUMENTARY EVIDENCES AND THE ARGUMENTS TAKEN IN THE QUANTUM PROCEEDINGS AND THE PE NALTY PROCEEDINGS, THE PENALTY IS DIRECTED TO BE QUASHED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JULY,2017. SD/- (DIVA SINGH) JUDICIAL MEMBER POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSTT. REGISTRAR ITAT,CHANDIGARH