Income Tax Appellate Tribunal - Mumbai
Ronni Hosi Metha, Mumbai vs Department Of Income Tax on 3 August, 2016
आयकर अपील
य अ धकरण "D" यायपीठ मब
ंु ई म ।
IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH, MUMBAI
BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND
SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER
आयकर अपील सं./I.T.A. No.6740/Mum/2012
( नधा रण वष / Assessment Year : 2008-09)
The ACIT - 19(2), बनाम/ Shri Ronnie Hosi Me hta,
Room No. 315, 3 r d Floor, 2 n d floor, Aarti Apartment,
v.
Piramal Chambe rs, Vallab hbhai Pate l Road,
Lalb aug, Parel, Santacruz (W),
Mumbai - 400 012. Mumbai -400 054.
थायी ले खा सं . /PAN : AAFP M9310C
(अपीलाथ /Appellant) .. ( यथ / Respondent)
Revenue by : Shri B.S. Bist, Sr. D.R.
Assessee by : Shri S.C. Tiwari
ु वाई क तार ख / Date of Hearing
सन : 30-05-2016
घोषणा क तार ख /Date of Pronouncement : 03-08-2016
आदे श / O R D E R
PER RAMIT KOCHAR, Accountant Member
This appeal, filed by the Revenue, being ITA No. 6740/Mum/2012, is directed against the appellate order dated 3rd August, 2012 passed by learned Commissioner of Income Tax (Appeals)- 30, Mumbai (hereinafter called "the CIT(A)"), for the assessment year 2008-09, the appellate proceedings before the learned CIT(A) arising from the penalty order dated 11th May,2011 passed by the learned Assessing Officer (hereinafter called "the AO") u/s 271(1)(c) of the Income Tax Act,1961 (Hereinafter called "the Act").
2 ITA 6740/Mum/2012
2. The grounds of appeal raised by the Revenue before Income Tax Appellate Tribunal, Mumbai (hereinafter called "the Tribunal") in the memo of appeal filed with the Tribunal read as under:-
"1. On the facts and in the circumstances of the case and in law, the Learned CIT(A) has erred in deleting the penalty u/s 271 (1 )(c) of the Income Tax Act at Rs.45,00,000/- after holding that just because assessee could not prove his sub tenancy that does not automatically mean that the appellant has furnished inaccurate particulars of income without appreciating the facts that offering income either under the head of "Income from other sources" or "Capital Gain" incurs substantial effect on allowability of deductions u/s 54F of the IT Act and the rate of tax, thus the treatment of the income under different head can be intentional to reduce the tax liability which can also well be termed as furnishing of inaccurate particulars of income.
2. On the facts and in the circumstances of the case and in law, the Learned CIT(A) has failed to appreciate the facts that offering income after selection of return for scrutiny establishes the intention to avoid the tax liability which cannot be covered under the category of particulars of bonafide mistake which can also well be termed as concealment of particulars of income or furnishing of inaccurate particulars of such income.
3. The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the AO be restored."
3. The brief facts of the case are that the assessee is a partner in M/s Nevron Properties & Estates which is engaged in the business in estate agencies and brokerage. During the course of assessment proceedings u/s 143(3) read with Section 143(2) of the Act , the AO observed from the records, that the assessee has shown receipts on sale of long term capital asset at Rs.1,13,73,000/- which were claimed exempt u/s. 54F of the Act. The assessee was asked by the AO to submit the details in respect of the transactions in respect of the sale of long term capital asset and claim of exemption u/s.54F of the Act. It was submitted by the assessee that in the year 1995 Mr. Rajni C. Shah, original tenant of M/s. Leach and Weborney of part of property situated at 66, Off E. Moses Road, Lower Parel, Mumbai 3 ITA 6740/Mum/2012 allowed the assessee to occupy the office premises and to do business transactions for the benefit of both of them and all cost were borne by Mr. Rajni C. Shah. It was submitted that by a Deed of Conveyance dated 9th March, 2007, M/s. Leach & Weborney sold , conveyed and transferred the land and structures thereon to M/s Second Land Developers Private Ltd. subject to the occupations of the areas in possession with the tenants/sub- tenants. Thereafter by a Deed of Surrender of Tenancy dated 12th April, 2007 the assessee surrendered to M/s Second Land Developers Private Ltd. all his tenancy rights in the said premises in his occupation. The agreement dated 12th April, 2007 was stamped and registered and was submitted by the assessee before the AO during the course of assessment proceedings u/s 143(3) read with Section 143(2) of the Act. The AO asked the assessee to prove his sub-tenancy and also submit a copy of the sub-tenancy agreement entered into by him with the original tenant said Mr. Rajni C. Shah who allowed the assessee to use office premises in the year 1995 along with proof of payment of rent, telephone bills, electricity bills, property tax etc to prove sub-tenancy in favour of the assessee with respect to the portion of the said property. In reply the assessee submitted before the AO that he does not presently have any receipts of electricity bills, telephone bills, payment of taxes made to various government bodies in respect of the said tenanted property. It was submitted that no Sub-tenancy agreement with Mr. Rajni C. Shah was entered into by the assessee , and he also did not obtain any license for the business carried on by him from the said property under the Shops and Establishment Act. The assessee gave to the AO present address of Sh Rajni C. Shah. The assessee submitted the copy of Deed of Surrender of Tenancy dated 12th April, 2007 executed by him with the Second Land Developers Private Ltd registered with Sub-Registrar, Mumbai City. The said registered document also had an affidavit of original tenant , layout plan of office occupied, letter dated 6th March, 2007 from original tenant confirming the premises given for business purpose to the assessee in 1995 and letter of 4 ITA 6740/Mum/2012 possession dated 12th April, 2007 given by the assessee to M/s Second Land Developers Private Ltd. The A.O. observed that the assessee has not been able to submit any details in respect of the sub-tenancy which he acquired in the year 1995 or any documentary proof of conducting any business in the said property from the year 1995 to 2007. The AO observed that primary onus is on assessee to prove sub-tenancy and in the absence of any contemporary evidence, the AO disbelieved the claim of the assessee with respect to sub-tenancy of the said premises. Notice u/s 133(6) of the Act was sent by the AO to Brihanmumbai Electricity Supply and Transport (BEST) calling for information relating to electricity meters installed in the said property as well notices u/s 133(6) of the Act were sent to Brihanmumbai Mahanagarpalika(BMC) calling information regarding the ownership and tenancies of the said property. Summons were also issued u/s 131 of the Act to Shri Rajni C. Shah asking him to be present before the A.O. on 13.12.2010 so that statement can be recorded on oath. In response to the said notices u/s 133(6) of the Act, the electricity department BEST confirmed that there has never been any electricity connection either in the name of the assessee or in the name of Shri Rajni C. Shah. The Brihanmumbai Mahanagarpalika(BMC) has also given the details of the owner, tenants and sub-tenants of the property wherein name of the assessee did not appear as sub-tenant of the said property. Shri Rajni C. Shah appeared before the A.O. whereby statement was recorded u/s 131 of the Act wherein he denied that any sub-tenancy or sub-lease was created by him or his family members with respect to the said property and he stated that he confirmed the deed of surrender of tenancy dated 12-04-2007 executed by the assessee with M/s Second Land Developers Private Limited as confirming party as several documents were signed by him without reading the material as documents were voluminous . It was observed by the A.O. from the various documents and enquiries made, statements recorded, that the assessee has fraudulently created sub-tenancy which never existed with a view to avoid tax by claiming 5 ITA 6740/Mum/2012 the money received as long term capital gain and claiming exemption u/s 54F of the Act. The A.O. also went through the audit report of M/s Nevron Properties and Estates wherein the assessee was partner that the assessee has shown address as 84, Bhakhtawar,22, Narayan Dabholkar Road, Malabar Hill, Mumbai-66 and even in personal capital account and balance sheet filed, it was observed by the AO that the assessee has never shown the sub- tenancy as an asset nor any deposit or expenses in respect of the said property was claimed by the assessee. The assessee during assessment proceedings before the AO accepted that he had wrongly shown Rs. 1,13,73,000/- as long term capital gains and claimed deduction u/s 54F of the Act. Thus, the assessee submitted vide letter dated 22-12-2010 before the AO the revised statement of income wherein he surrendered the claim of deduction u/s 54F of the Act before the AO and showed the income under the head 'income from other sources' as surrender of tenancy rights. The assessee counsel accepted before the AO on 14-12-2010 that he did not have any proof / evidence to support the sub-tenancy. The assessee also further stated in the letter dated 22-12-2010 that in fact the assessee helped in relation to sale of the premises at Worli by M/s Leach & Weborny to M/s Second Land Developers Private Ltd. The AO observed that the assessee is an estate broker and the assessee used a colorable device to avoid tax liability and indulged in tax evasion by fraudulently claiming the exemption u/s 54F of the Act, hence, relying upon the decision of Hon'ble Supreme Court in the case of Mc Dowell & Co. Ltd. v. Commercial Tax Officer, 154 ITR 148(SC) additions were made to the total income of the assessee vide assessment order dated 29-12-2010 passed u/s 143(3) of the Act. The assessee did not contest the said assessment order dated 29-12-2010 passed by the AO u/s 143(3) of the Act as no appeal was filed by the assessee with the learned CIT(A) against the said assessment order dated 29-12-2010 passed by the AO u/s 143(3) of the Act which assessment order attained finality.
6 ITA 6740/Mum/2012 Penalty proceedings were also initiated by the AO u/s 271(1)(c) of the Act for filing inaccurate particulars of income and notices were issued to the assessee . The assessee in the penalty proceedings submitted that with a view to end disputes and protracted litigations with the Revenue and in order to buy peace of mind, the assessee had without prejudice voluntarily revised the computation of income and withdrew his claim of deduction of Rs. 1,13,73,000/- u/s 54F of the Act. The assessee submitted that the assessee filed revised computation of income and paid the taxes accordingly , on the condition that no proceedings for penalty u/s 271(1)(c) of the Act shall be initiated against him for withdrawal of claim . The assessee requested the AO to drop penalty proceedings initiated against him by the AO u/s 271(1)(c) of the Act for filing inaccurate particulars of income.
The A.O. rejected the contentions of the assessee. The A.O. observed that the assessee has claimed exemption u/s 54F of the Act on surrender of tenancy rights although the assessee was not the sub-tenant of the property of which tenancy rights were surrendered. The assessee withdrew the claim and surrendered the amount only when the assessee was cornered by the A.O. after making rigorous efforts and collected the evidences which forced the assessee to revise the claim made in the return of income as the assessee was never sub-tenant of the said property and said fact was never disclosed in the return of income filed with the Revenue. In the statement recorded on oath of Shri Rajni C. Shah whereby said Sh Rajni C. Shah stated that no sub-tenancy or sub-lease was done by him or his family member of the said premises, it was clear that there was a malafide intention of the assessee to conceal the particulars of income and the assessee never withdrew the claim or surrendered the amount voluntarily in order to buy peace and to end protracted litigation with Revenue but the assessee was cornered by the Revenue and hence the assessee was forced to surrender the claim before the AO. Thus , the AO observed that it is proved beyond reasonable doubt that 7 ITA 6740/Mum/2012 the assessee had furnished inaccurate particulars of income adding to the false claim of exemption u/s 54F of the Act to which the assessee otherwise was not eligible, resulting into concealment of income. The AO after relying upon the decision of Hon'ble Supreme Court in the case UOI v. Dharmendra Textiles Processors and other (2007) 295 ITR 244(SC ) , held that the assessee has filed inaccurate particulars of income and thereby concealed the particulars of income within the meaning of Section 271(1)(c) read with explanation 1 of the Act and levied the penalty vide orders dated 11-05-2011 passed u/s 271(1)(c) of the Act.
4. Aggrieved by the penalty order dated 11-05-2011 passed by the A.O. u/s 271(1)(c) of the Act, the assessee filed appeal before the learned CIT(A).
