BRINDABAN III CO OPERATIVE HOUSING SOCIETY LIMITED,MUMBAI vs. ITO WARD-24(1)(1), MUMBAI

3.3 In the course of penalty proceedings ld. Assessing Officer noted that while passing the impugned assessment order u/s.143(3) r.w.s. 147, dated 11.12.2019, though the assessment was completed by accepting the returned income which was supposed to be at Rs.13,23,770/- but was inadvertently assessed at Rs.10,08,770/-, by adopting the figure from return filed earlier by assessee on 31.05.2019. In order to correct this inadvertent mistake, ld. Assessing Officer invoked provisions contained in section 292B. Based on this and taking into consideration the intent and purpose of the Act, the total assessed income was taken at Rs.13,23,770/- for the purpose of calculation of penalty. Subsequently, penalty u/s. 271(1)(c) of the Act Brindaban III Co operative Hsg. Soc. Ltd., AY 2012-13 was confirmed for alleged concealment of income. Penalty was levied on the difference of tax on total income of Rs. 13,23,770/- and Rs. 2,06,350/-.

4.1. Assessee submitted that the reasons of reopening is on account of old PAN which was allotted to the assessee bearing the code status as “Firm” though the status of the assessee is “AOP”. Assessee had duly applied for cancellation of the old PAN as early as on 24.07.2012 and had discharged its onus. The application made by the assessee for cancellation of the old PAN remained pending over a period, reasons for which are best known to the Department. Assessee strongly contended that the basis adopted by the ld. Assessing Officer for imposing penalty as noted in para-5.2 of the impugned penalty order is not tenable. It is stated by the ld. Assessing Officer in the said para that if the case was not reopened and notice u/s.148 was not issued, income of the assessee relating to the old PAN having the status “Firm” would have gone unnoticed, resulting in escapement of income.

Brindaban III Co operative Hsg. Soc. Ltd., AY 2012-13 In the same paragraph, ld. Assessing Officer has noted of not having clarity from the records as to why the PAN in the status “Firm” was not cancelled. He, further, mentions that assessee kept quiet for all these years after making application for cancellation of the old PAN. According to him, assessee ought to have included the income shown against the old PAN by including it in the return filed against the correct active PAN. Based on these observations, it is strongly contented by the assessee that there is no concealment of particulars of income the part of the assessee, since it had included the income in the return filed in response u/s. 148, which has been accepted and assessed as such.

4.2. To buttress its contentions, assessee placed reliance on the decisions of Hon'ble Jurisdictional High Court of Bombay in the case of CIT(A) vs. Hiralal Doshi [2017] 79 taxmann.com 371 (Bom). In this case, assessee disclosed long term capital gain on sale of shares and claimed exemption of same under section 10(38). However, following survey proceedings, the assessee filed revised return disclosing gain on sale of shares as business income. The Assessing Officer imposed penalty under section 271(1)(c). The Commissioner (Appeals) and the Tribunal deleted the penalty. Hon'ble Court held that the Commissioner (Appeals) reached a prima facie conclusion that the income could be regarded as long-term capital gain. Once the aforesaid conclusion has been reached coupled with two further facts, viz the authorities have rendered a finding of fact that the respondent- assessee had not concealed its income nor filed inaccurate particulars attributable to capital gains in its regular return of income, the view taken to delete the penalty is a possible view.

Brindaban III Co operative Hsg. Soc. Ltd., AY 2012-13 5. Per contra, ld. DR relied on the order of ld. Assessing Officer. He contended that assessee had concealed the particulars of income since, while filing the return in response to notice u/s.148, he did not incorporate the loss on account of mutuality which was earlier claimed in the original return. He thus, asserted that the penalty has been rightfully levied by the ld. Assessing Officer.

6.1. Assessee admitted in its explanation furnished in response to notice for levying penalty on account of concealment of particulars of income that it had inadvertently claimed loss on account of mutuality, which was set off against the rental and interest income, the same was corrected while filing the return in response to the notice u/s.148. Assessee also included interest relating to time deposit in its return filed in response to the notice u/s.148. It is also undisputed fact that the assessment u/s.143(3) r.w.s. 147 was completed by ld. Assessing Officer, accepting the returned income, there being no addition or disallowance. However, penalty proceedings were initiated on the Brindaban III Co operative Hsg. Soc. Ltd., AY 2012-13 income components, which were reported by the assessee in the return filed in response to notice u/s.148, vis-à-vis which were not included in the original return, u/s.139.

6.2. In the given set of facts as discussed above, we find that assessee has duly complied with Explanation 1 to Section 271(1) by offering all the possible explanations substantiating it by documentary evidences to establish that there is no concealment of particulars of income on its part. Having satisfied by the submissions made by the assessee in the course of re-assessment proceedings, ld. Assessing Officer has accepted the income returned by the assessee as such. Considering the overall factual matrix, we hold that there is no concealment of particulars of income on the part of the assessee. We accordingly, delete the penalty so imposed by ld. Assessing Officer. Ground raised by the assessee is allowed.