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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI JOGINDER SINGH & SHRI RAMIT KOCHAR
Shri. Abhijit Avarsekar बिाम/ ACIT-45 1404, 4th floor, Mumbai Shrusti Apartments, v. Appasaheb Marathe Marg, Old Prabhadevi Road, Prabhadevi, Mumbai- 400025 स्थायी ऱेखा सं./ PAN : AAAPA5573E (अपीऱाथी /Appellant) (प्रत्यथी / Respondent) .. Assessee by: Shri. Kapil Sheth Revenue by : Shri Satish Chandra Rajore (DR) सुनवाई की तारीख /Date of Hearing : 09.08.2018 घोषणा की तारीख /Date of Pronouncement : 09 .08.2018 आदेश / O R D E R
PER RAMIT KOCHAR, Accountant Member
This appeal, filed by assessee, being 29.10.2014 passed by learned Commissioner of Income Tax (Appeals)-50, Mumbai (hereinafter called “the CIT(A)”), for assessment year 2010-11, the appellate proceedings had arisen before learned CIT(A) from penalty order dated 23.09.2014 passed by learned Assessing Officer (hereinafter called “the AO”) u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter called “the Act”) for AY 2010-11.
The grounds of appeal
raised by the assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called “the tribunal”) read as under:- “On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming the penalty levied by the Assessing Officer u/s. 271(1)(c) of the Income Tax Act, 1961 amounting to Rs.6,26,186/-. The appellant prays that the same may please be deleted. The Appellant craves leave to add, alter, amend or omit any of the grounds of appeal before or during the hearing of the appeal.”
3. The brief facts of the case are that the assessee is Director of Unity Group wherein search & seizure operation u/s. 132 of the 1961 Act was carried out by Revenue on 10.02.2012 at the office premises of M/s. Unity Infraprojects Ltd. The assessee was also searched as part of the searches conducted against Unity group by Revenue u/s 132 of the 1961 Act on 10.02.2012. The assessee was also earlier searched by Revenue u/s 132 of the 1961 Act on 23.11.2007 . Pursuant to searches conducted by revenue u/s 132 of the 1961 Act on 10.02.2012, the assessee was asked by AO to file return of income u/s. 153A of the 1961 Act . The assessee filed return of income u/s 153A of the 1961 Act on 21.09.2013 which was later revised by assessee on 13.01.2014, wherein assessee additionally claimed deduction u/s. 54F of the 1961 Act of Rs. 30,39,742/- in the revised return filed with Revenue. On being confronted by the AO to explain the claim of deduction on merits w.r.t. deduction u/s. 54F of the Act as the assessee had more than one house property which in the opinion of the AO made him ineligible to claim said deduction u/s 54F of the 1961 Act , the assessee withdrew the said claim of deduction u/s. 54F of the Act during the course of assessment proceedings conducted u/s 153A r.w.s. 143(2)/143(3) of the 1961 Act, which ultimately led to the additions being made in the assessment order dated 31.03.2014 framed by the AO u/s 153A r.w.s. 143(3) of the 1961 Act , to the tune of Rs. 30,39,742/-. The penalty proceedings u/s 271(1)(c) of the 1961 Act were initiated by the AO against the assessee, for furnishing of inaccurate particulars of income in the 2 return of income filed with Revenue . The assessee claimed that it was bonafide mistake and was un-intentional on its part to have claimed said deduction u/s 54F of the 1961 Act which was rejected by the AO which led to the penalty of Rs. 18,78,558/- being imposed by the AO u/s. 271(1)(c) of the Act, vide penalty orders dated 23.09.2014 passed by the AO.