5. Before the ld. CIT(A), the assessee reiterated the submissions what were made before the AO which are not repeated for the sake of brevity. The assessee submitted that the assessee's main source of income has been as a working partner in Nevron Properties and Estates engaged in the business of real estate brokerage. The assessee submitted that in course of his business, the assessee came into contact with Mr. Rajni C. Shah who was the original tenant of M/s Leach and Weborney occupying a portion of the property situated at Plot No. 66, Off E.Moses Road, Lower Perel, Mumbai . The said Sh Rajni C. Shah granted permission to the assessee to occupy and operate the office in the year 1995. The said M/s Leach and Weborney sold their property to Second Land Developers Private Limited on 09-03-2007 , the assessee was in occupation of the property and hence the assessee was paid a sum of Rs.1,13,73,00/- by Second Land Developers Private Limited by virtue of the occupation of the property as the said new buyer wanted immediate vacant possession of the said property. The assessee executed deed of surrender of tenancy dated 12-04-2007 in favour of Second Land Developers Private Limited and was paid afore-stated Rs.1,13,73,000/- by said Second Land 8 ITA 6740/Mum/2012 Developers Private Limited to get vacant possession of the office premises in occupation of the assessee. The assessee invested this amount of Rs.1,13,73,000/- to get exemption from long term capital gains u/s 54F of the Act. The assessee submitted that since only permission was given by Sh. Rajni C Shah in 1995 to the assessee to occupy and use his office and hence no contemporary documents were available with the assessee and no costs such as rent, taxes, electricity etc were incurred by the assessee since 1995 till the date of deed of surrender of tenancy rights dated 12-04-2007. The assessee submitted that he was paid Rs.1,13,73,000/- by the said Second Land Developers Private Limited, the new owner /buyer because they wanted immediate vacant physical possession of the property and since the part of premises was occupied by the assessee and hence the assessee was paid Rs.1,13,73,000/- by Second Land Developers Limited to get immediate vacant physical possession of the property. The assessee submitted that the statement of Sh. Rajni C Shah be viewed in the light of these facts. The assessee submitted that he decided to pay tax voluntarily of his own but since the assessee did not had the contemporary evidence the AO disbelieved the assessee claim of long term capital gains. Since no formal right was created by Sh. Rajni C . Shah , he also denied having created any sub-tenancy in favour of the assessee. The A.O. erred in treating the entire transaction as a colorable device. The assessee submitted that the said Second Land Developers Private Limited is no way related or connected with the assessee and the transactions are at arm's length. It was stated by the assessee before the learned CIT(A) that the A.O. acted upon suspicion, conjectures and surmises and there is no material before the AO to come to conclusion that the said Second Land Developers Private Limited paid Rs.1,13,73,000/- for reasons other than obtaining vacant possession of the portion occupied by the assessee. It was submitted that reliance of the AO on information received from BEST and BMC has no relevance for determining the claim of the assessee that he was occupying the portion of the premises as sub-tenant 9 ITA 6740/Mum/2012 since the year 1995. The assessee referred to the provisions of section 271(1)(c) of the Act and submitted that no penalty can be levied against the assessee. The assessee submitted that the he had withdrawn the claim of deduction u/s 54F of the Act and offered the receipt of Rs.1,13,73,000/- on surrender of tenancy as income from other sources instead of being charged to tax as long term capital gains voluntarily with a view to end protracted litigation with Revenue and to buy peace of mind subject to the condition that no penalty u/s 271(1)(c) of the Act will be levied by the Revenue on the assessee. The assessee relied on several cases which are referred to by the learned CIT(A) in his appellate order dated 03-08-2012 at page 10.
The ld. CIT(A) after considering the submissions of the assessee and the penalty order passed by the AO and the other case laws relied upon, observed that the assessee has claimed deduction u/s 54F of the Act seeking exemption of long term capital gains amounting to Rs.1,13,73,000/- arising on account of surrender of sub-tenancy. During the course of assessment proceedings u/s 143(3) read with Section 143(2) of the Act, the assessee was asked by the AO to prove his claim of sub-tenancy and to submit copy of sub- tenancy agreement with the original tenant Shri Rajni C. Shah granted in his favour in the year 1995 as claimed by the assessee which were not submitted by the assessee. No electricity connection was there in the name of the assessee and no municipal taxes were paid by the assessee with respect to said property. Statement u/s 131 of the Act was recorded by the AO wherein Shri Rajni C. Shah denied having given any sub-tenancy to the assessee. The assessee also did not had any license obtained under Shops and Establishment Act in his favour. The assessee had surrendered the amount provided no penalty will be levied u/s 271(1)(c) of the Act. The ld. CIT (A) accepted the contentions of the assessee. The ld. CIT(A) held that the assessee's case is covered by the decision of Hon'ble Supreme Court in the case of CIT v. Reliance Petroproducts (P) Ltd (2010) 322 ITR 158(SC) wherein 10 ITA 6740/Mum/2012 the Hon'ble Supreme Court held that making of an incorrect claim in law cannot tantamount to furnishing inaccurate particulars of income and in the instant case the Revenue can say that the assessee had made an incorrect claim of deduction u/s 54F of the Act which did not found favour with the Revenue but penalty u/s 271(1)(c) of the Act is not leviable under these circumstances as per ratio of decision of the Hon'ble Supreme Court in the case of Reliance Petroproducts Private Limited(supra), therefore the A.O. was directed by learned CIT(A) to delete the penalty levied u/s 271(1)(c) of the Act against the assessee vide appellate order dated 03-08-2012 passed by the learned CIT(A).
6. Aggrieved by the appellate order dated 03-08-2012 passed by the ld. CIT(A), the Revenue is in appeal before the Tribunal.
