Penalties under Sec. 271(1)(c) deleted for income & suppressed receipts. Appeal allowed. Order pronounced 08/01/2018.

The Tribunal deleted the penalties imposed under Sec. 271(1)(c) for both the addition of Rs. 4,44,382/- as income from house property and the addition of Rs. 4,00,000/- towards suppressed contract receipts. The appeal was allowed, and the order was pronounced on 08/01/2018.

---

---

Issues Involved:
1. Penalty under Sec. 271(1)(c) for addition of Rs. 4,44,382/- as income from house property.
2. Penalty under Sec. 271(1)(c) for addition of Rs. 4,00,000/- towards suppressed contract receipts.

Detailed Analysis:

Issue 1: Penalty for Addition as Income from House Property
1. Facts and Arguments:
- The assessee disclosed ownership of certain properties in its balance sheet but did not offer any income from these properties.
- The properties included Shop Nos. 3, 4, 5, 6, 7 in God’s Gift Cooperative Housing Society and Flat Nos. 203 and 502 at Kent Estate.
- The assessee claimed that the shops were used as a godown due to a dispute with the society and the flats were used for business purposes.

2. Assessment and CIT(A) Findings:
- The A.O. did not accept the explanation and added Rs. 4,44,382/- as income from house property.
- The CIT(A) upheld the penalty imposed by the A.O.

3. Tribunal’s Findings:
- The assessee disclosed the properties in its balance sheet, indicating no concealment.
- The Tribunal referred to the letter from the society refusing to enroll the assessee as a member, supporting the claim that the shops were not in possession.
- Citing the Gujarat High Court's decision in Commissioner of Income-tax vs. Gaekwad & Co., the Tribunal held that if the assessee cannot exercise ownership rights, the income cannot be taxed.
- The claim that the flats were used for business purposes was unproved but not disproved, aligning with the Bombay High Court's decision in CIT Vs. Upendra V. Mithani, which states no penalty can be imposed if the explanation is unproved but not disproved.

4. Conclusion:
- The Tribunal deleted the penalty for the addition of Rs. 4,44,382/- as income from house property, finding the assessee’s explanation plausible and not disproved.

Issue 2: Penalty for Addition Towards Suppressed Contract Receipts
1. Facts and Arguments:
- The assessee received Rs. 6,50,000/- from M/s Siddhivinayak Construction but accounted for only Rs. 2,50,000/- due to a payment dispute.
- The assessee claimed that the client agreed to pay only Rs. 2,50,000/-, and the remaining Rs. 4,00,000/- was written back in the subsequent financial year.

2. Assessment and CIT(A) Findings:
- The A.O. added Rs. 4,00,000/- to the income, stating the assessee should have recognized the income when the bill was raised.
- The CIT(A) upheld the penalty imposed by the A.O.

3. Tribunal’s Findings:
- The Tribunal examined the ledger account and found that the client had written back Rs. 4,00,000/- in the subsequent financial year.
- The Tribunal acknowledged that the assessee claimed TDS credit only for the received amount of Rs. 2,50,000/-.
- The Tribunal concluded that the assessee’s explanation regarding the non-receipt of Rs. 4,00,000/- was bona fide and supported by evidence.

4. Conclusion:
- The Tribunal vacated the penalty for the addition of Rs. 4,00,000/- towards suppressed contract receipts, finding the assessee’s explanation credible and substantiated.

Final Order:
- The Tribunal allowed the appeal, deleting the penalties imposed under Sec. 271(1)(c) for both the addition of Rs. 4,44,382/- as income from house property and the addition of Rs. 4,00,000/- towards suppressed contract receipts. The Ground of appeal No. 4 was dismissed as not pressed. The order was pronounced in the open court on 08/01/2018.

---