9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (12) TMI 530 - AT - Income TaxPenalty u/s 271(1)(c) Held that - The assessee claims that the property was intended to be sold as per the market practices and in consequence thereof a business decision was taken to first let out the property and then sell the same as a gainful let out property - The assessee s conduct is supported by the fact that immediately after letting out, the property was sold and out of three months advance rent, two month s rent was passed on to the purchaser. The genuineness of the rent and brokerage has not been questioned - Earning rent, the incurring of business (brokerage) expenditure and business income on sale of property i.e. stock in trade was incorporated in the books of a/cs of the assessee and particulars thereof were filed with the return of income - Following Hindustan Steel Ltd. V. State of Orissa 1969 (8) TMI 31 - SUPREME Court - As the assessee bona fide belief is discernable and the relevant details were furnished along with return of income Decided in favour of assessee.
Issues Involved:
Challenge to penalty under section 271(1)(c) for claimed business expenditure as commission paid for property held as stock in trade. Detailed Analysis: Issue 1: Challenge to Penalty Imposed The appellant challenged the penalty under section 271(1)(c) imposed by the CIT(A) for claiming business expenditure as commission paid for a property held as stock in trade. The grounds of challenge included: - No furnishing of inaccurate particulars. - Particulars were furnished with the return. - Assessee's bona fide belief with a proper explanation. - Applicability of section 153C for the assessment. The appellant contended that the brokerage payment was related to a business decision to sell the property after letting it out, and thus, was a legitimate business expenditure. The assessing officer disallowed the amount, leading to the penalty proceedings under section 271(1)(c). Issue 2: Facts and Circumstances The appellant, a dealer in properties, held a property in Connaught Place as stock-in-trade. The property was intended for sale, and the appellant engaged a broker to find a tenant to make the property more attractive to potential buyers. After letting out the property, it was sold, and the appellant paid a commission as brokerage. The appellant believed the brokerage was a business expenditure and filed the return accordingly, offering business income on the sale and rental income. Despite no incriminating material found during the assessment, the assessing officer disallowed the brokerage amount, leading to the penalty proceedings. Issue 3: Legal Arguments The appellant argued that all relevant particulars were filed with the return, and the change in the head of expenditure should not lead to penalty imposition. Citing the Supreme Court's judgment in Reliance Petro Products case, the appellant contended that furnishing relevant particulars should prevent penalty imposition. The appellant also relied on the CIT Vs. Dalmia Cement case to support the commercial expediency of the expenditure. The appellant emphasized the distinction between assessment and penalty proceedings and highlighted the importance of the bona fides of the explanation. Issue 4: Judicial Precedents The appellant referenced judicial precedents, including the Hon'ble Delhi High Court's judgment in the case of Anil Kumar Bhatia and the ITAT Mumbai Special Bench decision in M/s All Cargo Global Logistics Ltd. Vs. DCIT, to argue against the penalty imposition. The appellant disputed the sustaining of the penalty, emphasizing the ongoing debate on the jurisdiction issue in various judicial forums. Judgment and Conclusion After considering the contentions, the Tribunal concluded that the appellant's belief in treating the brokerage as a business expenditure was bona fide. The relevant details were filed with the return of income, and the genuineness of the transactions was not in question. The Tribunal referred to the Hindustan Steel Ltd. case and the Reliance Petro Products case to support its decision. Consequently, the penalty under section 271(1)(c) was deleted, and the appellant's appeal was allowed.
|