7. The ld. D.R. submitted that penalty was levied by the AO on the assessee u/s 271(1)(c) of the Act. The assessee has claimed long term capital gains in the return of income filed with the Revenue on the alleged purported sale/surrender of sub-tenancy rights and claimed deduction u/s 54F of the Act on the said long term capital gains allegedly and purportedly earned on sale/surrender of sub-tenancy rights which sub-tenancy never actually existed and was merely a colorable device adopted by the assessee to evade taxes . The ld. D.R. relied upon the order of the A.O. and submitted that enquiries were made with the BEST and BMC which revealed that the assessee did not had electricity connection in his name in the said property nor the assessee paid taxes with respect to the said property. The ld. DR submitted that the assessee also did not paid any rent with respect to sub- tenancy of this property. No evidence has been produced with respect to the existence of the said sub-tenancy. The assessee never reflected sub-tenancy in its books of assets in assets nor any expenses were ever claimed with respect of said sub-tenancy towards rent, taxes , electricity etc. . Summons 11 ITA 6740/Mum/2012 were issued u/s 131 of the Act to Shri Rajni C. Shah , the original tenant of this property who allegedly gave sub-tenancy to the assessee in the year 1995 as per claim of the asssesse, wherein in the statement recorded u/s 131 of the Act, Sh. Rajni C. Shah admitted on oath that the assessee is not his sub- tenant or sub-lessee with respect to this property and he signed many documents without reading the voluminous material placed before him at the time of execution of deed of surrender of sub-tenancy executed by the assessee with Second Land Developers Private wherein the said Rajni C Shah was confirming party. It was submitted by the learned DR that the asssessee surrendered his claim of deduction u/s 54F of the Act and offered long term capital gains as 'income from other sources' when he was cornered and confronted by the Revenue , and the claim of the assessee that he surrendered the amount voluntarily is wrong and incorrect. No contemporary evidences were filed by the assessee either during the assessment proceedings or during the penalty proceedings to prove his sub-tenancy. No contemporary evidences were even filed during appellant proceedings to prove his sub- tenancy. Thus, it is absolutely wrong to say that the assessee surrendered the amount to avoid litigation and to buy peace of mind. The ld. CIT(A) deleted the penalty so levied by the A.O. by relying upon the decision of Hon'ble Supreme Court in the case of CIT v. Reliance Petroproducts P. Ltd. (2010) 322 ITR 158 by holding that the case of the assessee is squarely covered by the ratio of law laid down by the Hon'ble Supreme Court while the fact of the matter is that the assessee case is not covered by the above decision of Hon'ble Supreme Court as the assessee has made an ex-facie bogus claim of treating the amount received on surrender of tenancy as income from long term capital gains and claiming deduction u/s 54F of the Act. Deduction u/s 54F of the Act was not allowed to the assessee as the income was assessed under the head 'income from other sources' once the assessee withdrew his claim . No proof thereof of having any utilization of electricity such as bills etc. or payment of taxes to BMC and other contemporary documents were 12 ITA 6740/Mum/2012 produced by the assessee to prove his sub-tenancy. The ld. D.R. relied on the decision of Hon'ble Bombay High Court in the case of Virendra K. Mehta v. DCIT [2014] 50 taxmann.com 217 (Bombay) and the decision of Hon'ble Supreme Court in the case of MAK Data (P) Ltd. v. CIT [2013] 38 taxmann.com 448 (SC) and submitted that it was an ex-facie bogus claim of the assessee to contend that the assessee was sub-tenant of Sh. Rajni C. Shah since the year 1995 , and in-fact the deed of surrender of tenancy right dates 12-04-2007 was a colorable device adopted by the assessee to claim long term capital gains to claim deduction u/s. 54F of the Act and evade legitimate taxes due to Revenue. The ld DR supported the order of the AO and prayed that the order of the learned CIT(A) be set aside and penalty levied on the assessee on this count be confirmed.
8. The ld. Counsel for the assessee submitted that there was a surrender of sub-tenancy with respect to portion of property situated at 66, Off E. Moses Road, Lower Parel, Mumbai. The deed of surrender of tenancy dated 12-04- 2007 was a registered and stamped deed between the assessee and the buyer Second Land Developers Private Ltd. wherein the original tenant Shri Rajni C. Shah was the confirming party. It was submitted that the Second Land Developers Private Ltd. purchased the premises along with tenants and sub- tenants wherein the assessee was sub-tenant of the portion of the said property in occupation/possession of the said portion of the property. There were encumbrances in the property whereby there were tenant/sub-tenants in the portion of property holding possession of the said portion of the property. The assessee has received payment of Rs. 1,13,73,000/- from Second Land Developers Private Limited on surrender of sub-tenancy vide deed of surrender of tenancy dated 12-04-2007 in favour of Second Land Developers Private Limited wherein Sh Rajni C. Shah was confirming party . The assessee handed over physical possession to Second Land Developers Private Limited on signing of deed of surrender of tenancy dated 12-04-2007 13 ITA 6740/Mum/2012 on receipt of consideration of Rs.1,13,73,000/-- for surrender of tenancy. Shri Rajni C. Shah, the original tenant granted permission to the assessee in the year 1995 to occupy the portion of the premises . It was submitted that there was no written sub-tenancy agreement entered with Sh. Rajni C. Shah in the year 1995 when permission to occupy premises was granted by said Sh. Rajni C. Shah in favour of the assessee. The said Sh. Rajni C. Shah admitted that there was no sub-tenancy rights or sub-lease granted by him or his family members to the assessee in the statement recorded u/s 131 of the Act before the AO and several papers were signed by him without reading the voluminous material. It is submitted that the A.O. has made enquiries with BEST and BMC with respect to the electricity connection in the name of the AO installed at the said premises and to confirm the payment of taxes by the assessee. The learned counsel of the assessee submitted that it is irrelevant whether electricity bills or taxes were paid by the assessee or not to adjudicate the existence of sub-tenancy in favour of the assessee by Sh. Rajni C. Shah in the year 1995 with respect to the said property as it was an oral grant of permission by the said Sh. Rajni C. Shah in favour of the assessee to occupy and use the protion of the premises to do business together whereby all expenses were borne by Sh. Rajni C Shah . The assessee submitted that he had duly paid the taxes and interest on withdrawal of the claim u/s 54F of the Act with the condition that no penalty shall be levied by Revenue u/s 271(1)(c ) of the Act. Penalty is not automatic u/s 271(1)(c) of the Act. He submitted that the additions have been made purely on suspicion , conjectures and surmises with respect to the amount received on surrender of tenancy rights. The ld. Counsel drew our attention to the revised computation of income which is placed at paper book page 27. It is submitted that the assessee has not admitted that the amount was not received on surrender of tenancy which now is offered to be taxed under the head 'income from other sources' instead of being taxes as income from long term capital gain as the assessee did not have contemporary evidences to 14 ITA 6740/Mum/2012 prove sub-tenancy . It is submitted that the withdrawal of claim of deduction u/s 54F of the Act was made with the conditions that no penalty will be levied by the Revenue u/s.271(1)(c) of the Act. The ld. Counsel distinguished the case law relied on by the ld. D.R. in the case of MAK Data (P) Ltd(supra). and Virender K Mehta(supra). The ld. Counsel for the assessee relied upon following decisions :
1. CIT v. Reliance Petroproducts Private Limited (2010) 322 ITR 158(SC)
2. CIT v. Suresh Chandra Mittal (2001) 251 ITR 9(SC)
3. CIT v. Suresh Chandra Mittal (200) 241 ITR 124(MP)
4. UOI v.Rajasthan Spinning and Weaving Mills (2009) 224 CTR1(SC) The learned counsel reiterated the submissions as were made before the authorities below and relied upon the orders of learned CIT(A).
