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2016 (7) TMI 701 - ITAT MUMBAI

2016 (7) TMI 701 - ITAT MUMBAI - TMI - Penalty u/s. 271 (1)(c) - whether amount received by the assessee from two parties for surrendering its rights in a property,taxable u/s. 55 (2)(a)? - Held that:- It is not the case of the AO that the stand taken by the assessee was totally against the provisions of the Act or that prima facie it was inadmissible. Maximum it could be said that there was difference of opinion. Thus, the claim made by the assessee was a legally plausible claim. It is a differ .....

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dered to be bonafide. Considering the peculiar facts and circumstances of the case, we are of the opinion that the order of the FAA does not suffer from any legal infirmity. The cases, relied upon by the AR, also endorse the view taken by the FAA. So, confirming his order, we decide the effective ground of appeal in favour of the assessee - I.T.A. 2383/Mum/2014 - Dated:- 15-7-2016 - Sh. Rajendra, Accountant Member & Pawan Singh, Judicial Member For the Revenue : Ms. Radha Katyal Narang-DR Fo .....

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n 31/12/2009, u/s. 143 (3) of the Act, determining the income of the assessee at ₹ 3. 81 Crores. During the assessment proceedings, the AO found that assessee had received a sum of ₹ 4. 55 Crores from Pyramid retail Ltd and ₹ 5 lakhs from Maneck Dawer for surrendering rights offer premises situated at MM Estate, that the premises was owned by a Trust, that it had leased the premises to Moonshot Investment Corporation who entered sublet the premises to the assessee by agreement .....

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n (LTCG). He also initiated penalty proceedings u/s. 271(1)(c). The assessee agitated the issue before the First Appellate Authority (FAA), who dismiss the appeal filed by it. The AO gave one more opportunity to the assessee by issue a notice on 05/02/2013 and asked it as to why penalty should not levied. As per the AO, the assessee filed it an explanation and same was placed on record. After considering the submission of the assessee, the AO held that the issue had been upheld by the FAA, that .....

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faction of the AO, the assessee had acted in good faith, that it had disclosed the facts relating to the transaction in the return of income claiming the same was not taxable based on legal advice also relying on decisions of the High Court and the Tribunal, that the assessee s case was not of surrender of tenancy, that it was never a tenant-it was a mere licence holder, that the case was not covered by the provisions of section 55 (2), that the note was appended to the competition of income fil .....

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ed with concealment, that the explanation of the assessee for the purpose of evidence of penalty must be an acceptable explanation, that it should not be a fantastic or fanciful one. Referring to the case of Pfizer Ltd(19taxmanm. com75), he held that if the assessee entertained bona fide belief that the amount in question was not chargeable to tax and a disclosure was made penalty u/s. 271(1)(c) should not levied. He further observed that the assessee had placed all the material before the AO an .....

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ona fide belief on the basis of expert opinion given by a Supreme Court advocate, that a note was appended to the return of income, that it could not be said that assessee had not provided all the material facts for computing the income, that it could not also be said that the assessee could not have entertained the bona fide belief that the said sum was not exigible to tax. Relying upon the judgment of Reliance Petroproducts Pvt. Ltd. , he deleted the penalty imposed by the AO. 4. Before us, th .....

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s made on a bona fide belief, that provisions of sec. 55(2)(a) of the act were not applicable, that it was not a case of tenancy by it was a matter of transfer of rights, that it was a debatable issue, that rejection of a legal claim would not result in automatic levy of concealment penalty. He relied upon the cases of Reliance Petroproducts Pvt. Ltd. (322 ITR 158); S. M. Constructions (233 taxman 263);Petals Engineers (P) Ltd. (264 CTR 577);Nalin P. Shah (ITXA(LOD)49 of 2013; Administrator of t .....

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l -an advocate of the Apex Court, that the AO held that amount received by the assessee was taxable u/s. 55 (2)(a)of the Act, that the FAA and the Tribunal upheld the addition made by the assessee in quantum appeals, that the AO initiated penalty proceedings u/s. 271(1)(c) of the Act, that the assessee had filed explanation before him during the penalty proceedings. We observe that the AO mentions that the assessee had filed submissions for not levying penalty, but what was the explanation has n .....

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s is a precondition for imposing concealment penalty. We find that said pre-requisite is missing in the present case. No judicial authority is required to be cited to hold that assessment and penalty proceedings are different and conclusion drawn during assessment may be relevant but not binding for levying penalty u/s. 271(1)(c) of the Act. The purpose of assessment is to determine the amount of due taxes from an assessee, but penalty proceedings are initiated to compensate the State of revenue .....

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