Decided on February 16,1994



T.V.K. Natarajachandran, Accountant Member - (1.) THIS is an appeal by the assessee which is directed against the order of the CIT (Appeals) dated 16-12-1988 wherein penalty of Rs. 4,950 levied by the Assessing Officer under Section 273(2)(a) of the Income-tax Act, 1961 was confirmed. The assessee has raised several grounds to urge that the CIT (Appeals) was not justified in confirming the penalty and the penalty levied should be cancelled.
(2.) The assessee is a limited company and earns income from property and business. The assessment year involved is 1980-81. In order to giving proper focus to the issue involved in this appeal, it is considered necessary to refer to the assessment proceedings which highlight the relevant facts which are required to be taken into account in deciding the appeal. The assessee-company owned a property at Juhu known as Ruia House. It is situated at a plot of land measuring 18,936 sq. yds. The property has a guest house, swimming pool and own arrangement for water supply. It was given on rent of Rs. 5,000 per annum to Shri Radhakrishna Ramnarain Ruia, HUF who is having controlling interest in the assessee-company. It appears that in the previous year relevant for the assessment year 1980-81, the assessee commenced business of letting out this property for commercial purposes by giving on hire to various parties for film shooting. The assessee declared miscellaneous receipts of Rs. 1,23,813, in addition to the rent of Rs. 5,000 and also claimed repairs and maintenance expenses of Rs. 1,71,521. In other words, against the miscellaneous receipts styled as business receipts, expenses were also claimed which were higher than the miscellaneous receipts. In other words, the assessee has sustained loss in respect of the alleged business. It would appear that the Assessing Officer came to the conclusion that the expenses claimed by the assessee were capital expenditure incurred on renovation and modernisation of the building with a view to make it more attractive and more comfortable for the purpose of shooting of films. In short, the claim of current repairs put forth by the assessee was rejected as capital expenditure and which could not be allowed as a deduction while computing income from house property. It also appears that the Tribunal vide its order dated 27-9-1985 relating to the assessment years 1980-81 and 1981-82 in ITA Nos. 1456 & 1457/ Bom. /85 held that the expenditure on repairs and renovation of property could not be allowed as a deduction under the head 'property' and only that expenditure relating to the film shooting could be allowed as a deduction. The issue was restored to the Assessing Authority and ultimately, the Tribunal by its order dated 26-2-1991 in ITA Nos. 758 & 773 (Bom.)/87 held that the assessee had no legal right reserved for using Ruia House for the purpose of film shooting and the expenditure incurred did not relate to film shooting and, therefore, the assessee was not entitled to have deduction for film production.
(3.) IN view of the aforesaid background, we shall consider the relevant facts applicable to penalty. The assessee filed estimate of advance tax in form No. 29 on 11 -9-1979 estimating the advance tax payable at Rs. 3,494 and paid installment of Rs. 1,165 on 14-9-1979. Loss return was filed and revised at Rs. 1,01,666. However, the Assessing Officer has determined the income at Rs. 85,090. From these facts, the Assessing Officer concluded that the assessee had filed estimate of advance tax which it knew or had reason to oelieve it to be untrue. Therefore, after observing due process of law, i.e imposed penalty of Rs. 4,950 under Section 273(2)(a) of the Act.;

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