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2016 (7) TMI 566 - ITAT MUMBAI

2016 (7) TMI 566 - ITAT MUMBAI - TMI - Penalty under section 271(1)(c) - disallowances under section 40(a)(ia) and Addition of Rent receipts - Held that:- Both on facts and in law, the assessee, by its explanation and conduct, has not been able to discharge the burden that lay upon it under Explanation 1 to section 271(1)(c) of the Act. In this factual and legal view of the matter, we are of the considered opinion that the penalty levied under section 271(1)(c) of the Act in the impugned order b .....

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9;the Act'). 2. The facts of the case, briefly, are as under: - 2.1 The assessee, a company engaged in management and maintenance of real estate, filed its return of income for A.Y. 2007-08 on 27.10.2007 declaring loss of ₹ 1,00,40,853/-. The return was processed under section 143(1) of the Act and the case was subsequently taken up for scrutiny. The assessment was completed under section 143(3) of the Act vide order dated 27.11.2009, wherein the assessee s loss was determined at ͅ .....

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tion in respect of rent receipts has been upheld only to the extent of ₹ 1,49,500/- out of ₹ 4,34,123/- added by the Assessing Officer (AO). The AO issued the assessee a show cause notice on 24.02.2010 as to why penalty under section 271(1)(c) of the Act be not levied in its case in respect of the aforesaid two additions/disallowances (supra). The explanation put forth by the assessee with respect to the disallowance under section 40(a)(ia) was that due to lack of proper staff and co .....

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ssessment year. The AO rejected the aforesaid explanations put forth by the assessee and observing that these matters came to light only after enquiries made in the course of assessment proceedings, proceeded to hold that the assessee had furnished inaccurate particulars leading to concealment of income within the meaning of section 271(1)(c) of the Act and levied penalty of ₹ 22,23,643/- under section 271(1)(c) of the Act. 2.3 Aggrieved by the order levying penalty of ₹ 22,23,643/- .....

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he order of the CIT(A)-19, Mumbai dated 15.06.2011, the assessee has preferred this appeal before the Tribunal raising the following grounds: - (I) PENALTY ON DISALLOWANCE OF ₹ 61,72,064/- OUT OF RENT U/S. 40(a)(ia) - (1) The learned CIT(A) - 19, Mumbai [referred as CIT(A) ] erred in confirming penalty on disallowance out of rent u/s. 40(a)(ia) of the Act disregarding the fact that there was no concealment of any income or particulars within the meaning of section 271(1)(c) read with Expla .....

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under the provisions of section 40(a)(ia) of the Act and that the bonafide explanation was already given. (4) On the facts and circumstances and in view of the bonafide and genuine explanation, Your Appellant prays that the penalty levied on the disallowance under the provisions of section 40(a)(ia) of the Act may be cancelled. (II) PENALTY ON ADDITION ON A/C. OF RENT RECEIPTS OF ₹ 1,49,500- (1) The learned CIT(A) erred in confirming penalty on the addition of ₹ 1,49,500/- on a/c. Of .....

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, alter and/or amend any of the above grounds of appeal. 4. This appeal was fixed for hearing on a number of occasions, but none was present for the assessee on any of the dates when the appeal/ case was called. On the dates when the Bench did not function, the case was adjourned by display of the next date of hearing on the Notice Board. It is a matter of record that even when the notice for hearing was sent to the assessee by RPAD, still none was present for the assessee at the hearings. Even .....

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rned CIT(A) upholding the levy of penalty under section 271(1)(c) of the Act, in the case on hand, on the issues of (i) Disallowance under section 40(a)(ia) of ₹ 61,72,064/- and (ii) Addition of Rent receipts and perused and carefully considered the material on record. We find that the learned CIT(A) in the impugned order has dealt with these issues at paras 5 to 7 thereof as under: - 5. The appellant is engaged in the business of management and maintenance of real estate. Notice under s. .....

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that appellant had themselves added back a sum of ₹ 11,05,793/- on account of TDS not deducted and paid. It was further clarified before the A.O. that the assessee had already calculated TDS amount of ₹ 11,39,300/- and interest of ₹ 4,23,203/- and the same was paid on 24.12.2009. Hence it was requested that penalty may not be imposed since assessee was facing genuine difficulties due to lack of competent staff and that there was no intention to hide anything. As regard addition .....

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ed, the matter came to light only after enquiries made by A.O. and that as regards the addition with respect to rent receipts, the assessee ought to have returned the rental income in the current year as they pertain to the current year. Therefore, holding that assessee had furnished inaccurate particulars leading to concealment of income within the meaning of s. 271(1)( c) of the Act, A.O. imposed penalty of ₹ 22,23,643/-. 6. It is reiterated by the Authorized Representative that it was d .....

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tion to the extent of ₹ 1,49,500/- only has been confirmed and that additions of ₹ 41,323/- and ₹ 2,43,600/- have been deleted since the same were seen booked in the accounts. As regard receipts of ₹ 1,49,500/- it is submitted that the same were received only in the subsequent year and hence not included with the current rent receipts. It is contended that penalty is not imposable since the assessee had disclosed all the facts for computation of income. It is also added t .....

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TR 244. In this case, penalty has been imposed for the reason of making deduction of tax from payments but not remitting them within the stipulated time, and for not offering rental receipt to tax. The explanation is that the same had occurred due to inadvertent error since staff were incompetent. The said explanation is not an acceptable explanation for the reason that if the staff knew that tax had to be deducted at source from certain payments, then it is difficult to believe that they were i .....

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icult to believe that assessee company did not know the provisions of the Act. The assessee is not an ordinary layman but a company incorporated under the Companies Act and its accounts are also subject to Audit. This is not a case where claims made by the assessee company had been disallowed under the law by rejecting a probable view, but a case where there has been clear disregard of the unambiguous provisions of Law. This is not a case where two views are possible on a provision of Law. The p .....

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