DHAIRESH K SANGHVI, MUMBAI V. ITO 12(3)(4), MUMBAI

ITA 7413/MUM/2012

• Counselvise Citation: 741319914 RSA 2012
• Duration Of Justice: 1 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2001-2002
• Appeal Filed On: 14-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV JAIN
• Assessee Lawyers: M V SUBRAMANIAN
• Keywords: Business income; Difference of opinion

Judgement Text

, MH MHMH MH INCOME TAX APPELLATE TRIBUNAL,MUMBAI - D BENCH. , LAT; XXZ LAT; XXZ LAT; XXZ LAT; XXZ BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & SANJAY GA RG,JUDICIAL MEMBER /. ITA NO.7413/MUM/2012, ! ! ! ! / ASSESSMENT YEAR-2001-02 DHAIRESH K. SANGHVI PROP-KANTILAL SANGHVI & CO. UNION CO-OP INSURANCE BUILDING, 23, SIR P.M.ROAD, FORT MUMBAI-400001 VS ITO 12(3)(4), MUMBAI. PAN:AAFPS2488B ( '# / APPELLANT) ( $%'# / RESPONDENT) &' &' &' &' ( ( ( ( / ASSESSEE BY : SHRI M.V.SUBRAMA NIAN ) ( / REVENUE BY : SHRI SANJEEV JAIN ) )) ) '* '* '* '* / DATE OF HEARING : 25-02-2014 +,! ) '* / DATE OF PRONOUNCEMENT : 14-03-2014 , 1961 ) )) ) 254 )1( '-' '-' '-' '-' . . . . ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM : CHALLENGING THE ORDER DT.16.10.2012 OF THE CIT(A)-1 0,MUMBAI,ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED CIT(A) HAS ERRED IN CONFIRMING PENALTY IMPOSED U/S 271(1)(C) OF THE INC OME TAX ACT AMOUNTING TO RS. 4,40,940/-. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT THERE IS NO CONCEALMENT OF INCOME A TTRACTING PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT THE CLAIM OF THE ASSESSEE WAS DEBAT ABLE/DISPUTED AND HONBLE MUMBAI HIGH COURT HAS ALSO ADMITTED THE ASSESSEES QUANTUM APPEA L ARISING OUT OF THE REGULAR ASSESSMENT. 4. THE APPELLANT CRAVES TO ADD, ALTER, MODIFY ANY GROU NDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2. IN THIS CASE ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT,ON 23.01.2004,DETERMINING TOTAL INCOME OF THE ASSESSEE AT RS.16,17,340/-AS AGAINST RETURNED INCOME OF RS.3,43,578/-.THE INCREASE IN THE ASSESSED INCOME OVER THE RETURNED INCOME WAS ON ACCOUNT OF TREATMENT OF INCOME RECEIVED FROM LEASE OF PROPERTY AS INCOME FROM HOUSE PROPERT Y AS AGAINST BUSINESS INCOME SHOWN BY THE ASSESSEE AND CONSEQUENT DISALLOWANCE OF DEPRECIATIO N CLAIMED BY HIM.AS PER THE AO,THE ASSESSEE HAD CONCEALED PARTICULARS OF HIS INCOME WITHIN THE MEANING OF SECTION 271(L)(C) OF THE ACT.HE INITIATED PENALTY PROCEEDINGS U/S.271(1)(C)OF THE A CT AND A NOTICE U/S.274 R.W.S.27L(1)(C) WAS ISSUED BY HIM,REQUIRING THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY SHOULD NOT LEVIED FOR FURNISHING INACCURATE PARTICULARS AND CONCEALMENT O F INCOME.IN THE APPELLATE PROCEEDINGS,FIRST APPELLATE AUTHORITY(FAA)ALLOWED THE APPEAL FILED BY THE ASSESSEE,BUT TRIBUNAL REVERSED HIS 2 ITA NOS. 7413/MUM/2012 DHAIRESH K. SANGHVI . ORDER.AO, AS STATED EARLIER HAD ISSUED NOTICE FOR L EVYING PENALTY AND VIDE HIS ORDER DATED 30.10. 