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2016 (9) TMI 379 - ITAT MUMBAI

2016 (9) TMI 379 - ITAT MUMBAI - TMI - Penalty u/s 271(1)( c) - declaring the income from letting out of the office premises with various facilities under the head “Business Income” which was declared under the head “Income from House Property” in the return filed in the re-assessment proceedings u/s 148 of the Act and assessed accordingly - Held that:- The assessee has fully disclosed all the particulars of income in the return of income filed which can not be termed as inaccurate particulars b .....

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rant Investments (P)Ltd (2005 (12) TMI 458 - ITAT MUMBAI ) held that where the full and complete discloser is made by the assessee, and if the income returned by the assessee under a particular head so assessed by the AO under another head of income, penalty is not imposable under section 271(1)( c) of the Act. - Decided in favour of assessee - I.T.A. No.1639 and 1640/Mum/2015 - Dated:- 26-7-2016 - SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR,(AM) For The Appellant : Shri Dinesh Shah For The Respo .....

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for the assessment year 2006-07 3. Only issue raised in the grounds of appeal is against the penalty of ₹ 81,190/-levied by the AO and confirmed by the ld.CIT(A) under section 271(1)( c) of the Act for declaring the income from letting out of the office premises with various facilities under the head Business Income which was declared under the head Income from House Property in the return filed in the re-assessment proceedings u/s 148 of the Act and assessed accordingly. 4. Facts of the c .....

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AO noticed that the assessee credited rental income amounting to ₹ 8,21,124/- from letting out office premises in the profit and loss account and also claimed expenses to the tune of ₹ 6,98,439/-. In the assessment year 2008-09, the similar income from rental of premises was assessed under the head Income from House Property and the assessee accepted the action of the AO by not filing appeal before the first appellate authority. The AO reopened the assessment for the current year i.e .....

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.s.274 of the Act for furnishing inaccurate particulars of income. The AO issued show cause notice under section 271(1)( c) of the Act to the assessee calling it to explain as to why the penalty should not be imposed upon it for furnishing inaccurate particulars of income and concealment of income. Before the AO, the assessee submitted that it had fully disclosed all the material facts in the return of income. It submitted that mere showing the income under the wrong head i.e. Income from Busine .....

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: 3. Decision After careful perusal of the assessment order and written submissions of the A/R of the appellant it has been observed that in the return of income filed on 20.11.2006 the income was declared under the head profit and gain of business and professions. It is only when the case of the appellant company for A.Y. 2008-09 was taken up for scrutiny it was detected by the AO that the income declared is in fact rental income which should have been declared under the head income from house .....

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posal and despite this fact the rental income from let out the property has been declared under the head profits and gains from business and professions and deduction of expenses were claimed and further the carry forward business loss was also adjusted. It has been further stated by the AO that if the reassessment proceedings had not been initiated by issue of notice u/ s 148 the appellant would have been successful in evading incidence of tax on the income earned by it during the instant asses .....

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al return was the correct return of income and it is only to avoid long drawn litigation the revised return was filed on the advice of tax expert by declaring rental income as income from house property. It has been further stated by him that the case laws relied upon by the AO are not applicable to the facts of the case. He has claimed certain expenses which according to him or to have been allowed and these should be allowed for the purpose of penalty. The A/R of the appellant has not been abl .....

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y the A/R of the appellant are distinguishable on facts and the judgment of the Hon'ble Supreme Court in the case MAK Data (P) Ltd. It has been held by the Hon'ble Supreme Court as under:- "Voluntary disclosure does not release assessee from mischief of penal proceedings under section 271(1)(c) In terms of section 271(1)(c), Assessing Officer has to satisfy whether penalty proceedings be initiated or not during course of assessment proceedings and Assessing Officer is not required t .....

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llant on the above said judgment as it is squarely applicable to the facts of the case because the appellant had filed revised return only after the detection by the AO. Hence the grounds of appeal is dismissed 5. The ld. AR vehemently submitted before us that the assessee had fully disclosed all the material facts regarding rental income earned from letting out of office premises in the return of income filed originally and thus did not conceal or file any inaccurate particulars. The ld. AR fur .....

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with same particulars of income. The ld.counsel also submitted that in the assessment year 2008-09, the income was assessed by the AO under the head income from house property and the assessee did not file any appeal against the decision of the AO and thus reached finality. The assessee following the same parameter returned the income under the head Income from House Property in the return of income filed to the response to notice u/s 148 of the Act issued by the AO in order to avoid protected l .....

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ision of the Hon ble Delhi High Court in the case of Commissioner of Income-tax Bacardi Martini India Ltd.(2007) 288 ITR 0585 (Del) in support of his argument. Finally, the ld. AR prayed that in view of the ratio laid down in the above decision, penalty levied by the AO and confirmed by the ld.CIT(A) was against the spirit of law and be deleted by allowing the appeal of the assessee. On the contrary, the ld. DR strongly opposed the arguments of the ld.AR by stating that the assessee had willfull .....

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y the ld AR of the assessee. We find that the assessee has shown income from rent of office premises under the head business and profession and also claimed expenses against that income calculating the income from business ₹ 1,44,562/- and after adjustment of brought forward losses from assessment years 2004-05 of ₹ 63,500 , the returned income came to ₹ 81,062/-. The assessee s income from rent of office premises for assessment year 2008-09 was assessed under the head income f .....

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stion before us, whether the assessee s treatment of income from business in the original return amounted to filing inaccurate particulars of income and liable for penalty u/s 271(1)(c). In our opinion, the assessee has fully disclosed all the particulars of income in the return of income filed which can not be termed as inaccurate particulars by the assessee for the income. We are of the considered views that it could not be construed as filing of inaccurate particulars of income. In the case o .....

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e the Assessing Officer is duty bound to calculate correct total income in accordance with law, which may be different than the total income calculated by the assessee. Mere fact that the Assessing Officer while discharging his duty is recalculating the total income in accordance with law which is not the same as calculated by the assessee, it cannot be held that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income or there is a deemed conce .....

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