2014 (8) TMI 308 - AT - Income Tax

Reopening of assessment u/s 147 / 148 Held that - The assessment is being reopened on going through the return of income and the documents filed alongwith the return of income - the assessee had given the note along with the return of income that the amount received under a non-compete agreement is not chargeable to tax - The assessment was completed under Section 143(1) and was reopened without any fresh material - Identical is the situation in the case of the assessee - The assessee had also given the note in the computation of income pointing out why the perquisites from the rent free accommodation is not chargeable to tax - No fresh material is brought by the Revenue on record but the assessment has been reopened on the basis of return of income and the documents submitted alongwith the return of income - Following the decision in THE COMMISSIONER OF INCOME TAX-V Versus ORIENT CRAFT LTD. 2013 (1) TMI 177 - DELHI HIGH COURT and Commissioner of Income Tax-XVI Versus Shri Atul Kumar Swami 2014 (3) TMI 759 - DELHI HIGH COURT - reopening of assessment is not valid Decided in favour of assessee. Penalty u/s 271(1)(c) Held that - In the computation of income itself, the assessee has disclosed all the relevant facts - he has given the reason why the perquisite value of such rent free accommodation is not chargeable - Merely because this claim of the assessee is not accepted by the AO and perquisite value of the rent free accommodation was charged to tax, it cannot be said that the assessee concealed income or furnished any inaccurate particulars Relying upon CIT Vs. Reliance Petro products Pvt.Ltd. 2010 (3) TMI 80 - SUPREME COURT the penalty levied u/s 271(1)(c) of the Act is set aside Decided in favour of Assessee.

Summary

Issues:
1. Validity of reopening assessments under Section 148.
2. Treatment of rent-free accommodation as a perquisite.
3. Disallowance of expenses in professional income.
4. Levy of penalty under Section 271(1)(c).

Issue 1: Validity of reopening assessments under Section 148:
The appeals contested the reopening of assessments under Section 148 by the Assessing Officer. The appellant argued that the assessments were reopened based on the same return of income without any fresh material, contrary to decisions of Hon'ble Jurisdictional High Court. The appellant relied on cases like CIT Vs. Orient Craft Ltd. and CIT Vs. Atul Kumar Swami to support their argument. The Tribunal found that the assessments were indeed reopened without new material and quashed the assessment orders, following the precedent set by the mentioned court decisions.

Issue 2: Treatment of rent-free accommodation as a perquisite:
The appellant contested the addition of the value of rent-free accommodation as income from salary. The appellant argued that the perquisite value was not chargeable based on the nature of the accommodation provided by the employer. However, the Tribunal found that the appellant failed to justify why the value of rent-free accommodation should not be considered as income from salary. Consequently, the Tribunal rejected the appellant's grounds against the addition of the value of rent-free accommodation.

Issue 3: Disallowance of expenses in professional income:
The appellant raised a ground against the disallowance of expenses in their professional income. The Assessing Officer disallowed certain expenses, leading to an appeal by the appellant. During the hearing, the appellant could not provide sufficient justification for the disallowed expenses. As a result, the Tribunal found no merit in the appellant's grounds and rejected them accordingly.

Issue 4: Levy of penalty under Section 271(1)(c):
The appellant challenged the penalty levied under Section 271(1)(c) for non-disclosure of the perquisite value in the return of income. The Tribunal observed that the appellant had disclosed the relevant facts regarding the rent-free accommodation in the computation of income. Citing the decision in CIT Vs. Reliance Petroproducts Pvt. Ltd., the Tribunal concluded that the penalty was unjustified as the appellant had not concealed income or furnished inaccurate particulars. Consequently, the Tribunal canceled the penalty levied under Section 271(1)(c).

In conclusion, the Tribunal allowed the appeals in ITA No.4218/Del/2012, 874/Del/2012, 875/Del/2012, and 1193/Del/2013 while dismissing the appeal in ITA No.3051/Del/2010. The judgments were pronounced on 25th July 2014, addressing various legal issues related to the validity of assessments, treatment of perquisites, disallowance of expenses, and penalty levied under Section 271(1)(c).