Platina Properties And Projects ... vs Department Of Income Tax

ITA No.1717 of 2014 Platina Properties and Projects Ltd Hyderabad

IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad 'A' Bench, Hyderabad

Before Shri P.M. Jagtap, Accountant Member & Smt.Asha Vijayaraghavan, Judicial Member

ITA No.1717/Hyd/2014 (Assessment year: 2005-06)

ACIT Circle 16(2) Platina Properties and Hyderabad Vs. Projects Limited Hyderabad PAN: AACCP 8484 G (Appellant) (Respondent)

For Revenue : Shri Ramakrishna Bandi, DR For Assessee : Shri P. Murali Mohan Rao, CA

Date of Hearing : 19/03/2015 Date of Pronouncement : 27/03/2015

ORDER

Per Smt. Asha Vijayaraghavan, J.M.

This is an appeal filed by the Revenue directed against the

order of the ld CIT (A)-V, Hyderabad dated 30.06.2014, passed

for A.Y 2005-06.

2. Briefly stated, there has been a search and seizure action

u/s 132 of the Act in the group cases of Sujana Universal

Industries Ltd., Hyderabad during financial year 2004-05.

Subsequently assessment u/s 143(3) r.w.s. 153C of the Act has

been completed in assessee's case on 22.12.2006 determining

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the total income at Rs.65,60,469 as against the returned loss of

Rs.99,73,735. In the assessment, AO made an addition of

Rs.52,85,744 by recomputing the income under the head

"Income from House Property. AO also disallowed loss on sale of

fixed assets claimed for Rs.10,74,750/-.

3. Aggrieved by the assessment the assessee filed an appeal

before the Commissioner of Income Tax (Appeals) who dismissed

the appeal. Therefore, the Assessing Officer levied a penalty of

Rs.22,81,879/- u/s 271 (1 )(c) of the Act vide his order dated

26/03/2009.

4. The ld AR submitted before the CIT (A) that the assessee

has neither concealed any income nor has furnished inaccurate

particulars of income for the year under consideration and that

the levy of penalty u/s 271(1)(c) is not justified. The AR also filed

the following explanation:

"Search and seizure operation u/s 132 of the Act was conducted in the case of Sujana Group of Industries during the financial year 2004-05 subsequent to which a notice u/s 153C of the Act was issued to the appellant and an assessment u/s 143(3) r.w.s. 153A r.w.s. 153C of the Act was made on 22.12.2006 determining the total income at Rs.65,60,469 as against the returned loss of Rs.99,73,735. As can be seen from the

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assessment order, the additions made are on account of the following:

(i) Recomputation of income under the head "income from House Property"

(ii) Disallowance of loss on sale of fixed assets debited to P&L A/c.

2) Aggrieved by the assessment, the appellant filed an appeal before the CIT (A) who upheld the assessment. Further the appellant could not pursue the appeal filed before the Hon'ble ITAT with the result that the quantum was confirmed in the appeals. In this background, the AO levied a penalty of Rs.22,81,879 u/s 271(1)(c) vide order dated 26.03.2009. In this connection, it is to submit that the appellant has neither concealed any income nor furnished inaccurate particulars of income for the year under consideration. Further, there is no seized material based on which the additions are made in the assessment. As submitted in para No.1 above, the addition under the head "Income from House Property" has been made by the AO only by "recomputing the income". Further, the claim made by the appellant towards loss on sale of fixed assets has been disallowed in the assessment by the AO. These are the only two additions made in the assessment completed and the impugned penalty has been levied taking into consideration tax on the total income thus computed.

3) In this connection, it is submitted as under:

a) A mere making of a claim which is not sustainable in law by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee, whereby no penalty u/s 271(1)(c) is exigible. Reliance is placed on the Supreme Court judgment in the case of CIT v. Reliance Petroproducts Pvt. Ltd (2010) 322 ITR 0158 (S.C).

b) An erroneous claim of deduction, which is withdrawn when error is discovered is not concealment of income and penalty cannot be imposed. Reliance is placed on the following case laws:

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i) CIT v. Sri Saradha Textile Processors Pvt Ltd (2006) 286 ITR 499 (Mad).

ii) CIT v. Free Mentle India Television Production Pvt. Ltd (2007) 294 ITR 88 (Del.)

c) Where the facts were disclosed but wrong claims for special deduction were made, it was held in the following cases, that it was not a case of concealment of income and penalty could not be imposed.

i) CIT v. International Audio Visual Co (2007) 288 ITR 570 (Del.)

ii) CIT v. Nath Brothers Exim International Ltd (2007) 288 ITR 670 (Del.)

d) In the case of CIT v. Siramanda Steel Ltd (2002) 256 ITR 683 (Mad.) it was held as under:

"Where an assessee claimed depreciation and investment allowance on newly installed machinery based on a High Court decision, that user of machinery in test production is also user to merit depreciation, the interference that there was deliberate furnishing of inaccurate particulars in original return cannot be correct, so that the cancellation of penalty was justified".

e) In the following cases, the assessee claimed diminution in value of shares as revenue loss and it was held to be capital loss. Assessee disclosed writing off of investments in audit statement. It was held that it is not a case of furnishing inaccurate particulars and penalty u/s 271(1)(c) cannot be levied.

i) CIT v. Ganesan Builders Ltd (2008) 299 ITR 403 (Mad.)

ii) CIT v. Natarajan (P) (2004) 266 ITR 219 (Mad).

f) In the case of Gujarat Credit Corporation Ltd v. ACIT (2008) 302 ITR (AT) 250 (Ahm), the assessee held securities as investment and incurred loss and it was allowed by the AO. The assessment was reopened to bring the loss under "Capital Gains". Penalty u/s 271(1) (c) was levied. It was held that there was no concealment of

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income or furnishing inaccurate particulars of income and penalty u/s 271(1)(c) is not leviable.

g) In the following cases, levy of penalty u/s 271(1)(c) has been held not justified where a claim for certain expenditure is disallowed in the assessment.

i) Jajoo (JK) v. CIT (1990) 181 ITR 410 (MP)

ii) CIT v. Inden Bislers (1999) 240 ITR 943 (Mad)

h) In the case of CIT v. Chinni Krishna Chetty (K.R) (2000) 246 ITR 121 (Mad) it was held as under:

"Mere upward revision of income by the assessing authority does not automatically mean that the assessee concealed income and levy of penalty u/s 271(1)(c) was not justified".

i) Apart from placing reliance on the case laws mentioned at S.Nos (a) to (h) above, the assessee also places reliance on the following decisions of the Tribunal in support of its contention against levy of penalty u/s 271(1)(c) of the Act.

i) S. Prasad Rao vs. DCIT (ITA No.338/Hyd/06) ITAT Hyderabad Bench.

ii) Kanbay Software India Pvt Ltd v. DCIT (ITA No.300/PN/07) ITAT Pune Bench.

4) In view of the above submissions, it is requested to kindly delete the penalty levied of Rs.22,81,829 u/s 271(1)(c) for the year under consideration".

5. The ld CIT (A) held as follows:

As can be seen from the assessment order passed u/s 143(3) r.w.s 1537 r.w.s 153C dated 22/11/2006which has been confirmed by the Commissioner of Income Tax(Appeals), the addition of Rs.52,85,744/- has been made by recomputing the income under the head "Income from House Property". The other addition confirmed is towards disallowance of loss claimed on sale of fixed assets for Rs.1 0,74,750/-. There is no concealment of income or furnishing of

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inaccurate particulars in the appellant's case for the year under consideration. The Apex Court in the case of CIT v. Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR 0158 (SC)".

6. We have heard both parties. The addition under

the head "Income from House Property" has been made

by the Assessing Officer only by "recomputing the

income". Due to an arithmetical mistake in the

computation statement filed by the assessee along with

its return of income, the impugned addition has been

made. This is evident' from the Statement of Taxable

income, a copy of which was submitted in the paper

book. As can be seen from the said statement, it is

clear that the assessee has disclosed all the facts

relating to the earning of income from property in the

return of income filed. Hence no particulars of income

from House Property have been suppressed. The

addition of Rs.52,85,744/-has been made on

recomputation of income under the head "Income from

House Property". As such, levy of penalty u/s 271(1)(c)

with regard to the addition of Rs.52,85,744/- is not

warranted. We are of the opinion that assessee has neither

concealed any income nor furnished inaccurate

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particulars of income for the year under consideration.

Further, there is no seized material based on which the

additions are made in the assessment.

7. Further, the claim made by the assessee towards

loss on sale of fixed assets for Rs.10,74,750/-has been

disallowed in the assessment by the Assessing Officer.

We find from schedule 10 to P&L for the year under

consideration, a copy of which is placed in the paper

book that "Loss on sale of fixed Assets" for

Rs.l0,74,750/-has been shown in it and hence the

assessee has not concealed any particulars with

regard to his income. The assessee has not concealed

any particulars of income and the addition made by

the AO is a technical one. We are of the opinion that

levy of penalty u/s 271(1)(c) in respect of this addition

is not also not warranted. We also rely on the

decision in the case of Kanbay Software (P) Ltd,

wherein it has been held as follows:

"Thus, even on the first principle, a penalty under section 271(1)(c) is not simply as a consequence of an addition being made to the income of the assessee. The penalty under section 271(1)(c) is a penalty for concealment of income or for furnishing of inaccurate particulars or under the extended

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definition by virtue of the Explanation 1 to section 271(1)(c), for a deemed concealment of income. As a corollary to this legal position, unless it is established that there is concealment of income or furnishing of inaccurate particulars or it is established that, on the facts of the case, concealment of income can be deemed in accordance with the provisions of law, the penalty provisions cannot be invoked at all".

8. In the result, Revenue's appeal is dismissed.

Order pronounced in the Open Court on 27th March, 2015.

Sd/- Sd/- (P.M. Jagtap) (Asha Vijayaraghavan) Accountant Member Judicial Member

Hyderabad, dated 27th March, 2015.

Vnodan/sps Copy to:

1. Asstt. Commissioner of Income Tax, Circle 16(2) Room No.611, 6th Floor, Aayakar Bhavan, Basheerbagh, Hyderabad

2. M/s. Platina Properties & Projects Ltd., 5-4-435 Station Road, Nampally, Hyderabad

3. The CIT(A)-V Hyderabad

4. The CIT -IV Hyderabad

5. The DR, ITAT, Hyderabad

6. Guard File

By Order

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