9. In the rejoinder, the ld. D.R. submitted that no addition was made by the Revenue u/s 68 of the Act rather the income is assessed to tax under the head 'Income from other sources' instead of income from long term capital gains which was claimed by the assessee in return of income filed with the Revenue. The assessee has made the claim u/s 54F of the Act which is not sustainable as the assessee never earned income under the head long term capital gains on sale/surrender of sub-tenancy as the said sub-tenancy never existed and in-fact it was the colorable device adopted by the assessee to evade taxes. It was submitted that no evidence whatsoever was produced by the assessee to prove sub-tenancy. It was submitted by learned DR that the assessee has not filed any appeal against the quantum assessment order passed by the AO u/s 143(3) of the Act, which has attained finality. Thus, the ld DR prayed that penalty levied by the AO u/s 271(1)(c) of the Act be confirmed and order of the learned CIT(A) be set aside.
15 ITA 6740/Mum/2012
10. We have considered the rival contentions and perused the material placed on record including the case laws relied upon by both the parties. We have observed that the assessee is partner in a partnership firm M/s Nevron Properties and Estates which is engaged in business of real estate agencies and brokerage. The assessee has declared in the return of income filed with the Revenue , income from long term capital gains of Rs. 1,13,73,000/- received on surrender of sub-tenancy with respect to the portion of the property situated at 66, Off E Moses Road, Lower Parel, Mumbai vide stamped and registered deed of surrender of tenancy dated 12-04-2007 executed by the assessee with new owners of the property M/s. Second Land Developers Private Limited wherein Mr Rajni C. Shah, the original tenant of the property was confirming party . The assessee claimed deduction u/s 54F of the Act on afore-stated long term capital gains earned by the assessee. It is the contention of the assessee that the assessee was sub-tenant in the afore- stated property w.e.f. year 1995 wherein the original tenant of the said property Mr. Rajni C. Shah permitted him orally to occupy and use the office premises situated at afore-stated property to do business together and all costs in relation to the working from the said premises such as telephone, electricity , taxes to BMC etc. were to be paid by said Mr. Rajni C. Shah. On being called upon to prove his sub-tenancy with respect to the afore-stated premises, It was the contention of the assessee that he is not having any contemporary evidences to prove the actual occupation and usage of the said premises by the assessee since the year 1995 when Mr. Rajni C. Shah, original tenant of the said premises purportedly gave him permission and allowed him to occupy and use the said premises till the date of execution and registration of deed of surrender of tenancy on 12-04-2007. Further,it is the submission of the assessee that he did not have any written sub-tenancy agreement with Mr. Rajni C. Shah who was the original tenant of the said premises/property and said Mr. Rajni C Shah orally granted him permission in the year 1995 to occupy and use the afore-stated premises to do business 16 ITA 6740/Mum/2012 together . The assessee could not produce any contemporary evidences such as sub-tenancy agreement executed with Mr Rajni C Shah in the year 1995, telephone bills, electricity bills, proof of payment of taxes to BMC etc to prove his sub-tenancy. The assessee never reflected sub-tenancy in its books of assets in assets nor any expenses were ever claimed with respect of said sub- tenancy towards rent, taxes , electricity etc. The assessee submitted that these contemporary evidences are irrelevant to determine the claim of the assessee of treating the consideration of Rs.1,13,73,000/- received on surrender of tenancy as income from long term capital gains. The assessee submitted that he has executed written, stamped and registered deed of surrender of tenancy on 12-04-2007 in favour of new owners M/s Second Land Developers Private Limited wherein Mr. Rajni C Shah is confirming party and payment of Rs.1,13,73,000/- was made by said new owner M/s. Second Land Developers Private Limited to the assessee as the assessee was in occupation and possession of the said premises and the said M/s Second Land Developers Private Limited wanted immediate vacant possession of the said premises and hence payment of Rs.1,13,73,000/- was made to the assessee by said new owners M/s Second Land Developers Private Limited to vacate the said premises. The AO made enquiries with BEST and BMC , wherein BEST denied that any electricity connection is installed in the said premises in the name of the assessee and BMC denied of having any sub- tenancy registered in the name of the assessee , since the year 1995 till date of execution of deed of surrender of tenancy dated 12-04-2007. The AO recorded statement of Mr. Rajni C. Shah u/s 131 of the Act during assessment proceedings whereby Mr. Rajni C Shah stated on oath that neither he nor his family members have created any sub-tenancy or sub-lease in favour of the assessee and with respect to signing as confirming party of deed of surrender of tenancy dated 12-04-2007 executed by the assessee with M/s Second Land Developers Private Limited , Mr. Rajni C Shah affirmed of signing the said deed dated 12-04-2007 as confirming party but stated that 17 ITA 6740/Mum/2012 he signed several documents without reading the same as voluminous documents were presented before him for signatures. On being confronted about the above enquiries and examinations conducted by the AO, the assessee withdrew his claim of Rs.1,13,73,000/- being consideration received on surrender of sub-tenancy to be treated as income under the head 'income from long term capital gains' and filed revised computation of income before the AO wherein the said amount was declared as 'income from other sources' on surrender of tenancy rights. The assessee earlier made an claim of deduction u/s 54F of the Act of Rs.1,13,73,000/- from income from long term capital gains on surrender of tenancy which was withdrawn as now the income is offered for taxation as 'income from other sources' and obviously deductions u/s 54F of the Act is not available on the income chargeable to tax under the head 'Income from other sources' as per the scheme of the Act. The assessee is a real estate agent and broker being partner in M/s Nevron Properties and Estates which is engaged in the business in estate agencies and brokerage , whereby the assessee also admitted to have handled the deed of sale of the said property whereby the Second Land Developers Private Ltd. purchased the said property from M/s Leach and Weborney. The assessee submitted that he is voluntarily surrendering his afore-stated claim in order to avoid long and protracted litigation with Revenue and in order to buy peace of mind, provided no penalty be levied against the assessee u/s 271(1)(c) of the Act. Thus, in nut-shell the primary onus was on the assessee in quantum proceedings to prove his sub-tenancy which the assessee miserably failed to do so. The AO proceeded to levy penalty u/s 271(1)(c) of the Act while the learned CIT(A) deleted the same for the reasons mentioned in preceding para's of this order which are not repeated here again for the sake of brevity. With the above background now we will proceed further. The assessee is in the business of real estate agency and broker and has also admitted on being confronted and cornered by the Revenue to have handled the deed of sale of the said property whereby the Second Land Developers Private Ltd. purchased 18 ITA 6740/Mum/2012 the afore-stated property situated at 66, Off E Moses Road, Lower Parel, Mumbai from M/s Leach and Weborney. The assessee did not have any contemporary evidence to prove his sub-tenancy which was stated to be granted to him in the year 1995 by Mr. Rajni C. Shah, the original tenant and also agreement of sub-tenancy is stated to be an oral agreement wherein Mr. Rajni C. Shah granted him permission to occupy and use the said office premises since the year 1995 till the year 2007.Thus, the assesee in quantum proceedings failed to discharge primary onus cast upon by him under the Act