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TMI Blog2017 (12) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of Kaushambhi (Ghaziabad) property is concerned, the explanation of the assessee remained that rental income for the month of March, 2008 was credited to the profit and loss account for the year ended on 31.03.2009 and was offered to tax in assessment year 2009-10. We thus find that the assessee was able to explain the non-disclosure of rental income in respect of the above property during the year and it cannot be said that it was a case of furnishing of inaccurate particulars of income in this regard especially when the assessee had paid tax on it when the Assessing Officer was not satisfied with the explanation of the assessee. Regarding the disallowance made under section 14A we are of the view that it remained a debatable issue and it cannot be said beyond doubt that non-disallowance of expenditure under section 14A by the assessee was furnishing of inaccurate particulars of income or concealment of particulars of income to attract the penal provisions of section 271(1)(c) of the Act. The Assessing Officer is thus directed to delete the penalty in this regard as well. - Decided in favour of assessee. - I. T. Appeal No. 2224/Del/2012 - - - Dated:- 28-7-2017 - SHRI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment and besides, he also disallowed an amount of ₹ 75,974/- under section 14A of the Act and added it to the total income of the assessee. The total addition of ₹ 26,70,763/- was made on the assessed total income at ₹ 5,29,55,562/- in the assessment framed under section 143(3) of the Act. Penalty proceedings were initiated under section 271(1)(c) of the Act and being not satisfied with the explanation of the assessee, the Assessing Officer has levied penalty of ₹ 9,07,790/- on the addition of ₹ 26,70,763/- on account of furnishing inaccurate particulars of the income. The ld. CIT (Appeals) has also upheld the same. The assessee has questioned actions of the authorities below in imposing and upholding the penalty in question. 3.1 In support of the grounds, the ld. AR, Dr. Rakesh Gupta, Advocate, submitted that the assessee is a company of architects dealing with the real estate and being into the profession, follows cash system of accounting since the last 15 years. Rental income was treated as business income and was also offered on cash basis. Therefore, the rental income in respect of Gurgaon property, which was leased during the year itself, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate for Gurgaon property was issued consolidatedly for two years by the tenant and that also contributed to the offering of rental income on receipt basis. Page No. 69 of the paper book shows that the rent from Gurgaon property was received in assessment year 2009-10 and Page Nos. 70 71 are the copies of payment advises. Page No. 72 is the consolidated TDS certificate showing amount paid after 31.03.2008. The ld. AR also placed reliance on page Nos. 74 to 80 of the paper book, which are copies of ledgers of rent received for assessment years 2008-09 and 2009-10. Page Nos. 81 and 82 of the paper book shows explanation to the Assessing Officer. 3.3 Regarding non-disclosure of rent of Kaushambhi (Ghaziabad) property, the ld. AR also placed reliance on page No. 67 of the paper book, which shows that the Assessing Officer assessed income at ₹ 3,66,919/- as against ₹ 3,34,127/- offered for taxation by the assessee company. He further submitted that the rental income for the month of March, 2008 has been credited to Profit and Loss account for the year ended 31st March, 2009 and offered to tax in assessment year 2009-10. 3.4 Other component for which penalty was levied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the property at Gurgaon and ₹ 74,789/- as rental income from the property at Ghaziabad for taxation. The Assessing Officer also made disallowance of ₹ 75,974/- under section 14A of the Act. The Assessing Officer was not satisfied with the explanation of the assessee and while making total addition of ₹ 26,70,763/- on the above accounts, levied penalty under section 271(1)(c) of the Act at ₹ 9,07,790/- on the above addition. The ld. CIT (Appeals) has upheld the same. The authorities below have justified the levy of penalty mainly on the basis that had it not been pointed out to the assessee that the above rental income had remained to be offered for taxation and the assessee had not made any disallowance under section 14A, the assessee would not have offered those income for taxation. It was alleged that by the above action of the assessee, the assessee had furnished inaccurate particulars of income leading to levy of penalty in question. 3.7 On consideration of the explanation offered by the assessee, we find that regarding the non-disclosure of rental income of Gurgaon property, the submission of the assessee remained that it is in the profession of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r not disclosing the rental income from its property at Gurgaon and thus in absence of positive evidence beyond doubt regarding furnishing of inaccurate particulars of income or concealment of particulars of income towards the said rent, the Assessing Officer was not justified in invoking the penal provisions of section 271(1)(c) of the Act for levy of the impugned penalty. The action of the ld. CIT (Appeals) in upholding the same was not correct. We accordingly direct the Assessing Officer to delete the penalty in this regard. 4. So far as rental income in respect of Kaushambhi (Ghaziabad) property is concerned, the explanation of the assessee remained that rental income for the month of March, 2008 was credited to the profit and loss account for the year ended on 31.03.2009 and was offered to tax in assessment year 2009-10. We thus find that the assessee was able to explain the non-disclosure of rental income in respect of the above property during the year and it cannot be said that it was a case of furnishing of inaccurate particulars of income in this regard especially when the assessee had paid tax on it when the Assessing Officer was not satisfied with the explanation of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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