4. Aggrieved by the penalty order dated 23.09.2014 passed by the AO u/s 271(1)(c) of the 1961 Act, the assessee filed fist appeal before learned CIT(A) and submitted that due to the following circumstances as enumerated below, the assessee was under bonafide belief that the assessee was entitled to deduction u/s. 54F of the Act to the tune of Rs. 30.39,742/- , which was claimed in the revised return filed by the assessee u/s 153A of the 1961 Act. The circumstances enumerated by the assessee to come to conclusion of having bonafide belief that the assessee was entitled for deduction u/s 54F of the 1961 Act were as under as extracted from the appellate order of learned CIT(A) :-
“ The appellant had two residential fiats other than the newly acquired fiat on the date of sale of the "sold asset' one of which was inadvertently as office premises which resulted in the appellant's wrong claim u/s. 54F of the Act. Another flat at Sahara Tower was under redevelopment. The appellant was not in possession of said property during the year under consideration and thus appellant could not exercise his dominion over the said residential house. Accordingly, it cannot be said that the appellant is owning this residential house.”
The Ld. CIT(A) did not commented on this explanation offered by the assessee as to bonafide belief which led assessee to make claim for deduction u/s 54F of the 1961 Act and penalty levied by the AO was confirmed by learned CIT(A) vide appellate order dated 29.10.2014 passed by learned CIT(A).
Aggrieved by appellate order dated 29.10.2014 passed by learned CIT(A) , the assessee has come in an appeal before tribunal. The assessee has reiterated that it had a bonafide belief that the assessee was eligible for claiming deduction u/s 54F of the 1961 Act and it was an un-intentional mistake due to following reasons as reproduced under which led assessee to make the claim of deduction u/s 54F of the 1961 Act in revised return filed with Revenue:- “ The appellant had two residential fiats other than the newly acquired fiat on the date of sale of the "sold asset' one of which was inadvertently as office premises which resulted in the appellant's wrong claim u/s. 54F of the Act. Another flat at Sahara Tower was under redevelopment. The appellant was not in possession of said property during the year under consideration and thus appellant could not exercise his dominion over the said residential house. Accordingly, it cannot be said that the appellant is owning this residential house.” On the other hand Ld. DR strongly opposed the plea of the Ld. Counsel for the assessee and prayed that appellate order of learned CIT(A) confirming levy of penalty u/s 271(1)(c) be confirmed. The learned DR also submitted that return filed u/s 153A cannot be revised as per provisions of Act of 1961.
We have considered rival contentions and perused the material on record including orders of the AO and learned CIT(A) . The assessee is Director of Unity Group wherein search & seizure operation u/s. 132 of the 1961 Act was carried out by Revenue on 10.02.2012 at the office premises of M/s. Unity Infraprojects Ltd. The assessee was also searched as part of the searches conducted against Unity group by Revenue u/s 132 of the 1961 Act on 10.02.2012. The assessee was also earlier searched by Revenue u/s 132 of the 1961 Act on 23.11.2007 . Pursuant to searches conducted by Revenue u/s 132 of the 1961 Act on 10.02.2012, the assessee was asked by AO to file return of income u/s. 153A of the 1961 Act . The assessee filed return of income u/s 153A of the 1961 Act on 21.09.2013 which was later revised by assessee on 13.01.2014, wherein assessee additionally claimed deduction u/s. 54F of the 1961 Act of Rs. 30,39,742/-. On being confronted by the AO to explain on merits the claim of deduction u/s. 54F of the Act as the assessee had more than one house property which in the opinion of the AO made him ineligible to claim said deduction u/s 54F of the 1961 Act , the assessee withdrew the said claim of deduction u/s. 54F of the Act during the course of assessment proceedings conducted u/s 153A r.w.s. 143(2)/143(3) of the 1961 Act, which ultimately led to the additions to the tune of Rs. 30,39,742/- being made in the assessment order passed by the AO which was later confirmed by learned CIT(A). As per provisions of Section 271(1)(c) of the 1961 Act read with explanation 1 , if the taxpayer come forward and offer an explanation as to bonafide of its claim and reasonable cause, it will take the taxpayer out of the clutches of penalty provisions as are contained in Section 271(1)(c) of the 1961 Act. Provisions of Section 271(1)(c) read with explanation 1 are reproduced hereunder:- “[Failure to furnish returns, comply with notices, concealment of income, etc. 271. (1) If the [Assessing] Officer or the [***] [Commissioner (Appeals)] [or the [Principal Commissioner or] Commissioner] in the course of any proceedings under this Act is satisfied that any person— **** (c) has concealed the particulars of his income or [***]furnished inaccurate particulars of [such income, or] *** he may direct that such person shall pay by way of penalty,— (i) [***] [(ii) in the cases referred to in clause (b), [in addition to tax, if any, payable] by him, [a sum of ten thousand rupees] for each such failure ;] [(iii) in the cases referred to in clause (c) [or clause (d)], [in addition to tax, if any, payable] by him, a sum which shall not be less than, but which shall not exceed [three times], the amount of tax sought to be evaded by reason of the concealment of particulars of his income [or fringe benefits] or the furnishing of inaccurate particulars of such income [or fringe benefits]. [***]] [Explanation 1.—Where in respect of any facts material to the computation of the total income of any person under this Act,— (A) such person fails to offer an explanation or offers an explanation which is found by the [Assessing] Officer or the [***] [Commissioner (Appeals)] [or the [Principal Commissioner or] Commissioner] to be false, or (B) such person offers an explanation which he is not able to substantiate [and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him], then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this 5 sub-section, be deemed to represent the income in respect of which particulars have been concealed.” Despite assessee offering an explanation that it was due to bonafide reasons as detailed below which enabled the assessee to have belief that assessee was entitled to claim of deduction u/s. 54F of the 1961 Act , none of the authorities below have verified the said contentions on the touchstone of accuracy of the said claim on facts as well on law. The said so called bonafide reasoning offered by the assessee to claim deduction u/s 54F by filing revised return is reproduced here under:- “ The appellant had two residential fiats other than the newly acquired fiat on the date of sale of the "sold asset' one of which was inadvertently as office premises which resulted in the appellant's wrong claim u/s. 54F of the Act. Another flat at Sahara Tower was under redevelopment. The appellant was not in possession of said property during the year under consideration and thus appellant could not exercise his dominion over the said residential house. Accordingly, it cannot be said that the appellant is owning this residential house.”
None of the authorities have gone into deliberations as to the merit of the claim of the assessee as to bonafide explanation and reasonable cause both on merits and on law as no findings/conclusions are amenable from the orders of the authorities below. The authorities below have not given any specific findings with reasoning as to the sustainability or otherwise of plea of the assessee to be having a bonafide belief and reasonable cause that the assessee was entitled for deduction u/s 54F of the Act, and whether it is sufficient or not to take it out of clutches of penalty provisions as are contained in Section 271(1)(c) of the 1961 Act read with Explanation 1. Thus interest of justice in this case would be best served if the issue under our consideration is set aside to the file of AO for fresh de-novo adjudication both on facts as well on law whether these causes/explanation as set out by the assessee constituted reasonable and bonafide cause to come to conclusion that the assessee was entitled for deduction u/s 54F of the 1961 Act to take it out of the clutches of penal provision as are contained in Section 271(1)(c) of the 1961 Act. The assessee is directed to produce all necessary evidences to prove that the averments made by it are correct to come to conclusion/belief that the assessee was entitled for deduction u/s 54F of the 1961 Act and it constituted bonafide explanation and reasonable cause to take it out of the penal provisions as are contained in Section 271(1)(c) of the 1961 Act read with Explanation 1. Thus, the matter is restored to the file of AO for fresh consideration of entire issue on merits in accordance with law . We would like to clarify that we have not commented on the merits of the issue under consideration and all the contentions/issues both factual as well legal are kept open to be decided/adjudicated afresh by AO on merits in accordance with law. The AO shall admit all relevant evidences which are submitted by the assessee in its defence during the course of set- aside denovo proceedings and shall be adjudicated on merits in accordance with law . Needless to say proper and adequate opportunity of being heard shall be provided by the AO to the assessee in accordance with principles of natural justice in accordance with law before adjudicating the issue afresh as directed by us. Thus, in nutshell the grounds raised by the assessee are allowed for statistical purposes. We order accordingly.
7. In the result appeal of the assessee is allowed for statistical purposes as indicated above. order pronounced in the open court on 09 .08.2018 आदेश की घोषणा खुऱे न्यायाऱय में ददनांकः 09.08.2018 को की गई । Sd/- Sd/- (JOGINDER SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, dated: 09.08.2018 Nishant Verma Sr. Private Secretary