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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI RAMIT KOCHAR
Assessee by: Shri Mukesh Chokshi Revenue by : Shri. V. Justin ,DR सुनवाई की तारीख /Date of Hearing : 01-03-2018 घोषणा की तारीख /Date of Pronouncement : 09-04-2018 आदेश / O R D E R
PER RAMIT KOCHAR, Accountant Member
This appeal, filed by the assessee, being 2006-07 is directed against the appellate order dated 02.07.2014 passed by learned Commissioner of Income-tax(Appeals)-30 , Mumbai (hereinafter called "the CIT(A)"), the appellate proceedings had arisen before learned CIT(A) from the penalty order dated 26-03-2012 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 assessment year 2006-07 .
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- “Following grounds of appeal are without prejudice to each other
1. The learned Commissioner of Income Tax (Appeals) has erred in law and in facts in confirming the order passed by the Assessing Officer u/s 271(1)(C) of the Act.
2. The learned Commissioner of Income Tax (Appeals) has erred in law and in facts in confirming the order of Assessing Officer without complying with the principles of natural justice. 3. The learned Commissioner of Income Tax (Appeals) has erred in law and in facts in confirming penalty u/s 271(1)(C) of the Act at Rs. 33.060/-. 4. The appellant craves leave to add to, alter, amend and / or delete in all the foregoing grounds of appeal
.”
3. The assessee is a Co-operative Group Housing Society and has declared income from house property. The AO during the course of assessment proceedings u/s. 143(3) r.w.s 143(2) observed that the assessee has entered into two agreements with Tata Teleservices Maharashtra Ltd. both dated 24.06.2003 and vide first agreement , the assessee received license fees of Rs. 1,00,000/- per annum for installation of CDMA antenna and vide second agreement , the assessee had received Rs. 1,50,000/- for providing services i.e. lift security guard, common lighting etc. . The assessee declared Rs. 70,000/- as income from house property after claiming deduction u/s. 24(a) of the Act. The assessee did not offer to tax service charges of Rs. 1,50,000/- received from Tata Teleservices Maharashtra Ltd. . The assessee credited Rs. 1,50,000/- to Income and Expenditure Account and debited various expenses against the same. The assessee was show caused by the AO as to why the said income be not treated as income from other sources keeping in view decision of Hon‟ble Hon‟ble Calcutta High Court in the case of Mukherjee Estate Private Limited v. CIT reported in (2000) 244 ITR 1(Cal. HC). The AO was of the view that assessee has authorised Tata Teleservices Maharashtra Ltd. to use only some parts of terrace to install antenna/tower and BTS equipments and not the full terrace and hence the said income is chargeable to tax under the head „income from other sources‟. Similarly, with respect to the second agreement with Tata Teleservices Maharashtra Ltd. , it was also observed by the AO that the assessee has agreed to provide following services to Tata Teleservices Maharashtra Ltd. as under:- i) Nominal maintenance/upkeep of the portion of the terrace and space in and around the said building. ii) Use and benefit of the lifts and/or service elevators, 2 iii) Benefit of Security Guard System, iv) Use the common lighting within the said building. In the opinion of AO, the said income is also chargeable to tax at the gross level of Rs. 1,50,000/- under the head „income from other sources‟ because Tata Teleservices Maharashtra Limited has agreed to pay for maintenance fees for facilities provided. The AO brought to tax income of Rs. 2,50,000/- to tax as income under the head „income from other sources‟ as against income of Rs. 70,000/- declared by the assessee as income under the head „income from house property‟ , vide assessment order dated 22.12.2008 passed by the AO u/s 143(3) . The AO simultaneously invoked penalty provisions against the assessee u/s. 271(1)(c) for furnishing of inaccurate particulars of income and concealment of income . The learned CIT(A) while adjudicating appeal against quantum assessment confirmed the additions on account of service charges of Rs. 1,50,000/- received by the assessee from Tata Teleservices Maharashtra Ltd., but accepted claim of the assessee in respect of license fee of Rs. 1,00,000/-. The AO , thereafter , levied penalty of Rs. 33,060/- against the assessee u/s 271(1)(c) vide penalty order dated 26-03- 2012 for concealment of particulars of income w.r.t. addition of Rs. 1,50,000/- confirmed by learned CIT(A) against quantum assessment vide appellate order . The learned CIT-A also confirmed penalty levied by the AO vide appellate order dated 02-07-2014 , by holding as under:- “6. Decision:- 6.1 1 have duly considered the above submissions of the appellant and find that amount of Rs. 1.5 lac received from the Tata Teleservices Pvt Ltd has been offered by the appellant, as rental income against which expenses have been claimed. The appellant's case is that it has received the amount of Rs. 1.5 lac as reimbursement of expenses of common facilities provided to the company. However, as to how formula for compensation on account of maintenance charges and services has been designed and formulated has nowhere been mentioned. It is also stated that the service utilized by the company is on account of electricity charges, lift etc, but no details have been kept to show, as to what extent these common facilities and services have been used to establish any ratio between the use of service and facilities vis-a-vis the compensation received by the appellant on the said account. The appellant's action