DCIT 8(2), MUMBAI V. PANKAJ SHAWLS P. LTD, MUMBAI

ITA 7289/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9275 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-12-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 25-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Bonafide belief; Retrospective amendment; Wrong claim; Difference of opinion
• Section: 143(3); 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI . . !'# , $ %& BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI N.K. BILLAIYA, AM ./I.T.A. NO.7289/MUM/2010 ( ' ' ' ' / ASSESSMENT YEAR : 2000-01 THE DCIT 8(2), AAYAKAR BHAVAN, MUMBAIA-400 020 / VS. M/S. PANKAJ SHAWLS PVT. LTD., EVEREST HOUSE, 6,SUREN ROAD, MUMBAI 400 098 &( $ ./ )* ./PAN/GIR NO. AAACP 2181Q ( (+ /APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY: SHRI RAKESH RANJAN ,-(+ / . / RESPONDENT BY SHRI VIJAY MEHTA / 01$ / DATE OF HEARING : 20.12.2012 23' / 01$ /DATE OF PRONOUNCEMENT :20.12.2012 %4 / O R D E R PER N.K. BILLAIYA, AM: WITH THIS APPEAL THE REVENUE HAS CHALLENGED THE COR RECTNESS OF THE ORDER OF THE LD. CIT(A)-17, MUMBAI DT. 22.7.2010 PE RTAINING TO A.Y. 2000-01. ITA NO. 7289/MUM/2011 2 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD . CIT(A) OUGHT NOT HAVE DELETED THE PENALTY OF RS. 20,91,832/- LEVIED U/S. 271(1)(C) OF THE ACT. 3. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASS ESSMENT ORDER PASSED U/S. 143(3) WHEREIN THE ASSESSING OFFICER HAS MADE THE FOLLOWING ADDITIONS TO THE RETURNED INCOME WHICH WERE CONFIRM ED BY THE LD. CIT(A). A) INCOME FROM HOUSE PROPERTY -RS. 7,39,126/- B) OUT OF PERSONAL EXPENSES -RS. 1,07,340/- C) OUT OF DEPRECIATION -RS. 45,81,865/- D) 14A -RS. 5,000/- 4. THE ASSESSEE WAS SHOW CAUSED AS TO WHY PENALTY S HOULD NOT BE LEVIED U/S. 271(1)(C) OF THE ACT. THE ASSESSEE FIL ED A DETAILED REPLY WHICH WAS NOT ACCEPTED BY THE AO WHO WAS OF THE OPINION T HAT ASSESSEE MADE A PATENTLY WRONG CLAIM BY DECLARING INCOME FROM RENT UNDER THE HEAD INCOME FROM BUSINESS WHICH WAS ULTIMATELY ASSESSE D UNDER THE HEAD INCOME FROM HOUSE PROPERTY WHICH RESULTED INTO CO RRESPONDING DISALLOWANCE OF DEPRECIATION. THIS ACT OF THE ASSE SSEE AMOUNTED TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. TH E AO WAS CONVINCED THAT THE CLAIM OF DEDUCTION IN THE RETURN WHICH COU LD NOT BE SUBSTANTIATED IN THE PROCEEDINGS AMOUNTING TO FURNISHING OF INACC URATE PARTICULARS OF INCOME AS PER PROVISIONS OF SEC. 271(1)(C) OF THE A CT AND ACCORDINGLY LEVIED PENALTY OF RS. 20,91,832/- BEING 100% TAX SO UGHT TO BE EVADED. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A). THE ASSESSEE CLAIMED THAT IT HAS NOT FURNISHED ANY INAC CURATE PARTICULARS OR CONCEALED INCOME. ON THE CONTRARY, ALL THE DETAILS WERE PROVIDED ITA NO. 7289/MUM/2011 3 ALONGWITH RETURN OF INCOME. THE ASSESSEE HAS SHOWN RENT UNDER THE HEAD OTHER INCOME WHICH IN THE OPINION OF THE AO WAS S UPPOSED TO BE TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THIS IS NOTHING BUT A DIFFERENCE OF OPINION AND NOT A CASE OF CONCEALMENT OF INCOME OF FURNISHING OF INACCURATE PARTICULARS. ON OTHER ADDI TIONS, THE ASSESSEE SUBMITTED THAT THE AO HAS DISALLOWED EXPENSES OUT O F PERSONAL EXPENSES, DEPRECIATION AND U/S. 14A. BY NO STRETCH OF IMAGIN ATION SUCH DISALLOWANCES CAN BE TERMED AS FILING OF INACCURATE PARTICULARS. 6. THE LD. CIT(A) WAS CONVINCED WITH THE SUBMISSION S OF THE ASSESSEE AND HELD THAT THE ASSESSEE HAS DISCLOSED I NFORMATION REGARDING RENTAL INCOME IN THE RETURN OF INCOME FILED. RELYI NG UPON CERTAIN JUDICIAL DECISIONS AND ALSO IN THE LIGHT OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETRO PRODUCTS (P) LTD. 322 ITR 158, THE PENALTY SO LEVIED WAS DELETED. 