KHIMASIA WAREHOUSING,MUMBAI vs. ACIT 20(1), MUMBAI

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद� राजे� के अनुसार PER RAJENDRA, AM- Challenging the order,dtd.08.07.2011,of the CIT(A)-31,Mumbai,the assessee has filed the present appeal.Assessee-firm,engaged in the business of share trading and derivatives,filed its return of income on 30.10,2006,declaring income of Rs.12.48 lakhs.The Assessing officer (AO)completed the assessment u/s. 143(3) of the Act on 24.11.08, determining the taxable income of the assessee at Rs.14.08 lakhs. 2.On verification of details filed along with the return,he found that the assessee had shown income from share trading,rent from house property and profit from sale of immovable property,that it had prepared trading account for share trading business and rent account, that profit of both the account was transferred to P&L account where various expenses related to share trading account were claimed.He observed that in computation of income the assessee had shown rental income under the head house property income and had claimed expenditure as per section 24 of the Act, that it had claimed expenditure on electricity, gardening, and property tax of Rs.53,800/-,Rs.28,000/- and Rs.77,746/- respectively, that the assessee had taken double deduction of property tax Rs.77,746/-, that it had claimed the expenditure under the head electricity and maintenance which were not allowable as per the provisions of section 24,that the above expenses amounting to Rs.1.59 lakhs were claimed twice.He disallowed the amount in question and initiated penalty proceedings. In response to notice issued by AO,the assessee ,vide its letter dated 25.5.2009,stated that that double claim of expenditure was without any fraudulent intention, that there was a clerical error in computing the taxable income,that mere disallowance of expenses could not be considered as conceal - ment of income. 2.1.The AO after taking into consideration the explanation of the assessee,held that it had prepared separate P&L account for its income under the head share trading and rental income, that in the computation of income business income was separately worked out, that it had reduced the business income in excess by amount of Rs.1.59 lakhs which was on account of property tax claimed twice and electricity and gardening expenses, that the double claim of deduction and unallowable claim of expenditure in rental income was apparent from the 6501-Khimasia WNCS statement of computation of income,that the separate P&L account under different heads were prepared in such a way that double claim and claim of unallowable expenditure in rental income could not be detected easily.Referring to the caseof Dharmendra Textiles Processors & Others(306ITR277),the AO held that proof of mensrea was not required for levy of penalty, that the assessee had concealed his income to extent of Rs.1.59 lakhs. Finally,he levied a penalty of Rs.51,000 u/s. 271(1)(c) of the Act. 3.Aggrieved by the penalty order of the AO, the assessee preferred an appeal before the First Appelate Authority(FAA).Before him,it was argued that assessee had not concealed his income nor had furnished inaccurate particulars of income,that due to oversight the business income was reduced under certain heads, that the mistake committed by the assessee could not be equated with concealment of income.After considering the assessment order, penalty order and the submissions of the assessee, the FAA held that the assessee had claimed deduction twice on account of property tax paid, gardening expenses and electricity expenses in its return of income, that claim was made under the head income for house property as well as under the head business income, that the assessee had not disputed the fact of double claim.Referring to the provisions of section 271(1)(c ) – Explanation 1 of the Act, he held that explanation offered by the assessee could not be held as a bonafide explanation, that a patent wrong claim made by the assessee could not be held as a simple clerical error, that the explanation offered by the assessee was not sufficient or reasonable, he referred to the case of Zoom Communication Pvt.Ltd. (191taxmann179) of the Hon’ble Delhi High Court and held that explanation offered by the assessee was proved to be false,and it had failed to substantiate the said explanation by furnishing related evidences.Finally, he upheld the order of the AO. 4.During the course of hearing before us, none appeared for the assessee, as stated earlier,the Departmental Representative(DR) supported the order of the FAA and stated that the assessee had filed inaccurate particulars of income. 5.We have perused the material available on record.The undisputed facts of the case are that the assessee had claimed double deduction in case of property tax paid, gardening expenses and electricity expenses, that the assessee itself had admitted that those expenses were claimed under the head business income and income from house property, that the assessee had claimed that it was a clerical mistake.In short there was a double claim of deduction and unallowable claim of expenditure in the rental income, made by the assessee for the year under consideration, while filing the return. Before proceeding further,we want to mention that a perusal of provisions of the section 271 (1)(c),along with Explanation1(A) and (B),makes it clear that if the AO in the course of assessment proceedings,is satisfied that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income, he is empowered to levy penalty subject to the explanation given by the assessee found to be false or not bona fide. In short,if the explanation filed by the assessee is not substantiated by it or it fails to prove the bona fide of the explanation penalty can be levied by the AO u/s.271 (1)(c)of the Act.As the facts of each case are different,so one has to see that whether the assessee was successful in substantiating the explanation filed by it or had proved the bona fide of the explanation.In the case under consideration,the assessee was fully aware of the fact that it had claimed double deduction and had made a patent wrong claim.The moment a deduction was claimed twice the assessee had exposed itself to the penal provisions as envisaged by the Act.We find that that there was no difference of opinion between the AO and the assessee about the allowability of the claim. Both were of the view that the claim was not as in accordance with 6501-Khimasia WNCS