M/S.sigfriede infortech private limited ( NOW KNOWN AS TECHSTAR INFOTECH (I) P.LTD), MUMBAI V. ITO 15(3)(3), MUMBAI

ITA 7448/MUM/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9108 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Assessment Year: 2010-2011
• Appeal Filed On: 29-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V VINOD KUMAR
• Keywords: Set aside
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE S/SHRI PRAMOD KUMAR, VICE-PRESIDENT, &, SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.7448/MUM/2017 ASSESSMENT YEAR 2010-11 M/S. SIGFRIEDE INFOTECH PVT LTD., (NOW TECHSTAR INFOTECH (INDIA) PVT LTD.), 15, BHANDUP VILLAGE ROAD, BHANDUP (WEST), MUMBAI 400 068. PAN : AABCS9241D VS. ITO 15(3)(3), MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANUJ KISNADWALA RESPONDENT BY : SHRI V VINOD KUMAR DATE OF HEARING : 17 .09.201 9 DATE OF PRONOUNCEMENT : 30 .09.2019 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 18.09.2017 OF LEARNED CIT(A)-24, MUMBAI CONFIRMING PENALTY IMP OSED U/S. 271(1)(C) OF THE ACT FOR A.Y. 2010-11. 2. BRIEFLY, THE FACTS ARE, THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF LAND AND PROPERTY. IN THE COURSE OF SUCH ACTIVITY, THE ASSESSEE HAS LET OUT A PROPERTY TO MAHANAGAR TELEPH ONE NIGAM LTD. (MTNL). FOR THE YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 11.05.2011 DECLARING LOSS OF RS. 8,223/-. THE INCO ME SHOWN BY THE ASSESSEE ITA 7448/MUM/2017 SIGFRIEDE INFOTECH PVT LTD. 2 IS FROM INTEREST ON FIXED DEPOSIT AND RENTAL INCOME RECEIVED FROM LETTING OUT PROPERTY. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER FOUND THAT, THOUGH, AS PER FORM 26AS, THE ASSESSEE HAS RECEIVED RENTAL INCOME OF RS.35,98,356/- FROM MTNL, HOWEVER, IT HAD NOT OFFERED SUCH INCOME TO TAX. THEREFORE, HE ASKED THE ASSESSEE TO EXPLAIN THE REASON FOR NOT DOING SO. IN SUBMISSIONS DATED 17.10.2012, IT WAS STATED BY ASSESSEE THAT THE LEAVE AND LICENSE AGREEMENT WITH MTNL WAS NOT RENEWED DUE TO DISPUTE AND MTNL HAS ILLEGALLY OCCUPIED THE PREMISE S EVEN AFTER THE EXPIRY OF THE AGREEMENT. IT WAS SUBMITTED, ASSESSEE HAD FILE D SUIT FOR EVICTION AGAINST MTNL AND ALSO SOUGHT COMPENSATION FOR ILLEGAL POSSE SSION. IT WAS SUBMITTED, THE AMOUNT IN DISPUTE WAS PAID BY MTNL BY WAY OF EC S AND DIRECTLY CREDITED TO ASSESSEES ACCOUNT AND ASSESSEE HAD NOT CONTROL OVER IT. THEREFORE, ASSESSEE HAD NOT CONSIDERED IT AS INCOME, SINCE, AC CEPTANCE OF THE SAID AMOUNT WOULD HAVE JEOPARDIZED ITS LEGAL RIGHTS AND CONTENTIONS. IT WAS SUBMITTED, DUE TO THE AFORESTATED REASONS, THE AMOU NT RECEIVED FROM MTNL WAS ACCOUNTED AS MTNL DEPOSIT UNDER OTHER CURRENT L IABILITIES. THE ASSESSING OFFICER, HOWEVER, DID NOT FIND MERIT IN T HE SUBMISSIONS OF THE ASSESSEE AND ADDED THE AMOUNT OF RS.35,98,356/- AS INCOME FROM HOUSE PROPERTY. FURTHER, THE ASSESSING OFFICER FOUND TH AT THE ASSESSEE HAD NOT OFFERED INTEREST INCOME OF RS. 1,67,397/-. ACCORDI NGLY, THE SAID AMOUNT WAS ALSO ADDED TO THE INCOME OF THE ASSESSEE. ON THE B ASIS OF AFORESAID ADDITIONS THE ASSESSING OFFICER INITIATED PROCEEDINGS FOR IMP OSITION OF PENALTY U/S. ITA 7448/MUM/2017 SIGFRIEDE INFOTECH PVT LTD. 3 271(1)(C) OF THE ACT ALLEGING FURNISHING OF INACCUR ATE PARTICULARS OF INCOME AND ULTIMATELY, PASSED ORDER U/S. 271(1)(C) OF THE ACT IMPOSING PENALTY OF RS.8,30,050/- IN RESPECT OF BOTH THE ADDITIONS. TH E PENALTY SO IMPOSED WAS ALSO CONFIRMED BY LEARNED CIT(A). 3. THE LEARNED AR SUBMITTED, IN SO FAR AS THE ADDIT ION MADE ON ACCOUNT OF RENTAL INCOME FROM MTNL IS CONCERNED, THE ISSUE HAS BEEN RESTORED TO THE FILE OF THE ASSESSING OFFICER BY THE TRIBUNAL WHILE DECI DING THE ASSESSEES APPEAL IN ITA NO. 7545/MUM/2013 DATED 22.05.2019. THUS, H E SUBMITTED, SINCE BY VIRTUE OF THE AFORESAID ORDER OF THE TRIBUNAL NO AD DITION IN RESPECT OF RENTAL INCOME EXISTS AGAINST THE ASSESSEE, THE PENALTY IMP OSED ON SUCH ADDITION HAS TO BE DELETED. IN SO FAR AS, PENALTY IMPOSED ON TH E ADDITION MADE ON ACCOUNT OF INTEREST INCOME, THE LEARNED AR SUBMITTE D, DUE TO INADVERTENCE THE ASSESSEE DID NOT OFFER THE INTEREST INCOME TO T AX WHILE FILING ITS RETURN OF INCOME. HOWEVER, WHEN THIS FACT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESS EE ADMITTED ITS MISTAKE AND OFFERED THE AMOUNT TO TAX. THUS, HE SUBMITTED SINCE NON-DISCLOSURE OF INTEREST INCOME WAS DUE TO BONA FIDE MISTAKE AND NO T DELIBERATE, NO PENALTY SHOULD BE IMPOSED U/S. 271(1)(C) OF THE ACT. 4. THE LEARNED DR STRONGLY RELIED UPON THE OBSERVAT IONS OF THE ASSESSING OFFICER AND LEARNED CIT(A). ITA 7448/MUM/2017 SIGFRIEDE INFOTECH PVT LTD. 4 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. UNDISPUTEDLY, IN SO FAR AS ADDITION RELATING TO THE AMOUNT RECEIVED AS RENTAL INCOME FROM MTNL IS CONCERNED, THE DISPUTE HAS TRAV ELLED UP TO THE TRIBUNAL AND THE TRIBUNAL WHILE DECIDING ASSESSEES APPEAL H AS RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDIC ATION. THUS, AT THIS JUNCTURE, THE ADDITION OF RENTAL INCOME IS NOT IN EXISTENCE. THAT BEING THE CASE, PENALTY IMPOSED U/S. 271(1)(C) OF THE ACT IN RESPECT OF SUC H ADDITION CANNOT SURVIVE. THEREFORE, TO THAT EXTENT THE ORDER OF LEARNED CIT( A) CONFIRMING THE IMPOSITION OF PENALTY; U/S. 271(1)(C) OF THE ACT IS SET ASIDE AND THE ISSUE IS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR CONSIDERING AFRESH, IF WARRANTED, DEPENDING UPON THE DECISION TO BE TAKEN BY HIM ON THE ISSUE IN QUANTUM PROCEEDINGS. IN SO FAR AS THE IMPOSITION O F PENALTY ON THE ADDITION MADE ON ACCOUNT OF INTEREST INCOME, THOUGH IT MAY B E A FACT THAT IN THE RETURN OF INCOME ASSESSEE HAS NOT OFFERED IT TO TAX , HOWEVER, IN THE COURSE OF ASSESSMENT PROCEEDINGS WHEN THE ASSESSING OFFICER B ROUGHT THIS FACT TO THE NOTICE OF THE ASSESSEE, THE AMOUNT WAS OFFERED TO T AX. THUS, THE EXPLANATION OF THE ASSESSEE THAT IT WAS NOT OFFERED TO TAX DUE TO INADVERTENCE AND IS A BONA FIDE MISTAKE, APPEARS TO BE PLAUSIBLE. THAT B EING THE CASE, IN OUR CONSIDERED OPINION, NO PENALTY U/S. 271(1)(C) OF TH E ACT IS REQUIRED TO BE IMPOSED ON THE ADDITION OF RS.1,67,397/- AS IT CAN NEITHER BE CONSTRUED AS CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. ACCORDINGLY, WE DELETE THE PENALTY IMPOSED ON THE A DDITION OF RS.1,67,397/-. ITA 7448/MUM/2017 SIGFRIEDE INFOTECH PVT LTD. 5 GROUNDS ARE PARTLY ALLOWED. 6. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF SEPTEMBER, 2019. SD/- SD/- (PRAMOD KUMAR) (SAKTIJIT D EY) VICE-PRESIDENT JUDICIAL MEMBER MUMBAI; DATED : 30 TH SEPTEMBER, 2019. SA COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI. 4. THE CIT 5. DR, G BENCH, ITAT, MUMBAI BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI