The ITO, Ward-2(1), JAMNAGAR V. Hiras Hotels Pvt. Ltd., JAMNAGAR

ITA 84/RJT/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0463 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 29-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA
• Assessee Lawyers: HARISH RANPURA CA
• Keywords: Business income; Difference of opinion

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] , , ! BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.84/RJT/2014 ( / ASSESSMENT YEAR : 2007-08 ) THE INCOME TAX OFFICER WARD-2(1) JAMNAGAR / VS. HIRAS HOTELS PVT.LTD. C/O.HOTEL GOLDEN CROWN BEDI BUNDER ROAD JAMNAGAR & ./ ./ PAN/GIR NO. AAACH 5333 A ( &( / APPELLANT ) .. ( )&( / RESPONDENT ) &( * / APPELLANT BY : SHRI C.S. ANJARIA, DR )&( + * / RESPONDENT BY : SHRI HARISH RANPURA,C.A. (AR) ,-. + / DATE OF HEARING 09/12/2015 /0 + / DATE OF PRONOUNCEMENT 23/12/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-JAMANAGAR [CIT(A) IN SHORT] DATED 04/11/2013 PERTAINING TO ASSESSMENT Y EAR (AY) 2007-08. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL:- ITA NO.84/RJT/2 014 ITO VS. HIRAS HOTELS PVT.LTD. ASST.YEAR 2007-08 - 2 - 1. THE LD.CIT(A) HAS ERRED ON THE FACTS AND LAW BY CA NCELLING THE PENALTY U/S.271(1)(C) OF RS.3,31,900/- LEVIED BY TH E A.O. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 3. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD.CIT (A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THAT THE REVENUE CRAVES LEAVE TO ADD, AMEND, ALTER OR WITHDRAW ANY GROUNDS OF APPEAL. 2. THE ONLY EFFECTIVE GROUND IN THIS APPEAL IS AGAI NST DELETION OF PENALTY OF RS.3,31,900/- LEVIED BY THE ASSESSING OF FICER. 2.1. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 22/09/2009, THEREBY THE ASSESSING OFFICER (AO IN SHORT); THEREB Y THE AO TREATED THE RENTAL INCOME AS INCOME FROM HOU SE PROPERTY INSTEAD OF BUSINESS INCOME AS CLAIMED BY THE ASSESSEE. WHI LE FRAMING THE ASSESSEE, THE AO ALSO INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT AND, SUBSEQUENTLY, PENALTY WAS LEVIED VIDE ORDE R DATED 11/10/2012. THE ASSESSEE BEING AGGRIEVED BY THE PENALTY ORDER, PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUB MISSIONS OF THE ASSESSEE DELETED THE PENALTY. AGGRIEVED BY THE O RDER OF THE LD.CIT(A), NOW THE REVENUE IS IN APPEAL BEFORE US. 3. THE LD.DR SUPPORTED THE ORDER OF THE AO AND SUBM ITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE PENALTY . ITA NO.84/RJT/2 014 ITO VS. HIRAS HOTELS PVT.LTD. ASST.YEAR 2007-08 - 3 - 3.1. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE R EITERATED THE SUBMISSIONS AS WERE MADE IN THE WRITTEN SYNOPSIS. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE HAS FILED WRITTEN SYNOPSIS. 1. FACTS: THE RESPONDENT, A COMPANY, IS RUNNING A HOTEL AND R ESTAURANT DURING THE YEAR RESPONDENT LET OUT ITS HOTEL FOR COMMERCIAL EX PLOITATION ALONG WITH THE AMENITIES AND TREATED THE RENT INCOME AS BUSINESS I NCOME. THE AO TREATED RENT INCOME AS INCOME FROM HOUSE PROPERTY. IN. APPEAL, T HE COMMISSIONER OF INCOME TAX (APPEALS), RELYING ON VARIOUS JUDICIAL P RONOUNCEMENTS HELD THAT INCOME FROM RENT IS TO BE TREATED AS 'INCOME FROM B USINESS & PROFESSION'. HOWEVER, HON'BLE INCOME TAX APPELLANT TRIBUNAL, RAJ KOT BENCH, RAJKOT HAS REVERSED THE FINDING OF ID. CIT(A). THE AO LEVIED C ONCEALMENT PENALTY. 