in claiming various expenses against the above receipt apparently is to show that the said receipt is in the nature of reimbursement, from which it is clear that appellant has made an attempt to conceal its real income and thereby evade tax. I, therefore uphold the levy penalty in the case of the appellant. In this regard, I also rely on the order dated 13.05.2014 of the ITAT, Mumbai 'D' bench, wherein, it has been held, as under: "Reference in this context may also be made to the decision in the case of CIT v/s. Mac Data Ltd. [2013] ITR 1 (Del), referred to by the Id. DR, which stands since upheld by the apex court. As such, looked at from any angle there has been both concealment as well as furnishing inaccurate particulars of income in the present case, even as there may be areas of overlap and, farther, the revenue has clearly made out a case for the latter, that a plausible explanation, the onus to subtiate which is on the assesses, seizes penalty, represents trite law, expounded by the apex court decades { refer; CIT v. Atul Mohan Bindal /2009J ITR 317(SC); UOI v/s. Dharmendra Textile Processors 12008] 306 ITR 277(SC); K.P. Madhusudanan us. CIT 12001] 251 ITR 99 (SC); B.A. Balasubramaniam and Bros. v/s. CIT(1999) 236 ITR 977 (SC); Addl CIT v/s. Jeevan Lal Shah [1994] 205 ITR 244 (SC), to cite some, and which is completely absent in the instant case, the Id. CIT (A), Whose findings are comprehensive, has correctly appreciated both, the facts as well as the law in the matter, so that there has been no omission on his part to consider any aspect of the matter." 6.2 I further hold that the appellant has not established as to what principles of natured justice has not been followed by the AO and dismiss the second ground of appeal
. 6.3 In view of the above discussion, I uphold the penalty order that the appellant has concealed and filed inaccurate particulars of its income for the assessment year under consideration and confirm the penalty levied upon the appellant and dismiss the grounds of appeal.
7. In the result, appeal is dismissed.”
4. The assessee has come in an appeal before the tribunal against the appellate order passed by learned CIT(A) confirming/sustaining of the penalty levied by the AO u/s 271(1)(c) . The Secretary/Authorised signatory of the assessee who has signed and verified form no. 36 appeared in person before the tribunal. It was submitted on behalf of the assessee at the outset that proper opportunity was not given by the authorities below to the assessee to prove its case and that it has genuinely incurred expenses with respect to service charges of Rs. 1,50,000/- received from Tata Teleservices Maharashtra Ltd. for various services rendered by assessee to Tata Teleservices Maharashtra Limited for which expenses were genuinely and bonafidely incurred by the assessee and there is no evasion/avoidance of taxes by manipulation of accounts by the assessee . It is prayed that if the matter is set aside to the file of the AO for granting an opportunity to the assessee to prove its case , the assessee will prove with evidences that expenses were genuinely, bonafidely and exclusively incurred in connection 4 with services rendered to Tata Teleservices Maharashtra Limited against which service charges were received to the tune of Rs. 1,50,000/- during the year under consideration. The Ld. DR fairly submitted that is has no objection if the matter is restored to the file of the AO for fresh adjudication on merits.
5. We have considered rival contentions and have perused the material on record . We have observed that the assessee is a Co-operative Group Housing Society. The assessee has entered into two agreements both dated 24.06.2003, with respect to installation of antenna and tower at terrace. The issue so far as license fee of Rs.1,00,000/- per annum received by the assessee from Tata Teleservices Maharashtra Limited is considered has reached finality as learned CIT(A) while adjudicating quantum assessment accepted the claim of the assessee. The dispute is w.r.t. service charges of Rs. 1,50,000/- received by assessee from Tata Teleservices Maharashtra Ltd. for providing various services such as lift, security guard etc. . The assessee has credited said income of Rs. 1,50,000/- to Income & Expenditure Account and debited expenses incurred in relation to the earning of the said income to Income & Expenditure account . The AO has brought the said income to tax at gross level of Rs. 1,50,000/- under the head „income from other sources‟ and no benefit of expenses were allowed which was claimed to be incurred in relation to the earning of said income as the assessee could not show that these expenses were incurred in connection with the services for which service charges were received . It is the claim of the assessee that the expenses were incurred exclusively for earning the said income and if the opportunity is provided , the assessee will be able prove its case that these expenses were genuinely , bonafdily, exclusively and wholly incurred for providing services to Tata Teleservices Maharashtra Limited . In our considered view , the matter need to be restored back to the file of the AO for fresh adjudication on merits in accordance with law . Needless to say that the AO shall provide proper and adequate opportunity of being heard to the assessee in accordance with the principal of natural justice. The onus is on assessee to prove that these expenses which were debited to Income and Expenditure Account against service charges of Rs. 1,50,000/- received from Tata Teleservices Maharashtra Limited credited to Income and Expenditure Account , were genuinely, wholly, exclsuively and bonafidely incurred in