2024 (8) TMI 224 - AT - Income Tax

Determination of rental income - assessee is owner of 50% of the house property in Singapore jointly with his wife - assessee, who is residing in Singapore, has become a resident and ordinarily resident during AY 2014-15 and AY 2015-16 and thereby offered his global income to tax in India - For AY 2014-15 the assessee has erroneously offered 100% of the rental income from the Singapore property instead of 50% but during the year under consideration the assessee has realized the error and in the original return of income offered only 50% of the rental income and filled revised return - HELD THAT - We notice that the AO has accepted the additional income offered as per the revised return while completing the assessment under section 143(3) and the CIT(A) upheld the order of AO. In other words, the lower authorities have accepted the income as offered by the assessee in the revised return of income without making any other additions. Therefore when the assessee himself has offered the above two incomes in the revised return, we are unable to appreciate in what way the assessee is aggrieved by the orders of the lower authorities. Further on perusal of the grounds of appeal raised by the assessee we notice that no specific contention is raised on the grievance caused by the orders of the lower authorities. Accordingly we dismiss the various grounds raised by the assessee as not tenable. Assessee raised additional ground stating that only 50% of the rental income is assessable in his hands since the House Property is jointly owned by him along with his wife. The assessee also submitted additional evidences in this regard. However during the course of hearing the ld AR did not press for admission of the additional ground and the evidences submitted. Accordingly the additional ground and additional evidences are not admitted for adjudication - Appeal dismissed. Penalty levied u/s 271(1)(c) - The assessee is a Singapore citizen and is assessed to tax there. The assessee claims that assessment year in Singapore is different (calendar year) and therefore there is a time lag in getting the correct details of his Singapore income. Accordingly, to file the return of income in time, the assessee has filed the original return with the details best available at that point in time. This is substantiated by the fact that the assessee has declared excess salary income and that in the revised return rectified the same by filing the correct income from salary. From the perusal of the facts peculiar to assessee's case, in our considered view there is no willful intention on the part of the assessee to conceal the income since the assessee has filed the revised return of income rectifying all the errors in the original return of income. It is also relevant to note that the revised return of income was filed by the assessee on 30.03.2017 and the assessment under section 143(3) was completed on 08.12.2017 where the AO has assessed the income as per the income declared in the revised return by the assessee i.e. revenue has accepted the income declared in the revised return. As relying on HINDUSTAN STEEL LIMITED VERSUS STATE OF ORISSA 1969 (8) TMI 31 - SUPREME COURT we are of the view that the levy of penalty under section 271(1)(c) is not justified and accordingly we direct the AO to delete the penalty levied.

Summary

Issues Involved:
1. Addition of income under the head "Income from Other Sources" and "House Property".
2. Levy of penalty under section 271(1)(c) for furnishing inaccurate particulars of income.

Detailed Analysis:

1. Addition of Income Under "Income from Other Sources" and "House Property":
The assessee, an individual residing in Singapore but considered a resident and ordinarily resident in India for the relevant assessment year, filed a return of income in India declaring Rs. 12,05,86,110/-. This included 50% of the rental income from a property in Singapore jointly owned with his wife. During scrutiny, the AO noted that the assessee had not declared Rs. 6,21,652/- under "Income from Other Sources" and the full rental income of Rs. 23,71,076/- from the Singapore property. Consequently, the assessee filed a revised return including these amounts, resulting in a total income of Rs. 12,28,70,870/-. The AO accepted this revised return and initiated penalty proceedings under section 271(1)(c) for furnishing inaccurate particulars of income.

The CIT(A) dismissed the appeal due to a delay of 186 days in filing and upheld the AO's order on merits. The Tribunal noted that the assessee himself had offered the additional income in the revised return during the assessment proceedings and thus could not claim to be aggrieved by the lower authorities' orders. The Tribunal dismissed the grounds raised by the assessee as not tenable.

2. Levy of Penalty Under Section 271(1)(c):
The AO levied a penalty of Rs. 9,24,760/- under section 271(1)(c), stating the assessee furnished inaccurate particulars leading to concealment of income. The assessee argued that the original return was filed based on the available information and that the revised return was filed once accurate details were obtained. The CIT(A) upheld the penalty, reasoning that the assessee was aware of the income from Form 26AS and failed to declare it in the original return. The CIT(A) also noted that the revised return was filed only after the case was selected for scrutiny, indicating an intent to conceal income.

The Tribunal, however, found the CIT(A)'s reasoning factually incorrect regarding the rental income, as Form 26AS only contained details of interest income. The Tribunal acknowledged that the assessee had filed the revised return to correct errors, including an overstatement of salary income. It was noted that the assessee had offered 100% of the rental income from the Singapore property despite claiming joint ownership. The Tribunal concluded that there was no willful intention to conceal income, as the revised return was filed to rectify errors. The Tribunal cited the Supreme Court's observation in Hindustan Steel Ltd. v. State of Orissa, emphasizing that penalty should not be imposed for technical or venial breaches or bona fide errors.

Conclusion:
The Tribunal dismissed the appeal regarding the addition of income (ITA.No. 2706/Mum/2024) but allowed the appeal concerning the penalty (ITA.No. 2707/Mum/2024), directing the AO to delete the penalty levied under section 271(1)(c).