to prove his sub-tenancy and the claims lodged for treating the consideration received on surrender of tenancy as 'income from long term capital gains'. It is incomprehensive and unbelievable by any standards and yardsticks that the assessee who was allegedly occupying and using the said portion of the premises/property as his office from the year 1995 to 2007 does not have any contemporary evidences to support and demonstrate his alleged continuous occupation/possession of the said premises since 1995 to 2007 including agreement for grant of sub-tenancy and other relevant contemporary evidences to support and prove his sub-tenancy . In-fact the assessee who is an estate broker vide his own admission has stated that he handled the deal of sale of the said property whereby the Second Land Developers Private Ltd. purchased the said property from M/s Leach and Weborney. The said Rajni C. Shah on a statement recorded on oath u/s 131 of the Act denied to have granted himself or by any of his family member any sub-tenancy or sub-lease in favour of the assessee. The assessee never reflected sub-tenancy in its books of assets in assets nor any expenses were ever claimed with respect of said sub-tenancy towards rent, taxes , electricity etc. . The assessee on being cornered and confronted by the Revenue after detailed enquiry and investigation conducted by Revenue, surrendered his claim of treating the receipt of consideration of Rs.1,13,73,000/- on surrender of tenancy from being treated as 'income from long term capital gains' and agreed to now bring to tax the said receipt as income under the head 'income from other 19 ITA 6740/Mum/2012 sources' and also withdrew his claims of deduction u/s 54F of the Act . The assessee did not challenge the assessment framed by the AO u/s 143(3) of the Act in appellate proceedings and accepted the said assessment order passed by the AO which was passed after the assessee withdrew his afore-stated claims. In our considered view based on the facts and circumstances of the case, the assessee was never the sub-tenant of the said premises and the story has been concocted to reduce tax liability wherein the assessee entered into Deed of surrender of the tenancy dated 12-04-2007 as a colorable and sham device to receive the said amount of Rs.1,13,73,000/- as income from surrender of tenancy of the said premises purported and allegedly to be in his occupation and possession in favour of Second Land Developers Private Limited , so that the said amount of alleged consideration can be brought to tax under the head 'Income from long term capital gains' on which the assessee can purportedly claim deduction u/s 54F of the Act. Immediately on being confronted and cornered by the Revenue after detailed enquiry and investigations conducted by the Revenue as set out above wherein the Revenue brought cogent material on record to disprove the story of sub- tenancy set-out by the assessee , the assessee withdrew his claims before the AO as set out by the assessee in return of income filed with the Revenue, while on the other hand the primary onus was on the assessee to bring on record contemporary evidences to prove his sub-tenancy in quantum proceedings with respect to occupation/possession of the said premises which the assessee miserably failed to do us. The primary onus is cast on the Revenue under penalty proceedings u/s 271(1)(c) of the Act to bring on record cogent incriminating material to substantiate that ingredients of Section 271(1)(c) of the Act are fulfilled which in the instant case were duly fulfilled by the Revenue by conducting detailed enquiry and investigations to bring on record cogent incriminating material to disprove the story of sub-tenancy set up by the assessee. Once the primary onus cast on the revenue in penalty proceedings is discharged, the burden shift on the assessee to bring on record 20 ITA 6740/Mum/2012 bonafide explanations to support the claim filed by the assessee in the return of income filed with the Revenue as per mandate of Section 271(1)(c) of the Act read with explanation. The explanation submitted by the assessee to explain the claim filed by the assessee in the return of income with respect to the income earned from long term capital gains on surrender of tenancy and claim of deductions u/s 54F of the Act , were found to be false and the assessee deliberately filed the said wrong claim to reduce his tax liability , which the assessee immediately withdrew on being confronted and cornered by the Revenue. In our considered view based on peculiar facts and circumstances of the case , it was when the assessee was confronted and cornered by the Revenue, the assessee was compelled to come out with withdrawal of his claims filed in return of income which claims were in fact camouflaged by the assessee by way of deed of surrender of tenancy dated 12- 04-2007 to claim long term capital gains and deductions u/s 54F of the Act . The contentions of the assessee that he surrendered the claims as detailed above to avoid long and protracted litigations and to buy peace of mind is wrong and misleading as the assessee surrendered the claims on being cornered and confronted by the Revenue. The ratio of the decision of Hon'ble Supreme Court in the case of MAK Data (P) Ltd.(supra) and decision of Hon'ble Bombay High Court in the case of Virendra K. Mehta v. DCIT(supra) relied upon by the Ld. D.R. are clearly applicable in the case of the assessee as the assessee had camouflaged the real transactions by using colorable and sham devices by way of deed of surrender of tenancy dated 12-04-2007 to reduce tax liability , while the fact of the matter was that the assessee was never ever holding the sub-tenancy of the said premises or so called permission from Mr Rajni C Shah since the year 1995 to occupy and use the said premises and in-fact the said premises was never in occupation/possession of the assessee since the year 1995 till 2007. The claim of the assessee made in the return of income to declare the income as long term capital gain on surrender of tenancy vide registered deed dated 12- 21 ITA 6740/Mum/2012 04-2007 was in-fact wrong claim lodged to reduce the tax liability. The assessee himself withdrew the said claim when cornered and confronted by the Revenue and the contentions of the assessee that he withdrew the claim voluntarily in order to avoid long and protracted litigation with the Revenue and to buy peace of mind are not correct. The assessee has also not challenged the assessment order framed by the Revenue u/s 143(3) of the Act in the appellate forums which was framed after claims as set out by the assesssee in return of income was withdrawn by the assessee after being cornered and confronted by the Revenue.
The Hon'ble Supreme Court in the case of Mak Data Private Limited v. CIT (2013) 358 ITR 593(SC) has observed that voluntary disclosure does not release the assessee from mischief of penal proceedings u/s 271(1)(c) of the Act and the AO shall not be carried away by the plea of the assessee 'like voluntary disclosure' , 'buy peace' , 'avoid litigation' , 'amicable settlement' etc. to explain away its conduct , as under:
"6. We have heard counsel on either side. We fully concur with the view of the High Court that the Tribunal has not properly understood or appreciated the scope of Explanation 1 to Section 271(1)(c) of the Act, which reads as follows :-
"Explanation 1 - Where in respect of any facts material to the computation of the total income of any person under this Act, -
(A) Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false, or
22 ITA 6740/Mum/2012 (B) Such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed."
7. The AO, in our view, shall not be carried away by the plea of the assessee like "voluntary disclosure", "buy peace", "avoid litigation", "amicable settlement", etc. to explain away its conduct. The question is whether the assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income. Explanation to Section 271(1) raises a presumption of concealment, when a difference is noticed by the AO, between reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence. When the initial onus placed by the explanation, has been discharged by him, the onus shifts on the Revenue to show that the amount in question constituted the income and not otherwise.
