M/S. PINEWOOD COMMERCIAL LTD.,KOLKATA vs. ITO, WD-3(1), KOLKATA, KOLKATA

In this appeal the assessee has challenged the order of CIT(A) whereby the CIT(A) confirmed the order of AO imposing penalty u/s 271(1)(c) of the Income Tax Act, 1961 (Act).

The facts and circumstances under which penalty was imposed on the assessee by the AO are as follows :- The Assessee is a company engaged in the business of providing secretarial, consultancy and accounting services. The Return of Income for the Assessment Year 2008-09 was submitted on 28/09/2008 showing total Income of Rs. 3,55,634/-. The Assessee had purchased a commercial property situated at Westmore 11, sir Pochkanwale Road, Worli, Mumbai in the year 1987. Depreciation on the property was claimed and allowed in earlier assessment years. During the year the Assessee sold the Pinewood Commercial Ltd. A.Y.2008-09 property and acquired a new property for Rs. 1,00,79,310/-. The Assessee inadvertently offered the profits under the head Capital Gain instead of under the head Profit and Gains from Business or Profession. The Assessee rectified the mistake in the course of hearing by submitting a revised computation and offering profit of Rs 2,41,254/- under section 41(2) of the Income Tax Act, 1961. The profit of Rs. 2,41,254/- was duly disclosed in the revised computation. The Assessing Officer did not accept the revised computation and completed the Assessment u/s 143(3) of the Income Tax Act, 1961 on 27/12/2010 on the basis of original computation filed by the assessee. He made an addition of Rs. 60,05,067/- to the Income of the assessee under the head "Capital Gains" on alleged ground that the commercial premises sold by the assessee was a Capital Asset. The Assessing Officer also held that no depreciation was claimed by the Assessee for the commercial premises under section 32 of the Income Tax Act 1961. The Assessee aggrieved by the order u/s 143(3) of the Income Tax Act, 1961 of the Assessing Officer filed an appeal before the CIT(A) on 19/01/2011. However, the CIT(A) confirmed the disallowance by his order dt.25.1.2011.

In respect of the addition made under the head “Capital gains” the AO imposed penalty on the assessee u/s 271(1)(c) of the Act. On appeal the CIT(A) confirmed the order of the AO. Aggrieved by the order of CIT(A) the assessee is in appeal before the Tribunal.

At the time of hearing of this appeal it was brought to our notice by the ld. Counsel for the assessee that as against the addition of Rs.60,05,067/- made by the AO under the head “Capital gains” which was confirmed by CIT(A), the assessee preferred an appeal before the Hon’ble Tribunal in ITA No.1028/Kol/2014. The Tribunal vide its order dated 31.07.2017 was pleased to delete the addition made under the head “Capital Gains”. Since the very addition on the basis of which penalty was imposed on the assessee by the AO has been deleted by the Tribunal, We are of the view that the order

In the result the appeal by the assessee is allowed.