2009,HE LEVIED PENALTY OF RS.4.40 LAKHS,U/S.271(1)( C)OF THE ACT. 3. DURING THE COURSE OF APPEAL PROCEEDINGS BEFORE THE FAA,ASSESSEE SUBMITTED THAT THERE WAS NO CONCEALMENT OF INCOME,THAT THE RENTAL INCOME WAS FU LLY DISCLOSED IN THE P&L A/C.,THAT HE HAD MERELY MADE A LEGAL INCOME BY OFFERING IT TO TAX AS BUSINESS INCOME WHEREAS THE AO HAD TAXED THE SAME AS INCOME FROM HOUSE PROPERTY,THAT IN THE SUBSEQUENT YEARS(AY.S.2006-07,2007-08 AND 2008-09),AO HIMSELF HAD ACCEPTED THE STAND OF THE A SSESSEE.THAT THE DECISION OF THE SUPREME COURT DELIVERED IN THE CASE OF RELIANCE PETRO PRODU CTS(322ITR158)WAS APPLICABLE TO THE MATTER. 3.1. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND THE PENALTY ORDER,FAA HELD THAT FROM THE RETURN OF INCOME AND THE P&L A/C.,FILED FOR THE RELEVANT PREVIOUS YEAR,IT WAS FOUND THAT THE RENTAL INCOME WAS SHOWN AS SUBSCRIPTION INCOME,THAT THERE WAS NO INDICATION ANYWHERE EITHER IN THE RETURN OF INCOME OR IN THE P&L A/C THAT THE SAI D SUBSCRIPTION INCOME CONSTITUTED RENTAL INCOME,THAT ONLY ON SPECIFIC QUERIES RAISED BY THE AO NATURE OF THIS INCOME COULD BE ASCERTAINED, THAT THE IMPUGNED RECEIPT WAS ON ACCOUNT OF RENTAL INCOME,THAT IT WAS NOT A CASE OF LEGAL CLAIM, THAT A CASE OF LEGAL CLAIM COULD BE MADE OUT ONLY W HEN THE ASSESSEE WOULD COME OUT WITH ALL THE FACTS BY MAKING FULL DISCLOSURE,THAT THE ASSESSEE H AD NOWHERE DISCLOSED IN THE RETURN OF INCOME THAT THE SUBSCRIPTION INCOME WAS,IN FACT,RENTAL INC OME AND HAD BEEN OFFERED AS BUSINESS INCOME, THAT THERE WAS ALSO NO INDICATION THAT THE ASSESSEE WAS RUNNING ANY BUSINESS CENTRE OR THAT ITS BUSINESS CONSTITUTED OF RUNNING OF SUCH BUSINESS CE NTERS,THAT THE JUDGMENT OF RELIANCE PETROPROD - UCTS(SUPRA)WAS NOT APPLICABLE.FINALLY,HE CONFIRMED THE ORDER OF THE AO. 4. BEFORE US,AUTHORISED REPRESENTATIVE(AR)SUBMITTED TH AT EXCEPT FOR THE YEAR UNDER APPEAL INCOME FROM THE PREMISES RENTED OUT WAS ASSESSED UN DER THE HEAD INCOME FROM BUSINESS,THAT IN THE SUBSEQUENT YEARS AO HAD ACCEPTED THE CLAIM MAD E BY THE ASSESSEE TO TREAT IT AS BUSINESS INCOME, THAT THE SAID INCOME WAS NOT ASSESSEE AS IN COME FORM HOUSE PROPERTY WHILE AO HAD PASSED ASSESSMENT ORDER U/S.143(3) OF THE ACT,THAT HONBLE HIGH COURT HAD ADMITTED THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE TRIB UNAL.HE RELIED UPON THE JUDGMENTS OF RELIANCE PETROPRODUCT(SUPRA),ADVAITA ESTATE DEVELOPMENT P LT D.(27ITR112-TRIB),SHAILSEH P PATEL(33TAX MANNN.COM.51-AHD),AMIT JAIN(351ITR74),MAHAVEER IRRI GATION PVT.LTD.