8. Assessee has only stated that he had surrendered the additional sum of Rs.40,74,000/- with a view to avoid litigation, buy peace and to channelize the energy and resources towards productive work and to make amicable settlement with the income tax department. Statute does not recognize those types of defences under the explanation 1 to Section 271(l)(c) of the Act. It is trite law that the voluntary disclosure does not release the Appellant-assessee from the mischief of penal proceedings.
23 ITA 6740/Mum/2012 The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he had to be absolved from penalty.
9. We are of the view that the surrender of income in this case is not voluntary in the sense that the offer of surrender was made in view of detection made by the AO in the search conducted in the sister concern of the assessee. In that situation, it cannot be said that the surrender of income was voluntary. AO during the course of assessment proceedings has noticed that certain documents comprising of share application forms, bank statements, memorandum of association of companies, affidavits, copies of Income Tax Returns and assessment orders and blank share transfer deeds duly signed, have been impounded in the course of survey proceedings under Section 133A conducted on 16.12.2003, in the case of a sister concern of the assessee. The survey was conducted more than 10 months before the assessee filed its return of income. Had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount which was surrendered later during the course of the assessment proceedings. Consequently, it is clear that the assessee had no intention to declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. The AO, in our view, has recorded a categorical finding that he was satisfied that the assessee had concealed true particulars of income and is liable for penalty proceedings under Section 271 read with Section 274 of the Income Tax Act, 1961.
10. The AO has to satisfy whether the penalty proceedings be initiated or not during the course of the assessment proceedings and the AO is not required to record his satisfaction in a particular manner or reduce it into 24 ITA 6740/Mum/2012 writing. The scope of Section 271(l)(c) has also been elaborately discussed by this Court in Union of India v. Dharmendra Textile Processors [2008] 13 SCC 369 and CIT v. Atul Mohan Bindal[2009] 9 SCC 589.
11. The principle laid down by this Court, in our view, has been correctly followed by the Revenue and we find no illegality in the department initiating penalty proceedings in the instant case. We, therefore, fully agree with the view of the High Court. Hence, the appeal lacks merit and is dismissed. There shall be no order as to costs."
The Hon'ble Bombay High Court in the case of Virender K. Mehta v. DCIT in (2014) 50 taxmann.com 217(Bombay) held on almost similar facts that where assessee claimed that flats shown in return of income was acquired by surrendering his tenancy rights but failed to prove such tenancy rights , penalty levied under section 271(1)(c) of the Act was justified, as under:
"6. After perusing the concurrent orders in this case, we are not impressed by any of these contentions. True, it is that the revenue has to prove that the ingredients or preconditions based on which imposition of penalty is permissible, are present and that is why the penalty is imposed. True, it is that the limited assistance can be derived from the quantum proceeding in such matters but one finds in the facts and circumstances of the present case, that the foundation or basis on which the assessee before us claimed the benefit was highly doubtful and questionable. The Assessing Officer, the Commissioner of Income Tax (Appeals) and the Tribunal all concurrently found that the explanation which was furnished by the assessee falls miserably short of the required standard in that it is not bonafide at all. If the assessee was a tenant of a building 25 ITA 6740/Mum/2012 and which was required to be pulled down and there was, therefore, an arrangement with the landlady of providing two flats, then, that was a version of the assessee which was being tested. The Authorities had indicated and with sufficient clarity that the claim of tenancy is not genuine. The documents in relation to that claim are highly suspicious and the contents thereof cannot be believed. In meeting such a case, the assessee came forward and said that the registered agreement evidenced a genuine tenancy. Therefore, summons was issued to the landlady and in response to which her daughter appeared. She has stated that prior to demolition of the building, there were 5 tenants including one Mr. Sachdeva. That Mr. Sachdeva transferred the tenancy to the assessee before us and without the knowledge of the landlady was the response of the landlady. It is, therefore, rightly held that so long as the list of authorized tenants in the building does not contain the name of the assessee, then, his entering upon the property has to be probed further. This probe and in which the explanation was forwarded that one Mr. Sachdeva, the original tenant surrendered his tenancy rights and rather relinquished the flat in favour of the landlady. Even that version was not found to be genuine. The findings of the Assessing Officer based on the answers given and the replies furnished are reproduced at para-7 of the Tribunal's order. We are of the opinion that the Tribunal rightly held that this was a fit case for imposition of penalty. The entire explanation with regard to the tenancy rights, if surrendered has not been found to be true. Even in penalty proceedings, the assessee was not able to give a satisfactory explanation that the claim made by him in the return of income was bonafide and that he had declared all the material facts for computation of income. It is in these circumstances that the penalty was held to be justified.
26 ITA 6740/Mum/2012 The facts and circumstances of the present case were clearly distinguishable from the judgments and which have been noted by the Tribunal in para-10 of its order.
7. Even the principle relied upon in case of Anantharam must be applied in the backdrop of the facts in each case. The assessee before the Hon'ble Supreme Court was Abkari contractor. The return of income was filed and disclosing a turnover and certain income. That the ingredients of the return was not accepted by the Income Tax Officer. He noticed that there are several deposits and entered in the name of certain shop-keepers. The assessee's explanation was not found to be acceptable and it came to be rejected. The books of account were also rejected. In appeal before the Appellate Assistant Commissioner of Income Tax and before the Appellate Tribunal, the assessee succeeded in getting the assessed income reduced to Rs.1,30,000/- in addition to book profits. That is how in the penalty proceedings, he urged that the penalty proceedings are quasi-criminal in nature. The burden of proof lay on the revenue to establish that the penalty was attracted and that intangible addition represented real income. That is how the Hon'ble Supreme Court reiterated the settled principles that penalty is a result of quasi-criminal proceedings and the want of proof is, therefore, strict and a test different than that of assessment proceedings has to be applied. There is no dispute and no quarrel about this legal principle but whether that has been satisfied or not will have to be decided and determined in the facts and circumstances of each case. We do not find that in this case either of the authorities have deviated from this legal principle or have not invoked and applied it at all. Once the imposition of penalty was justified and after application of the relevant tests 27 ITA 6740/Mum/2012 and there was material to impose such penalty, then, this is not a fit case for entertaining this appeal. The appeal does not give rise to any substantial question of law as the orders of the Tribunal cannot be termed as perverse or vitiated by any error of law apparent on the face of the record. In relation to the Quantum or measure of penalty and which is in the case of section 271(1)(c) read with the explanation (1) the law postulates that in cases referred by clause (c) and (d) in addition to the tax, if any, payable by the assessee, a sum which shall not be less than, but shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefits or the furnishing of inaccurate particulars of such income or fringe benefits, shall be payable by way of penalty. It is that clause which has been applied. We do not think that the reasoning of the Tribunal in this regard and particularly in para-9 of the order under challenge raises any substantial question of law. The appeal cannot be entertained even on that ground. It is accordingly dismissed."
