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C.P. Kukreja Associates Pvt. Ltd. Versus Asstt. Commissioner of Income Tax, Circle : 3 (1) , New Delhi

2017 (12) TMI 415 - ITAT DELHI

Penalty u/s 271(1)(c) - non-declaration of the rental income from property at Gurgaon, offering an amount of ₹ 74,789/- as rental income from the property at Ghaziabad and non-disallowance made under section 14A - Held that:- The assessee submitted that TDS certificate for Gurgaon property was issued consolidatedly for two years by the tenant and that also contributed to the offering of rental income on receipt basis. In support the assessee has filed copies of payment advices, consolidate .....

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s of section 271(1)(c). - So far as rental income in respect of Kaushambhi (Ghaziabad) property is concerned, the explanation of the assessee remained that rental income for the month of March, 2008 was credited to the profit and loss account for the year ended on 31.03.2009 and was offered to tax in assessment year 2009-10. We thus find that the assessee was able to explain the non-disclosure of rental income in respect of the above property during the year and it cannot be said that it was .....

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s of income to attract the penal provisions of section 271(1)(c) of the Act. The Assessing Officer is thus directed to delete the penalty in this regard as well. - Decided in favour of assessee. - I. T. Appeal No. 2224/Del/2012 - Dated:- 28-7-2017 - SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI L. P. SAHU, ACCOUNTANT MEMBER For The Assessee : Dr. Rakesh Gupta; Adv. For The Department : Shri Anil Kumar Sharma, Sr. D. R ORDER. PER I. C. SUDHIR, J. M. : The assessee has questioned first appellate ord .....

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ly and arbitrarily. The impugned penalty order is bad in law, unjustified and against facts and record of the case. 2. Heard and considered the arguments advanced by the parties in view of orders of the authorities below, material available on record and the decisions relied upon. 3. The relevant facts are that the assessee company engaged in the business of professional activities of architects and engineering, had declared its income of ₹ 5,02,84,793/- in its return of income during the .....

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iabad and rental income from property at Gurgaon was not disclosed by the assessee company. Show cause notice was issued to the assessee to explain the reasons for not disclosing the rental income from its property at Gurgaon. In response the assessee company offered the rental income from the property at Gurgaon amounting to ₹ 25,20,000/- for taxation. The assessee company further offered an amount of ₹ 74,789/- as rental income from the property at Ghaziabad, which was not offered .....

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with the explanation of the assessee, the Assessing Officer has levied penalty of ₹ 9,07,790/- on the addition of ₹ 26,70,763/- on account of furnishing inaccurate particulars of the income. The ld. CIT (Appeals) has also upheld the same. The assessee has questioned actions of the authorities below in imposing and upholding the penalty in question. 3.1 In support of the grounds, the ld. AR, Dr. Rakesh Gupta, Advocate, submitted that the assessee is a company of architects dealing wi .....

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assessment was made on 3.12.2010. The ld. AR submitted that the said income was already returned, but in assessment year 2009- 10 and there was no concealment as such or any attempt to avoid tax as sought to be portrayed by the Assessing Officer in the impugned assessment order. He placed reliance on page Nos. 9 to 12 of the paper book, which is copy of original return for assessment year 2009-10 filed on 30.09.2009 showing the rental income from Gurgaon property being part of business income a .....

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shows [at page 22 of the paper book] cash method of accounting and since rent was shown as business income, the income was offered on the basis of cash method of accounting only. The ld. AR placed reliance on page No. 43 of the paper book, which is copy of letter to the Assessing Officer which shows that the rent of Gurgaon property was received on 16.06.2008 [Page Nos. 65 & 66 of the paper book] i.e. in assessment year 2009-10 and therefore, as per cash method of accounting it was offered .....

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nalty proceedings. 3.2 The ld. AR also placed reliance on page Nos. 65 to 72 of the paper book, which are the submissions before the ld. CIT (Appeals) submitting, inter alia, that TDS certificate for Gurgaon property was issued consolidatedly for two years by the tenant and that also contributed to the offering of rental income on receipt basis. Page No. 69 of the paper book shows that the rent from Gurgaon property was received in assessment year 2009-10 and Page Nos. 70 & 71 are the copies .....

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that the Assessing Officer assessed income at ₹ 3,66,919/- as against ₹ 3,34,127/- offered for taxation by the assessee company. He further submitted that the rental income for the month of March, 2008 has been credited to Profit and Loss account for the year ended 31st March, 2009 and offered to tax in assessment year 2009-10. 3.4 Other component for which penalty was levied was disallowance under section 14A. Reliance was placed on the decision of Hon ble Supreme Court in the case .....

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. 380 of 2015 dated 23.11.2015 [High Court of Karnataka at Bengaluru]; (iii) CIT Vs. M/s. SSA S EMERALDS MEADOWS SLP to Appeal [CC No.11485/2016] dated 5.08.2016; (iv) CIT Vs. M/s. Vishnu Industrial Gases P. Ltd. ITR No. 229/1988 dated 6.05.2008 [Delhi High Court]; (v) CIT & Anr. Vs. Dinesh Kumar Goel (2011) 331 ITR 10 (Del.); (vi) CIT Vs. Vee Gee Industrial Enterprises In Income Tax Appeal No. 187 of 2014 dated 28.07.2015 [Punjab & Haryana High Court]; (vii) Sri Nilaya AR Projects Vs. I .....

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ng gone through the orders of the authorities below, we find that the penalty under section 271(1)(c) at ₹ 9,07,790/- on the addition of ₹ 26,70,763/- on account of furnishing inaccurate particulars of the income regarding non-declaration of the rental income from property at Gurgaon, offering an amount of ₹ 74,789/- as rental income from the property at Ghaziabad and non-disallowance made under section 14A of the Act. During the course of assessment proceedings, when the above .....

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planation of the assessee and while making total addition of ₹ 26,70,763/- on the above accounts, levied penalty under section 271(1)(c) of the Act at ₹ 9,07,790/- on the above addition. The ld. CIT (Appeals) has upheld the same. The authorities below have justified the levy of penalty mainly on the basis that had it not been pointed out to the assessee that the above rental income had remained to be offered for taxation and the assessee had not made any disallowance under section 14 .....

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rofession, it follows cash system of accounting since last 15 years. Rental income was treated as business income and was also offered for tax basis. Therefore, the rental income in respect of Gurgaon property, which was leased during the year itself on 13.11.2007 was offered on receipt basis in assessment year 2009-10 for which return of income was filed on 30.09.2009 i.e. much before the impugned issue was raised by the Assessing Officer. It was submitted that present assessment was made on 3. .....

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Gurgaon from the computation from assessment year 2009-10 after the issue was raised by the Assessing Officer in the assessment year 2008-09. Copy of the assessment order for assessment year 2009-10 was also filed with the copy of return, audit report and balance sheet showing that cash method of accounting was followed and since rent was shown as business income, the income was offered on the basis of cash method of accounting only. It was submitted that the rent of Gurgaon property was receive .....

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and that also contributed to the offering of rental income on receipt basis. In support the assessee has filed copies of payment advices, consolidated TDS certificate showing amount after 31.03.2008, ledger of rent received for assessment years 2008-09 and 2009-10. We thus find that the assessee has been able to offer bona fide reasons for not disclosing the rental income from its property at Gurgaon and thus in absence of positive evidence beyond doubt regarding furnishing of inaccurate particu .....

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