(347ITR241).DEPARTME - NTAL REPRESENTATIVE(DR) SUBMITTED THAT THE ASSESSEE HAD NOT DISCLOSED THE FULL FACTS,THAT HE HAD GIVEN WRONG DESCRIPTION OF THE RECEIPT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ASSESSEE HAD GIVEN HIS PREMISES AT NARIMAN POINT, A BMEDABAD AND VASHI ON RENT AND THE INCOME THEREFROM WAS SHOWN AS SUBSCRIPTION FEES IN THE P&L A/ AT RS 5,32,667/-, THAT AO WAS OF THE OPINION THAT THE INCOME WAS TO BE CHARGED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND HE HELD THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM DE PRECIATION,THAT FAA HAD ALLOWED THE APPEAL OF THE ASSESSEE, BUT THE TRIBUNAL HAD REVERSED THE ORD ER OF THE FAA,THAT IN THE SUBSEQUENT YEAR; WHILE FINALISING THE ASSESSMENT ORDERS U/S.143(3) OF THE ACT;AO.S HAVE ACCEPTED THE CLAIM MADE BY THE ASSESSEE THAT DISPUTED INCOME WAS TO ASSESSED AS BU SINESS INCOME.AS PER THE ESTABLISHED NORMS OF TAXATION JURISPRUDENCE PENALTY CANNOT BE IMPOSED WH ERE ISSUE IS DEBATABLE OR WHERE THE AO AND THE ASSESSEE HAVE DIFFERENCE OF OPINION.AS FAR AS D ISALLOWANCE IN QUANTUM APPEAL IS CONCERNED IT SHOULD NOT RESULT IN AUTOMATIC LEVY OF PENALTY.FOR INVOKING PROVISIONS OF SECTION 271(1)( C) OF THE ACT,AO HAS TO MENTION AS WHICH PARTICULARS WERE INA CCURATE.IT IS FOUND THAT IN THE SUBSEQUENT YEARS AO HIMSELF HAS ADMITTED THAT THE INCOME EARNE D BY THE ASSESSEE BY LETTING OUT THE PREMISES SHOULD BE ASSESSED AS BUSINESS INCOME.THUS,IT IS CL EAR THAT THE ISSUE IS A DEBATABLE ISSUE.WE FIND 3 ITA NOS. 7413/MUM/2012 DHAIRESH K. SANGHVI . THAT IN THE CASE OF AMIT JAIN(SUPRA)HONBLE DELHI H IGH COURT HAS HELD THAT IF AMOUNT IN QUESTION, WHICH FORMS THE BASIS FOR THE AO TO LEVY PENALTY, I S TRUTHFULLY REPORTED IN THE RETURNS AND THE AO CHOOSES TO TREAT THE INCOME UNDER SOME OTHER HEAD T HEM IT CANNOT BE HELD THAT THE ASSESSEE HAS FILED INACCURATE PARTICULARS OR HAS SUPPRESSED THE FACTS.WHILE DECIDING THE MATTER HONBLE DELHI HIGH COURT HAD RELIED UPON THE JUDGMENT OF RELIANCE PETROPRODUCTS.CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE OPINION THA T BY CLAIMING RENTAL INCOME AS BUSINESS INCOME CANNOT BE HELD TO BE FURNISHING OF INACCURATE PARTI CULARS OF INCOME.THEREFORE, REVERSING THE ORDER OF THE FAA,WE DECIDE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. AS A RESULT,APP EAL FILED BY THE ASSESSEE STANDS ALLOWED. 0'1 &' 2 3 4 ) ' 56. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH MARCH, 2014 . . ) +,! 8 9 14 EKPZ EKPZ EKPZ EKPZ , 201 4 , ) - : SD/- SD/- ( LAT; XXZ LAT; XXZ LAT; XXZ LAT; XXZ / SANJAY GARG) ( / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 9 /DATE: 14.03.2014. SK . . . . ) )) ) $'; $'; $'; $'; <;!' <;!' <;!' <;!' / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / '# 2. RESPONDENT / $%'# 3. THE CONCERNED CIT(A)/ = > , 4. THE CONCERNED CIT / = > 5. DR D BENCH, ITAT, MUMBAI / ;?- $' M MM MH HH H , . . . 6. GUARD FILE/ - 0 %;' %;' %;' %;' $' $'$' $' //TRUE COPY// . / BY ORDER, @ / 5 DY./ASST. REGISTRAR , /ITAT, MUMBAI