SINDOORI TRADERS P. LTD, MUMBAI V. ITO 8(3)-2, MUMBAI

ITA 771/MUM/2009

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3463 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 17-12-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 05-02-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: RAKESH MILWANI
• Keywords: Business income; Deemed to accrue or arise in india

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE S/SHRI B.R. BASKARAN (AM) & AMARJIT SINGH (JM) I.T.A. NO. 771 /MUM/ 2009 (ASSESSMENT YEAR 2003 - 04 ) SINDOORI TRADERS PRIVATE LIMITED 301A, SOLARIS - I SAKI VIHAR ROAD ANDHERI EAST MUMBAI - 400 07 2. VS. ITO 8(3)(2) AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) PAN NO . AAACS6166Q ASSESSEE BY SHRI RAKESH MILWANI DEPARTMENT BY SHRI CHANDRAJIT SINGH DATE OF HEARING 31.3 . 201 6 DATE OF PRONOUNCEMENT 18 . 5 . 201 6 O R D E R PER B.R. BASKARAN, A M : - THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 23.12.2008 PASSED BY LEARNED CIT(A) - XXIX, MUMBAI CONFIRMING THE PENALTY OF RS. 13.33 LAKHS LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE ACT. 2. LEARNED COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD DECLARED RENTAL INCOME DERIVED FROM LETTING OF THE PROPERTIES AS BUSINESS INCOME. HOWEVER, THE ASSESSING OFFICER ASSESSED THE SAME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AN D HE ALSO ASSESSED A PORTION OF RENTAL INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. WHILE COMPLETING THE ASSESSMENT THE ASSESSING OFFICER HAD INCLUDED DEEMED INCOME FROM VACANT (UNLET) PROPERTY ALSO AND DISALLOWED INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE. THE ABOVE SAID ADJUSTMENTS RESULTED IN ASSESSING A TOTAL INCOME OF RS. 26.31 LAKHS AS AGAINST LOSS OF RS. 9.96 LAKHS DECLARED BY THE ASSESSEE IN ITS RETURN. IN THE APPELLATE PROCEEDINGS LEARNED CIT(A) ALLOWED INTEREST EXPENDITURE AND THE TRIBUNAL DELETED THE DEEMED INCOME RELATING TO VACANT ( UNLET ) PROPERTY. SINDOO RI TRADERS PRIVATE LIMITED 2 LEARNED AR INVITED OUR ATTENTION TO A WORKING S HEET FURNISH ED BY HIM AND SUBMITTED THAT , AFTER GIVING EFFECT TO THE ORDERS OF BOTH THE APPELLATE AUTHORITIES, DIFFERENCE BETWEEN THE RETURNED I NCOME AND ASSESSED INCOME HAS NARROWED DOWN TO RS. 70,704/ - . LEARNED COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE HAD FURNISHED ALL PARTICULARS RELATING TO THE RENTAL INCOME. LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE HAS NOT CONCEALED ANY PARTICULARS OF INCOME OR FURNISH ED ANY INACCURATE PARTICULARS OF INCOME. THE TOTAL INCO ME HAS GONE UP ONLY DUE TO CHANGE IN HEAD OF INCOME AND DUE TO DISALLOWANCE/ADDITION. LEARNED COUNSEL PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT REN D ERED IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD., (322 ITR 158) AND SUBMITTED THAT MAKING OF A CLAIM , WHICH IS SUSTAINABLE IN LAW, DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. ACCORDINGLY HE PRAYED FOR CANCELLATION OF PENALTY LEVIED BY THE ASSESSI NG OFFICER. 3. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE CONTRARY, SUPPORTED THE ORDER PASSED BY LEARNED CIT(A). 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE NOTICED THAT THE ASSESSING OFFICER HAS LEVIED PENALTY FOR FURNISHIN G INACCURATE PARTICULARS OF INCOME. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS CONCEALED ANY PARTICULARS OF INCOME. THE TOTAL INCOME ASSESSED BY THE AO HAS GONE UP MAINLY DUE TO THE CHANGE EFFECTED IN RESPECT OF HEAD OF INCOME FOR A SSESSING RENTAL INCOME AND DUE TO DISALLOWANCE OF INTEREST EXPENDITURE . WE NOTICED THAT THE DISALLOWANCE OF INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE AND ADDITION OF DEEMED RENTAL INCOME FROM UN - LET PORTION OF THE PROPERTY HAS SINCE BEEN SET ASIDE IN T HE APPELLATE FORUM. HENCE THERE IS A DIFFERENCE OF RS. 70,704/ - ONLY BETWEEN THE RETURNED INCOME AND ASSESSED INCOME AND THE SAID DIFFERENCE HAS ARISEN DUE TO CHANGE IN HEAD OF INCOME. THE ASSESSEE MAY NOT BE RIGHT IN DECLARING RENTAL INCOME UNDER THE HEAD INCOME FROM BUSINESS , BUT HON'BLE SUPREME COURT HAS HELD IN THE CASE OF RELIANCE PETRO PRODUCT S PVT. LTD. (SUPRA) THAT MAKING A CLAIM , WHICH IS NOT SINDOO RI TRADERS PRIVATE LIMITED 3 SUSTAINABLE IN LAW, WOULD NOT RESULT IN FURNISHING INACCURATE PARTICULARS OF INCOME . ACCORDINGLY WE ARE OF THE VIEW THAT THERE IS MERIT IN THE CONTENTION OF THE ASSESSEE. ACCORDINGLY WE SET ASIDE THE ORDER OF LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 5. IN THE RESULT, APPEAL FILED BY THE A SSESSEE IS ALLOWED. ORDER HAS BEEN PRONOU NCED IN THE OPEN COURT ON 18 .5 .2016 . SD/ - SD/ - (AMARJIT SINGH ) (B.R.BASKARAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 18 / 5 /20 1 6 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) ITAT, MUMBAI PS