ITO 3(3)(1), MUMBAI vs. RAK CONSTRUCITON PROJECT P.LTD, MUMBAI

This appeal by Revenue under section 253 of the Act is directed against the order of ld. Commissioner of Income-tax (Appeals)-8, Mumbai [ld.

Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was right in deleting the penalty of Rs. 12,25, 630/- levied u/s.271(l)(c) of the I. T. Act, 1961 without appreciating the fact that the assessee has failed to declare its true income and the claim made is not only incorrect in law but is also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bona fide; Mum 2017-Ms Rak Construction Project Pvt. Ltd.

The Assessing Officer also initiated penalty under section 271(1)(c) of the Act. Show cause notice under section 274 read with section 271(1)(c) was issued on 05.03.2015 to the assessee seeking explanation as to why penalty prescribed under section 271(1)(c) be not levied. In response to the show-cause notice, the assessee contended that the income under the head “Income from House Property” was received was adjusted in work-in- progress account. It was further contended that M/s National Textile Corporation was making the payment on account of compensation as per Small Cause Court order. The assessee has no contract with National Textile Corporation who had made payment of such compensation( rent) the assessee company has purchased the land for development. The 2 Mum 2017-Ms Rak Construction Project Pvt. Ltd. assessee has neither concealed income nor furnished inaccurate particulars thereof. The contention of assessee was not accepted by Assessing Officer.

We have heard the ld. Departmental Representative (DR) for the Revenue and ld. Authorized Representative (AR) of the assessee and perused the material available on record. The ld. DR for the revenue supported the order of Assessing Officer. The ld. DR further contended that the assessee claimed credit of TDS of Rs. 12,49,786/- for the income received against the rental income. As per the AIR details and in Form-26AS, the assessee received rental income of Rs. 48,00,000/- and interest on income-tax 3 Mum 2017-Ms Rak Construction Project Pvt. Ltd. refund. The assessee has not offered the same in the return of income nor filed any revised return of income. Thus, the assessee has willfully furnished inaccurate particular of income leading concealment of income to the extent of Rs. 33,60,000/-. The penalty was deleted by ld. CIT(A) is liable to be restored. This was a clear case where the assessee willfully furnished inaccurate particular leading to concealment of income. The ld DR further submits that in subsequent years the assessee has shown the similar receipt as rental income.

On the other hand, the ld. AR of the assessee supported the order of ld. CIT(A). The ld. AR of the assessee further submits that by filing return of income, the assessee disclosed all the particulars. The assessee received he mesne profit against the use and occupation of property which was in the nature of Capital receipt. However, the assessee adjusted the same in work-in-progress. The Assessing Officer did not accept the contention of the assessee and made the addition of Rs. 48,00,000/- and after granting statutory deduction under the head “Income from House Property”. The addition of Rs. 33,60,000/- was added on which the Assessing Officer levied the penalty. The ld. AR further submits that assessee neither concealed the particular of income nor furnished inaccurate particulars thereof. The assessee has not filed any appeal against the quantum assessment. The ld. AR further submitted that merely no filing appeal against the quantum assessment is not fetal to the assessee. Merely the 4 ITA No. 1247 Mum 2017-Ms Rak Construction Project Pvt. Ltd. treatment of receipt on account of use and occupation of property was not accepted by the Assessing Officer that would not be treated as furnishing incorrect particulars. The assessee has made a bonafide claim and merely the claim was not accepted by Assessing Officer would not tantamount to furnishing inaccurate particular or for concealing income and no penalty can be levied on the assessee.

We have considered the rival submission of the parties and have gone through the orders of authorities below. There is no dispute that assessee received Rs. 48,00,000/- as computation as per the order of Small Cause Court, during the relevant Financial Year from National Textile Corporation. We have noted that the addition in the ‘income from house property’ have been made by the Assessing Officer on his view that the payment of compensation is on account of use and occupation of property is liable to be treated under the head “income from house property”. Thus, the assessing officer gave a different treatment. The assessee has shown the said amount in work-in-progress. It is settled legal position that mere making a claim, which is not accepted by Assessing Officer or sustainable in law by itself, will not amount to furnishing inaccurate particulars regarding the income of assessee. The Hon’ble Apex Court in case of CIT vs. Reliance Petroproducts Ltd. 322 ITR 158 held that when disallowance/addition made by Assessing Officer while passing assessment order solely on account of different view taken on the same set 5 Mum 2017-Ms Rak Construction Project Pvt. Ltd. of fact which may be termed as difference of opinion but nothing to do with the concealment of income or furnishing inaccurate particular of such income. We are also of the view that mere addition/disallowance per se cannot be the ground for imposing penalty for quantum addition, unless there is finding of assessing officer that assessee willfully and deliberately concealed the particulars of income or filed inaccurate particulars thereof .

In the result, appeal of Revenue is dismissed.