S.H.R. TRADING PVT. LTD. Vs. DCIT
LAWS(IT)-2014-7-12
INCOME TAX APPELLATE TRIBUNAL
Decided on July 02,2014

S.H.R. Trading Pvt. Ltd. Appellant
VERSUS
Dcit Respondents

JUDGEMENT

Rajendra, Member (A) - (1.) CHALLENGING the order dt. 16.01.2013 of the CIT(A) -20, Mumbai, assessee -company has raised following Grounds of Appeal: The learned D.C. has erred in matter of facts as well as law, as under to levy penalty u/s. 271(1)(c). 1. Failed to take cognizance of the fact that necessary particulars is question are duly declared in Return of Income. Under schedule Capital Gain as well as computation of Total Income. 2. HAS not gathered any fresh material to rely upon while deciding to levy the penalty. Penalty proceedings are distinct from proceeding u/s. 143 and are independent of addition and disallowances. 3.FAILED to prove as false the submission vide letter dated 23.04.2012, under section 271(1)(c) of the Income Tax Act, 1961 which has been duly substantiated. 4.FAILED to follow Supreme Court Pronouncement in case of CIT V Reliance Petro Products Ltd. : [2010] 322 ITR 158 (SC), wherein the Apex Court has defined the meaning of term "Particulars". Assessee craves for leave to add, omit or alter grounds of appeal on or before final hearing. Though there are six grounds of appeal, but the effective ground of appeal deals with imposition of penalty for concealment u/s. 271(1)(c) of the Act.
(2.) Assessee -company, engaged in the business of letting out of immovable property filed its return of income on 26.08.2009 declaring income of Rs. 82,17,407/ -. The assessment was completed u/s. 143(3) of the Act by the AO (AO) on 25.10.2011 determining the income of the assessee at 2,02,43,923/. During the Assessment proceedings he found that the assessee had sold immovable property; being Unit No. II admeasuring 1422 sq. ft and one stilt car park No. 75; in Raheja Centre Premise Co -operative Society Limited, Mumbai, the resultant long term capital gain (LTCG) arising out of the said sale was quantified at Rs. 1,21,82,871 against which it claimed exemption u/s. 54 of the entire LTCG having invested 2,63,17,760/ - in acquiring new residential properties. He held that the assessee, being a company, was not entitled to claim deduction u/s. 54/54F of the Act. So, he made rejected the claim made by the assessee. Besides, he also initiated penalty proceedings after issuing a notice, dated, 25.10.2011, u/s. 274 r.w. s. 271(1)(c) of the Act. The assessee was given a further opportunity, vide letter dated 13.04.2012, to explain as to why penalty u/s. 271(1)(c) should not be levied. After considering the reply, dated 23.04.2012, filed by the assessee, AO held that being a company the assessee was not entitled to claim deduction u/s. 54 of the Act, that it had furnished inaccurate particulars and had concealed its income. He levied penalty of Rs. 41,00,754/ -. AO held that the accounts of the assessee company were audited by a Chartered Accountant and in the computation of income it had accounted for the capital gain received by it as income from LTCG duly claiming indexation benefit as provided in the Act for computing the income chargeable under the head 'Capital Gains', that the assessee was fully aware of the provisions of Act, that it was also conversant with the provisions of the Act in respect of taxability of income from capital gain as laid down in Section 48 of the Act, that the assessee had claimed exemption of the LTCG as per Section 54 of the Act even though the provisions of Section 54 were applicable only to an individual or a HUF, that the assessee had furnished inaccurate particulars of its income by claiming exemption amounting to Rs. 1,21,82,871 u/s. 54, when in fact it was not eligible to do so as per the provisions of the Act, it was not a case of merely making a claim which was not sustainable in law but was clearly a case of making an ineligible claim after due application of mind, that the decision of Reliance Petro Products Private Limited was not applicable, that it had furnished inaccurate particulars of its income by claiming deduction of Rs. 1.21 Crores from its income under capital gains. Finally, he levied penalty of Rs. 41,00,754/ - u/s. 271(1)(c) of the Act.
(3.) In the appellate proceedings, First appellate Authority (FAA) held that it was not the case where simple disallowance had been made, that it was a case where taxable income had been suppressed by way of patently wrong claim of deduction u/s. 54 knowing well that it was a company not entitled for any such deduction, that in the case of Reliance petro Products Ltd. it was specifically mentioned that everything depended upon return of income, that in the case under consideration the assessee had suppressed the taxable income in the return of income, that the decisions relied upon by the assessee i.e. Atul Mohan Bindal ( : 317 ITR 1) and Reliance petro Products Pvt. Ltd. ( : 322 ITR 158) were not applicable to the facts of the case. He relied upon the cases of Balakrishna Textiles ( : 193 ITR 361), Nagin Chand Shiv Sahai ( : 6 ITR 534), Vidya Sagar Oswal ( : 108 ITR 861), Hoshiarpur Express Transport Co. Ltd. ( : 162 ITR 393), Electrical Agencies Corporation ( : 253 ITR 619), Dharmendra Textile Processors & Others ( : 306 ITR 277), M V. Valliappan ( : 170 ITR 238), K.R. Hoganathan (174 ITR 658), Smt. Nayantara G. Agrawal ( : 207 ITR 639).;


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