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TMI Blog2018 (1) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... be set aside on this ground. 2. The CIT(A) has erred in upholding the penalty imposed by the assessing officer on addition of Rs. 4,00,000/- made to the income of the assessee merely on the basis of excess tax withheld by the party M/s Siddhivinayak construction co. 3. The CIT(A) has erred in upholding the penalty imposed by the assessing officer on addition of Rs. 4,44,382/- made to the income of the assessee on account of house property which was used by the assessee for storing of goods essential for its business. 4. The CIT(A) has erred in holding that the explanation of the assessee are not bonafide and inconsistent." 2. Briefly stated, the facts of the case are that the assessee firm which is engaged in the business of a contractor had filed its return of income for A.Y. 2006-07 on 15.12.2008, declaring an income of Rs. 55,22,750/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. The case of the assessee was thereafter taken up for scrutiny assessment under Sec. 143(2). 3. That during the course of the assessment proceedings the A.O observed that the assessee had shown certain immovable properties as an investment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o have recognized the income at the time when the bill of Rs. 4 lac was raised on the client and the non-recovery of the amount could only have been routed through the books of account by subsequently raising a claim of bad debt. Thus, the A.O on the basis of his aforesaid observations made an addition of Rs. 4 lac in the hands of the assessee. 7. Aggrieved, the assessee carried the order of the A.O in appeal before the CIT(A). The CIT(A) after deliberating on the facts of the case did not find favour with the contentions of the assessee and vide his order dated 21.10.2010 dismissed the appeal. The assessee did not assail the order of the CIT(A) before the Tribunal, which thus attained finality. 8. The A.O called upon the assessee to show cause as to why penalty under Sec. 271(1)(c) may not be imposed in respect of the aforesaid additions made in its hands, viz. (i). addition under the head income from house property: Rs. 4,44,382/-; and (ii). addition towards suppressed contract receipts : Rs. 4,00,000/-. The explanation offered by the assessee did not find favour with the A.O, who after deliberating on the facts concluded that as the assessee had failed to substantiate the bona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the aforesaid client, viz. M/s Sidhivinayak Construction, therefore, no suppression of the contract receipts could be inferred. The ld. A.R in order to drive home her contention that in the absence of receipt of the amount of Rs. 4 lac from the aforesaid client, viz. M/s Sidhivinayak Construction, the same could not have been assessed as the income of the assessee relied on the judgment of the Hon'ble High Court of Kerala in the case of Karn Vir Mehta Vs. Collector of Customs, Cochin (1998) 97 E.L.T 42 (Ker). 11. That as regards the addition of Rs. 4,44,382/- made by the A.O under the head 'Income from house property', it was submitted by the ld. A.R that as the Shop nos. 3,4,5,6 and 7 were not in possession of the assessee due to dispute between the builder and the society, therefore, no income was offered for the same under the head 'house property'. That as regards the Flat Nos. 502 and 203 at Kent Estate, it was submitted by the assessee that as both of the properties were being exploited by the assessee for its business purposes, therefore, the issue of determining the annual lettable value under Sec. 22 of the Act did not arise at all. The ld. A.R in support of her conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... framing the assessment, being of the view that the properties were held by the assessee as investment, had thus made an addition of their respective ALV in the hands of the assessee. We find that the assessee had assailed the determining of the ALV of the Shop Nos. 3,4,5, 6 & 7 in God's Gift Cooperative Housing Society, for the reason that now when it was not put into exclusive possession of the said respective shops, therefore, the ALV of the same could not be brought to tax in its hands. We have perused the letter dated 01.09.2006 addressed by the society, viz. God's Gift Cooperative Housing Society to the assessee, wherein the society had declined to enrol the assessee as a member of the society in respect of the Shop nos. 3 to 7. We are of the considered view that the fact that the assessee was not put into exclusive possession of the aforesaid shops can safely be gathered from the aforesaid correspondence of the society with the assessee. We find that the Hon'ble High Court of Gujarat in the case of Commissioner of Income-tax vs. Gaekwad & Co. (2005) 277 ITR 553 (Gujarat) had held that if an assessee is not in a position to exercise his right as owner of the property purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts and circumstances are equally consistent with the hypothesis that the amount does not represent concealed income as with the hypothesis that it does. If the assessee gives an explanation which is unproved but not disproved, i.e. it is not accepted but circumstances do not lead to the reasonable and positive inference that the assessee's case is false. The view taken by the Tribunal is a reasonable and possible view. The appeal is without any substance. The same is dismissed in limine with no order as to costs." We thus being of the considered view that the claim of the assessee that it was using the Flats No. 203 and 502 for its business purposes had not been disproved, therefore, no penalty under Sec. 271(1)(c) on the said count could have been validly imposed in its hands on the said count. We thus in the backdrop of our aforesaid observations delete the penalty imposed by the A.O and sustained by the CIT(A) as regards the addition of Rs. 4,44,382/- made in the hands of the assessee. The Ground of appeal No. 3 is allowed. 13. We shall now take up the penalty imposed under Sec. 271(1)(c) in the hands of the assessee as regards the suppressed contract receipts of Rs. 4 l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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