The decision relied upon by the assessee are clearly distinguishable as in the case of CIT v. Reliance Petroproducts Private Limited(supra) , Hon'ble Supreme Court held that where the assessee filed a claim of deduction which did not found favour with the revenue being not sustainable at law , while admittedly no information given in the return of income was found to be incorrect or inaccurate will not make the assessee liable to penalty u/s 271(1)(c) of the Act as merely making an incorrect claim will not tantamount to furnishing of inaccurate particulars , while in the instant case the assessee made a wrong claim in the return of income of having sub-tenancy in the said premises while the fact of the matter in the present case before us is that the assessee did not had any such sub-tenancy in the said property as the 28 ITA 6740/Mum/2012 assessee failed to prove the existence of sub-tenancy and the claim of the assessee was found to be false claim and explanations offered by the assessee were found by the Revenue to be false and clearly explanation1 to Section 271(1)(c) of the Act is hit and the assesse is liable for penalty u/s 271(1)(c) of the Act, Similarly , in the judgment of Hon'ble High Court of Madhya Pradesh in CIT v. Suresh Chandra Mittal(supra) relied upon by the assessee which was also affirmed by the Hon'ble Supreme Court, the assessee surrendered the amount by filing revised return of income after persistent queries from the AO , which revised return of income was regularized by the revenue and where the asseseee contended that he surrendered the amount to buy peace and to come out of vexed litigation with the Revenue, it was held that explanation was bonafide and penalty is not exigible . This case is distinguishable as in this case of CIT v. Suresh Chandra Mittal(Supra) , the revised returns were regularized by the Revenue and also surrender was made on persistent queries by the AO whereas revenue did not discharged its burden of proving that there was concealment of income by the tax-payer in the said case and it rested its conclusion on the act of voluntary surrender by the tax-payer , while in the instant case before us, the Revenue made detailed enquiries and investigations , thereafter cornered and confronted the assessee with cogent incriminating evidences to disprove the existence of sub-tenancy whereby the assessee was compelled to surrender the claims during assessment proceedings which were also not filed vide revised return of income.
The assessee also relied upon the decision of Hon'ble Supreme Court in the case of UOI v. Rajasthan Spinning and Weaving Mills (2009) 224 CTR 1(SC) and in our considered view, the same is in-fact supportive to the decision taken by us to confirm/sustain the penalty in the instant case. In the instant case , there is a reporting of false and wrong facts in the return of income 29 ITA 6740/Mum/2012 filed by the assessee wherein it is claimed that the assessee holds sub- tenancy in the afore-stated property since the year 1995 till 2007 and proceeds received on purported alleged surrender of tenancy were deliberately camouflaged as 'income from long term capital gains' with an intent to claim deduction u/s 54F of the Act to reduce tax liability. The ratio of decision in Rajasthan Spinning and Weaving Mills(Supra) clearly stipulates that penalty is punishment for an act of deliberate deception by the assessee with an intent to evade duty be adopting any of the means mentioned in the section i.e. fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provision of the Central Excise Act or of the rules made there-under . It is also pertinent to mention here that decision in the case of Rajasthan Spinning and Weaving Mills(Supra) was rendered by the Hon'ble Supreme Court in context of Central Excise Act while the proceedings before us are under Income Tax Act,1961.The Hon'ble Supreme Court held in para 23 as under :
"23. The decision in Dharamendra Textile Processors' case (supra) must, therefore, be understood to mean that though the application of section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub- section (2) of section 11A. That is what Dharamendra Textile Processors' case (supra) decides."
Hence , in our considered view keeping in view facts and circumstances of the case and as per our detailed discussions in the preceding para's, penalty levied u/s 271(1)(c) of the Act by the AO needs to be confirmed and the order of the learned CIT(A) is ordered to be set aside. We however are inclined to restrict the penalty levied u/s 271(1)(c) of the Act to the amount computed 30 ITA 6740/Mum/2012 @100% of the tax so evaded by the assessee. We would also like to clarify that we have confined ourselves to the penalty levied with respect to ground arising out of claim of sub-tenancy as set out by the assessee and claim of deduction u/s54F of the Act as per our decision in preceding para's , and other grounds on which penalty was deleted by the learned CIT(A) was not agitated before the Tribunal by the Revenue nor was supported by grounds of appeal filed before the Tribunal and hence we have not adjudicated the same. We order accordingly.
11. In the result, the appeal filed by the Revenue in ITA N0. 6740/Mum/2012 for the assessment year 2008-09 is partly allowed as indicated above.
Order pronounced in the open court on 3rd August, 2016.
आदे श क घोषणा खुले #यायालय म% &दनांकः 03-08-2016 को क गई ।
Sd/- sd/-
(SAKTIJIT DEY) (RAMIT KOCHAR)
JUDICIAL MEMBER ACCOUNTANT MEMBER
मुंबई Mumbai; &दनांक Dated 03-08-2016
[
व.9न.स./ R.K., Ex. Sr. PS
31 ITA 6740/Mum/2012
आदे श क! " त$ल%प अ&े%षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकर आय:
ु त(अपील) / The CIT(A)- concerned, Mumbai
4. आयकर आयु:त / CIT- Concerned, Mumbai
5. =वभागीय 9त9न?ध, आयकर अपील य अ?धकरण, मुंबई / DR, ITAT, Mumbai "D" Bench
6. गाडC फाईल / Guard file.
आदे शानुसार/ BY ORDER, स या=पत 9त //True Copy// उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai