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Income Tax Appellate Tribunal, MUMBAI BENCHES “D” MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
ORDER
PER N.K. PRADHAN, AM
This is an appeal filed by the revenue. The relevant assessment year is 2011-12. The appeal is directed against the order of the Commissioner (Appeals) – 12, Mumbai and arises out of order u/s 271(1)(c) of the Income Tax Act 1961, (The ‘Act’).
The grounds of appeal filed by the revenue read as under:-
1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in deleting the penalty levied u/s 271(1)(c) of Rs. 10,66,504/- without appreciating the fact that the assessee has not offered any taxable income under the head Income from House property for any of the immovable property out of total fourteen immovable properties.
2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate tcvhe fact that assessing officer has proved
that assessee has not shown income from House property in respect of any of the immovable property out of 14 immovable properties and there was nothing on record to prove that omission on the part of assessee company not to offer for tax is correct and ‘’Income from House property’’ was on account of ‘’bonafide mistake’’ on the part of assessee company, which is an entity duly assisted by C.A / C.S for all compliances under the Company Act and Income Tax Act.’’
3. It is further submitted that similar penalty order u/s 271(1)(c) has been passed by the A.O. for the A.Y. 2009-10 on identical issue as that of the assessee company for the A.Y,. in question and the said penalty was also deleted by the CIT(A)-14 in order dated 20.08.2014. The deletion of penalty by the Ld. CIT(A)-14 for the A.Y. 2009-10 has also been challenged by the department before Hon'ble ITAT.
Briefly stated the facts are that the Assessing Officer (AO) found that the assessee had shown an amount of Rs. 5,86,07,966/- towards investment in immovable properties. However, no ‘’income from house property’’ has been offered against these properties. The AO determined the annual value at 8.5% of the cost of above properties. Thus he determined the income from house property at Rs. 32,31,831/-. Thereafter, the AO levied a minimum penalty of Rs. 10,.66,504/- on the above amount u/s 271(1)(c) of the Act.
The assessee preferred an appeal before the learned CIT(A) against the penalty of Rs. 10,66,504/- levied by the AO. The learned CIT(A) followed the appellate order of her predecessor-in-office for the A.Y. 2009-10 and deleted the said penalty levied by the AO.
The learned DR supports the order passed by the AO. It is submitted by him that the assessee has not preferred an appeal before the learned CIT(A) against the income from house property determined by the AO. at Rs. 32,31,831/-. It is also submitted by the learned DR that the assessee has not offered ‘’income from house property’’ from the investment of Rs. 5,86,07,966/-. Thus it was submitted that the assessee had furnished inaccurate particulars of income and also concealed the income.
The learned counsel of the assessee supported the order passed by the learned CIT(A).
We have heard the rival submissions and perused the relevant material on record. We find that the AO has determined the annual value at 8.5% of the cost of properties. This is not the way to do so. There is no precedent for doing so. In CIT vs Metal Products of India [(1984) 150 ITR 714 (Punj)], it has been held that merely because the addition has been made on estimate under the first proviso to section 145(1) cannot automatically lead to the conclusion that there was failure to return the correct income by means of fraud or gross or wilful neglect.
7.1 We hold that the determination of annual value at 8.5% of the cost of properties by the A.O. is devoid of reasons.
7.2 Regarding the contention of the learned DR that the assessee has not filed an appeal against the order of the AO before the learned CIT(A), we may say that findings given in assessment proceedings are certainly relevant and have probative value, but such findings are material alone and may not justify the imposition of penalty in a given case, because the consideration that arise in penalty proceedings are different from those that arise in assessment proceedings . We rely on the decision in Banaras Textorium vs CIT, (1988) 169 ITR 782, 790, 791 (All); CIT vs Govindankutty Menon, (1989) 178 ITR 509, 515 (Ker); Hotel & Allied Trades (P) Ltd. vs CIT, (1996) 221 ITR 619, 646 (Ker).
In view of the reasons delineated at para 7, 7.1 & 7.2 here-in- above, we uphold the order of the learned CIT(A).
In the result, the appeal filed by the revenue is dismissed.
Order pronounced in the open court on 27/01/2017