7. THE REVENUE IS AGGRIEVED AND IS BEFORE US. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY PLACED RELIANCE ON THE FIND ING OF THE AO. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2001-02 IN ITA NO. 7290/MUM/2010 AND SUBMITTED THAT ON IDENTICAL FACTS AND ON SIMILAR ADDITIONS THE TRIBUNAL HAS CANCELLED THE PENALTY AN D PLEADED THAT THE SAME DECISION SHOULD BE FOLLOWED. 8. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES AND THE DECISION OF THE TRIBUNAL IN ITA NO. 7290 (SUPRA ). WE FIND THAT IN THE SAID CASE SIMILAR ADDITIONS WERE MADE I.E. UNDER TH E HEAD INCOME FROM HOUSE PROPERTY, OUT OF PERSONAL EXPENSES, OUT OF DE PRECIATION AND U/S. 14A WHEREIN THE TRIBUNAL HELD AS UNDER: ITA NO. 7289/MUM/2011 4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE ASS ESSEE HAD EXPLAINED BEFORE THE CIT(A) THAT IT WAS UNDER T HE BONAFIDE BELIEF THAT IN RESPECT OF THE PORTION LET OUT TO IT S ASSOCIATE CONCERNS IT COULD DETERMINE THE ANNUAL VALUE LIMITED TO STAN DARD RENT AS LAID DOWN IN SEVERAL JUDICIAL PRONOUNCEMENTS. SINCE THE ASSESSEE HAD USED FUNDS OF THE SISTER CONCERN FOR CONSTRUCTION O F THE BUILDING IT CANNOT CHARGE THE SISTER CONCERN THE SAME RENT AS I T CHARGED TO THE OUTSIDERS. IT WAS SUBMITTED IN ANY EVENT IT CANNOT BE TERMED AS CONCEALMENT OF PARTICULARS OF INCOME. IT IS ALSO N OTICED THAT THE HONBLE BOMBAY HIGH COURT HAS SINCE CONFIRMED THE B ASIS OF DETERMINING OF ALV IN THE CASE OF THE ASSESSEE AS A PPROVED BY THE TRIBUNAL IN A.Y 2002-03. IN SUCH CIRCUMSTANCES WE ARE OF THE VIEW THAT NO PENALTY COULD BE IMPOSED ON MERE CHANGE OF HEAD OF INCOME AND ADOPTING NOTIONAL BASIS TO DETERMINE THE INCOME. NONE OF THE FACTS REGARDING LETTING OUT OF PREMISES TO S ISTER CONCERNS AND OUTSIDERS AND THE QUANTUM OF RENT CHARGED FOR SUCH LETTING HAD BEEN CONCEALED. ON THE FACTS THAT WERE DISCLOSED I N THE RETURN OF INCOME, THE AO TOOK A DIFFERENT VIEW OF THE MANNER OF COMPUTATION OF INCOME AS WELL AS THE HEAD OF INCOME. IN RESPECT OF DISALLOWANCE OF EXPENSES THE SAME I S PURELY BASED ON ESTIMATE AND ON AN ADHOC BASIS WITHOUT ANY ADVERSE MATERIAL AND, THEREFORE, THERE IS NO JUSTIFICATION OF IMPOSING PENALTY ON THIS ADDITION. AS FAR AS DISALLOWANCE U NDER SECTION 14A OF THE ACT IS CONCERNED IT IS SEEN THAT THE ASSESSE E FILED RETURN OF INCOME ON 31/10/2001. THE PROVISIONS OF SECTION 14 A WERE AMENDED BY THE FINANCE ACT 2001 WITH RETROSPECTIVE EFFECT FROM 1/4/1962. THUS THOSE PROVISIONS WERE SUBJECT MATTE R OF DIFFERENT INTERPRETATION BEING NEWLY INTRODUCED PROVISIONS. MOREOVER THE ADDITION WAS MADE ONLY ON PURELY ESTIMATE BASIS. E VEN THE DISALLOWANCE OF DEPRECIATION IS ON ACCOUNT OF CHANG E OF HEAD OF INCOME AND THAT TOO ONLY PART OF THE DEPRECIATION C LAIM WAS DISALLOWED. WE ARE OF THE VIEW THAT TAKING INTO CO NSIDERATION THE FACTS AND CIRCUMSTANCES OF THE CASE THE PENALTY WAS RIGHTLY CANCELLED BY THE CIT(A). THE ORDER OF THE CIT(A) I S CONFIRMED AND THE APPEAL BY THE REVENUE IS DISMISSED. FACTS AND THE HEAD OF DISALLOWANCES BEING THE SAME , RESPECTIVELY FOLLOWING THE DECISION OF THE TRIBUNAL, WE HAVE NO HESITATION IN CONFIRMING THE ORDER OF THE LD. CIT(A). ITA NO. 7289/MUM/2011 5 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. 5 06 )& / 7 $5) / )0 8' ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON 20.12.2012 %4 / 3' $ 7 9%6 20.12.2012 3 / : SD/- SD/- (H.L. KARWA) (N.K. BILLAIYA) /PRESIDENT $ %& / ACCOUNTANT MEMBER MUMBAI; 9% DATED 20.12.2012 . . ./ RJ , SR. PS %4 / ,0 ; '0 / COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. < ( ) / THE CIT(A)- 4. < / CIT 5. =: ,0 , , / DR, ITAT, MUMBAI 6. :> ? / GUARD FILE. %4 / BY ORDER, - 0 ,0 //TRUE COPY// @ / 8 ) DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI