KONKAN CO-OP HOUSING SOCIETY LTD.,,MUMBAI vs. DCIT-21(2), MUMBAI

आदेश / O R D E R PER M. BALAGANESH (A.M): This appeal in A.Y.2010-11 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-33, Mumbai in appeal No. CIT(A)-33/Rg.21/478/15-16 dated 26/04/2019 (ld. CIT(A) in short) in the matter of imposition of penalty u/s.271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as Act).

2.1. The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in confirming the levy of penalty u/s.271(1)(c) of the Act in the sum of Rs.4,32,517/- in the facts and circumstances of the instant case.

M/s. Konkan Co-op Housing Society Ltd., that assessee had made claim for exemption on the ground of mutuality on the basis of professional advice received from the then tax advisors of the society pertaining to its on going appeal for A.Y.2004-05 before this Tribunal. This Tribunal for A.Y.2004-05 partly allowed the appeal and restored the impugned issue to the file of the ld. AO vide its order dated 10/07/2013. However, the issue was decided by the ld. AO against the society vide his order dated 31/10/2014 for A.Y.2014-15 for exemption of the society. The said order was placed before its members by its Managing committee members and thereupon, it was decided by the then society officials to offer the said income for tax despite receipt of contrary opinion from its tax advisors. This was done to avoid additional cost of litigation and to buy peace from the department. As such, the society interalia paid the tax due on the said income and it electronically filed its return of income for A.Y.2010-11 on 11/02/2015 offering to tax the aforesaid amount received from nominal member to avoid litigation and to buy peace of mind, as decided by the new committee members of the society on the basis of decision taken by the majority of the members of the society. The assessee claimed that collection of receipts from its various members including nominal members towards maintenance and other services, facilities etc., are neither covered by the definition of income u/s.2(24) of the Act nor assessable as income liable to tax in its hands u/s.4 of the Act being exempt on the ground of mutuality. Before us, it was pleaded by the ld. AR that the observations made by the ld. AO related to the income derived by the assessee society for allowing purposeful commercial use of its all premises does not take it out of exempt category on the grounds of mutuality. Reliance in this regard was placed on the decision of the Hon’ble Jurisdictional High Court in the case of CIT vs. Wellington Club reported in 302 ITR 279 (Bom). Further, it was also argued that the assessee society had made claim for exemption on M/s. Konkan Co-op Housing Society Ltd., the grounds of mutuality as there is no distinction between persons and nominal members as per the provisions of this Act. Reliance in this regard was placed on the decision of the Hon’ble Jurisdictional High Court in the case of Jalgaon District Co-operative Bank Ltd., vs. Union of India reported in 134 Taxman 1 (Bom).

3.1. We find that the assessee had furnished full, true, correct and complete particulars of its income and had neither concealed any income nor filed any inaccurate particulars thereof. The receipt of rental income was always recorded in the original return filed u/s.139 of the Act and exemption was claimed only on the ground or mutuality. The return filed after issue of notice u/s 148 of the Act offering the said income to tax after disposal of appeal filed before this Tribunal was just to buy peace and avoid cost of litigation. In any case, the entire details of receipt of amount from Eureka Forbes Ltd for usage charges of its hall premises together with TDS figure thereon were already part of the returns filed by the assessee as stated supra. Hence the ratio laid down by the Hon’ble Supreme Court in the case of Pricewaterhouse Coopers reported in 348 ITR 306 (SC) would squarely apply to the facts of the instant case. In these circumstances, it could be safely concluded that this is not a fit case for levy of penalty u/s.271(1)(c) of the Act in the sum of Rs.4,32,517/-. Accordingly, we direct the ld. AO to delete the same. The grounds raised by the assessee are allowed.

M/s. Konkan Co-op Housing Society Ltd.,

Order pronounced on 21/04/2021 by way of proper mentioning in the notice board.