2. SUBMISSION OF THE RESPONDENT IN SUPPORT OF CIT (A)'S ORDER UNDER APPEAL: THE RESPONDENT HAS NEITHER CONCEALED ANY INCOME NOR FURNISHED ANY INCORRECT PARTICULAR OF INCOME. FACT AS TO RECEIPT OF RENTAL INCOME IS ON RECORD. THERE EXISTED DIFFERENCE OF OPINION BETWEEN AUTHORITIES A S TO HEAD OF INCOME UNDER WHICH RENTAL INCOME IS TAXABLE. HENCE, IT IS A DEBA TABLE ISSUE AND NO PENALTY CAN BE LEVIED ON SUCH ISSUES. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS: (I) HON'BLE ITAT MUMBAI BENCH HAS IN THE CASE OF ITO VS. ROBORANT INVESTMENTS (P) LTD., 7 SOT 0181 HAS HELD THAT 'ASSESSEE HAVING MADE FULL AND COMPLETE DISCLOSURE, MERELY BECAUSE INCOME RETURNED BY ASSESSEE UNDER A PARTICULAR HEAD WAS ASSESSED BY AO UNDER ANOTHER HEAD IS NOT SUFFICIENT TO IMPOSE P ENALTY BY INVOKING EXPLANATION 1 TO SECTION 271(1)(C)'. (II) HON'BLE ITAT, AHMEDABAD BENCH HAS IN THE CASE OF M/S CROWN TRADELINKS PVT. LTD VS. ACIT IN ITA. NO.2768/AHD/2012 HAS HELD THAT: ITA NO.84/RJT/2 014 ITO VS. HIRAS HOTELS PVT.LTD. ASST.YEAR 2007-08 - 4 - 'ADDITION WAS MADE MERELY BECAUSE OF CHANGE IN THE HEAD OF INCOME. ON THIS ISSUE, THERE ARE SEVERAL DECISIONS IN FAVOR OF THE ASSESSEE, AS CITED SUPRA, WHEREIN IT WAS HELD THAT IN THE ABSENC E OF ANY INACCURACY IN THE PARTICULARS OF INCOME OR CONCEALMENT OF FACT S THE PENALTY MUST NOT BE LEVIED. 4.1. WE FIND THAT THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF THE COORDINATE BENCH (ITAT MUMBAI BENCH) IN THE CASE OF ITO VS. ROBORANT INVESTMENTS (P) LTD., REPORTED AT 7 SOT 01 81 AND THE DECISION OF ITAT AHMEDABAD BENCH IN THE CASE OF M/S.CROWN TR ADELINKS PVT.LTD. VS. ACIT IN ITA NO.2768/AHD/2012 IN SUPPOR T OF THE CONTENTION THAT THE ASSESSEE HAVING MADE FULL AND COMPLETE DIS CLOSURE, MERELY BECAUSE INCOME RETURNED BY ASSESSEE UNDER A PARTICU LAR HEAD WAS ASSESSED BY AO UNDER ANOTHER HEAD IS NOT SUFFICIENT TO IMPOSE PENALTY BY INVOKING EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT. THE LD.DR COULD NOT POINT OUT AS TO HOW THE AFORESAID DECISIONS OF THE COORDINATE BENCH RELIED UPON BY THE LD.COUNSEL FOR THE ASSESSEE ARE NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. WE FIND THAT, UNDER THE IDENTICAL FACTS, THE COORDINATE BENCH IN THE CASE OF M/S.CROWN TRADELINK S PVT.LTD. VS. ACIT(SUPRA) HAS HELD AS UNDER:- 'ADDITION WAS MADE MERELY BECAUSE OF CHANGE IN THE HEAD OF INCOME. ON THIS ISSUE, THERE ARE SEVERAL DECISIONS IN FAVOR OF THE ASSESSEE, AS CITED SUPRA, WHEREIN IT WAS HELD THAT IN THE ABSENCE OF ANY INAC CURACY IN THE PARTICULARS OF INCOME OR CONCEALMENT OF FACTS THE PENALTY MUST NOT BE LEVIED. 4.2. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER O F THE LD.CIT(A), SAME IS ITA NO.84/RJT/2 014 ITO VS. HIRAS HOTELS PVT.LTD. ASST.YEAR 2007-08 - 5 - HEREBY UPHELD. THUS, GROUNDS OF THE REVENUES APP EAL ARE REJECTED. 5. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN THE COURT ON WEDNESDAY, THE 23 RD DAY OF DECEMBER, 2015 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( PRAMOD KUMAR ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 23/ 12 /2015 ..,, -. ,../ T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. &( / THE APPELLANT 2. )&( / THE RESPONDENT. 3. 4 5 / CONCERNED CIT 4. 5 ( ) / THE CIT(A)-JAMNAGAR 5. 7-8 , , , /DR,ITAT, RAJKOT 6. 8CD E. / GUARD FILE. / BY ORDER, )7 //TRUE COPY// / ( DY./ASSTT.REGISTRAR) & ' , / ITAT, RAJKOT 1. DATE OF DICTATION 9.XII.15 (DICTATION-PAD 6 - PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..11.XII.15 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.23.12.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23.12.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER