TaxTMI 
TaxTMI 
2020 (2) TMI 1045
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....reinafter referred to as the "Act"). 3. Briefly stated facts as noted by the AO are that during the course of assessment proceedings the AO found from individual transaction statement that the assessee had received a sum of Rs. 3,50,67,785/- as interest on Income Tax Refund of Rs. 36,73,76,770/- during the relevant year. But the assessee had not disclosed the same in its return of income. Therefore, he added back Rs. 3,50,67,785/- to the total income of assessee and penalty proceedings u/s. 271(1)(c) of the Act was initiated for filing inaccurate particulars of income. Accordingly, notice u/s. 274 r.w.s. 271(1)(c) of the Act was issued on 29.12.2016 and served upon the assessee. In response to this notice, the Ld. AR filed its submission before the AO which was reproduced by the AO in the penalty order dated 20.06.2017 at page 2 and thereafter, according to the AO the assessee's reply was not acceptable and imposed penalty of Rs. 1,17,26,930/- u/s. 271(1)(c) of the Act for furnishing inaccurate particulars of income which has resulted into the omission of interest income on Income Tax refund as part of the taxable income. Aggrieved, assessee preferred an appeal before the Ld. CIT....
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.... Cotton and Ginning factory (2013) 359 ITR 565 took a view that imposing of penalty u/s 271(1)(c) of the Act is bad in law and invalid for the reason that the show cause notice u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. We also note that as against the decision of the Hon'ble Karnataka High Court the revenue preferred an appeal in SLP in CC No.11485 of 2016 and the Hon'ble Supreme Court by its order dated 05.08.2016 dismissed the SLP preferred by the department. We also note that the decision of the Hon'ble Bombay High Court in the case of CIT vs Shri Samson Perinchery in ITA No.1154 of 2014 dated 05.01.2017 wherein the Hon'ble Bombay High Court following the decision of the Hon'ble Karnataka High Court in the case of CIT vs Manjunatha Cotton and Ginning factory (supra) came to the conclusion that imposition of penalty on defective show cause notice without specifying the charge against the assessee cannot be sustained. Our attention was also drawn to the decision of ITAT in the case of Suvaprasanna Bhattacharya vs ACIT in ITA No.1303/Kol/2010 dat....
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....s of natural justice on the ground of absence of opportunity, it has to be established that prejudice is caused to the concerned person by the procedure followed. The issuance of notice is an administrative device for informing the assessee about the proposal to levy penalty in order to enable him to explain as to why it should not be done. Mere mistake in the language used or mere non-striking of the inaccurate portion cannot by itself invalidate the notice. The ITAT Mumbai Bench in the case of Dhanraj Mills Pvt.Ltd. (supra) followed the decision rendered by the Jurisdictional Hon'ble Bombay High court in the case of Kaushalya (supra) and chose not to follow decision of Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory (supra). Reliance was also placed by the ITAT Mumbai in this decision on the decision of Hon'ble Patna High court in the case of CIT v. Mithila Motor's (P.) Ltd. [1984] 149 ITR 751 (Patna) wherein it was held that under section 274 of the Income-tax Act, 1961, all that is required is that the assessee should be given an opportunity to show cause. No statutory notice has been prescribed in this behalf. Hence, it is sufficient if the ....
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....iz., 1. Whether the notice issued under Section 271(1)(c) in the printed form without specifically mentioning whether the proceedings are initiated on the ground of concealment of income or on account of furnishing of inaccurate particulars is valid and legal? 2. Whether the proceedings initiated by the Assessing Authority was legal and valid? The Hon'ble Karnataka High Court held in the negative and against the revenue on both the questions. Therefore the decision rendered by the ITAT Mumbai in the case of Earthmoving Equipment Service Corporation (supra) is of no assistance to the plea of the revenue before us. 11. In the case of M/S.Maharaj Garage & Co. Vs. CIT dated 22.8.2017 referred to in the written note given by the learned DR, which is an unreported decision and a copy of the same was not furnished, the same proposition as was laid down by the Hon'ble Bombay High Court in the case of Smt.Kaushalya (supra) appears to have been reiterated, as is evident from the extracts furnished in the written note furnished by the learned DR before us. 12. In the case of Trishul Enterprises ITA No.384 & 385/Mum/2014, the Mumbai Bench of ITAT followed the decision of the Hon'ble Bombay....
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..... It is settled legal position that where two views are available on an issue, the view favourable to the Assessee has to be followed. We therefore prefer to follow the view expressed by the Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning (supra). 15. We have already observed that the show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea of the ld. Counsel for the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled." 7. Respectfully following the aforesaid order of the coordinate bench of this Tribunal, we, therefore, sustain the deletion of penalty by the Ld. CIT(A) and, therefore, the appeal of revenue is dismissed. 8. The Cross Ob....
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....ion or benefit was obtained in FY 1983-84 under the Income Tax Act when the provision was originally made in FY 1983-84. Therefore, according to him, the reversal of the same in the relevant AY 2014-15 is not taxable even under any section/provision particularly not u/s. 41(1) of the Act and, therefore, according to the Ld. AR, in view of the fact that Rs. 1.75 cr. was credited to the P&L Account represents the reversal of a liability credited in the books during the period when the assessee was not a taxable entity and, therefore, the Ld. CIT(A) has rightly deleted the addition of Rs. 1.75 cr. and, therefore, he does not want us to interfere in the order of the Ld. CIT(A). 13. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the assessee in question is a Port Trust engaged in providing port services since the year 1870 and is under the direct control and supervision of the Union Government and is a creature of the Port Trust Act. It is undisputed that the income of the Port Trust was earlier exempted being a local authority u/s. 10 of the Act. Due to the subsequent amendment by the Finance Act, 2003 the income of the assessee ....
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....will be followed in the case of AYs. 2013-14 and 2014-15. The first ground of appeal of the assessee is against the action of the Ld. CIT(A) in disallowing the contribution made by the assessee to Kolkata Port Trust officer's Club. 17. Brief facts of the case as noted by the AO are that it was seen from schedule-16 of the P&L Account that expenses to the tune of Rs. 19,42,034/- has been debited as donation to Kolkata Port Trust Officers' Association. According to AO, these expenses were not relatable to the business activity of the assessee Trust, so was disallowed and added back to the total income of the assessee. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A), who was pleased to give partial relief to the assessee to the tune of Rs. 2,23,078/- in place of Rs. 19,42,034/- addition made by the AO. Still not satisfied with the partial relief granted by the Ld. CIT(A), the assessee is before us challenging the action of the Ld. CIT(A) in confirming Rs. 17,18,956/-. 18. Having heard both the parties, we note that the assessee's contribution to Kolkata Port Trust Officer's Club to the tune of Rs. 17,18,956/- as well as the assessee's contribution to Kolkata Port T....
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....r dispute is covered by the earlier order of this tribunal in assessee's own case as stated supra wherein it was held as below:- "15. At the time of hearing before us, the Ld. Counsel for the assessee submitted that the issue is covered in favour of the assessee by the decision of the Hon'ble Bombay High Court in the case of CIT vs Bharat Petroleum CorporationLtd 252 ITR 43 (Bom) wherein it has been held that 40A(9) of the Act is not applicable in case the assessee has reimbursed expenses to the club formed for the benefit of the employees. He also placed reliance on the decision of this Tribunal in the case of DCIT vs Chloride Industries Ltd reported in 76 ITD 1 (Kol). 16. On the other hand , the Ld DR relied on the orders of the lower authorities. 17. We have heard the rival submissions, perused the materials available on record and the case laws cited by the Ld. Counsel for the assessee. We find that the facts are not in dispute. We, therefore, find merit in the plea of the Ld. Counsel for the assessee that the Tribunal, Kolkata Bench in the case DCIT vs Chloride Industries Ltd (Supra) has deleted the addition by observing as under: "The Commissioner (Appeals) had delete....
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....two parts (i) unrealised portion of the compensation of Rs. 101,84,03,098/- and (ii) realised portion of Rs. 75,08,09,517/-. According to the Ld. AR, the assessee has decided not to press the action of the Ld. CIT(A) confirming the addition in respect of the realised portion of compensation i.e. Rs. 75,08,09,517/-, therefore, this part of addition is not under challenge by the assessee so in the result, this action of Ld. CIT(A) stands confirmed to the extent of Rs. 75,08,09,517/-. So, assessee's appeal partly fails. 21. Coming to the unrealised portion of Rs. 101.84 cr. the AO has noted that he asked the assessee to explain about the taxation impact regarding compensation billing of Rs. 176.92 cr. as appearing from the Note 14 Notes of Account of the assessee and they were also asked to explain why the service tax amounting to Rs. 9.04 cr. for land compensation bill for KDS should not be disallowed u/s. 43B of the Act. It was replied by the assessee that it had large areas of land which has been given out on rent and when there is a breach of agreement like unauthorised construction, unauthorised occupation etc. the eviction notices are issued under the Public Premises Act and th....
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....is evicted, he is liable to pay the rent for the period for which the land was under his control. As such, in either case the rent has accrued and is certain to be received. There remains no rooms of doubt or uncertainty about the receive of the income. In consequences it being a accrued rent taxable in the year in which it has accrued. Note No. 14 to the Notes of Accounts clarified that compensation billing of Rs. 176,92,12,615/- (excluding Service Tax and Education Cess) was made during the year. Actual amount realized for the year 2011-12 was Rs. 75,08,09,517/- has been recognized as revenue." 22. And then the AO referred to the case of E. D. Sassoon and Co. Ltd. Vs. CIT (1984) 26 ITR 27 (SC) as well as the case of the CIT Vs. A Gajapathi Naidu (1964) 53 ITR 114 (SC) and thereafter held as under: "The plain and simple fact is that rent is nothing but a periodical payment paid by the tenant to the landlord for use of land. It accrues as soon as the tenant uses the land for the period. Here the period of use is the factor that determines the accrual of the same. Sine in the given case the period of accrual is during the previous year relevant to AY 2012-13 the said payment whet....
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....ich eviction notices were issued and the disputes between the lessees/occupiers/tenants and the estate officer were referred to judicial proceedings and pending resolution of such disputes the appellant was sending compensation billing instead of rent billing. The appellant was also charging service tax which is leviable for consideration received for use of / letting our Properties in terms of the service-tax laws. Referring to Accounting Standard - 9, issued by lCAI, the appellant had claimed that in view of the uncertainty regarding realization of compensatory billings the appellant was not recognizing the revenue in form of compensation billing until actual realization of payment from the parties. The appellant therefore claimed before the Ld. AO that unreallzed compensation billing was not assessable to tax as income of the appellant since it involved huge uncertainties. The appellant claimed that no real income accrued or arose to the appellant until the appellant acquired legal right to recover the said amount. The contention raised by the appellant did not find favour with the Ld. AO and accordingly the Ld. AO assessed even the unrealized compensation billings to the exte....
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.... then the appellant or the Department can be permitted to raise a new plea with regard to taxability or non-taxability. I am also aware that in taxation proceedings the principle of promissory estoppel does not apply and therefore if in law certain receipt is not taxable then the appellant can raise plea regarding non-taxability at any time and at any stage of proceeding. Keeping in view these legal propositions therefore, I am entertaining the assessee'splea regarding non-taxability of compensation charges even though such plea was never raised by the appellant before the Id. AO. 4. From the material placed before me, I find that the appellant owns vast stretches of land in the city of Kolkata and adjoining areas. Apart from using part of the land, buildings& other infrastructure to operate the port, the appellant has given lands, buildings & other civic infrastructure either on lease, license or tenancy basis to a very large number of concerns and these properties are being used for carrying on various business & industrial activities. The terms and conditions on which the persons are allowed to occupy and use the premises belonging to the appellant are evidenced in the for....
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....d persons were in unauthorized occupation of the premises and therefore the appellant was left with no other alternative but to raise monthly claims on such parties. Although much emphasis was placed on the fact that the appellant was having large number of disputes, unfortunately no evidences or documents in support of such pending disputes were furnished before me, except for furnishing some documentary evidences and copies of orders pertaining to dispute with M/s Eri-Tech Limited. However when several hundred different disputes were pending in different courts and terms & conditions for granting lease/licenses were different in each case, furnishing of documents in relation to only one case cannot be considered to be representative of all disputes. 6. Even from going through the documents placed before me, it appeared that the appellant had granted lease to M/s Eri-Tech Limited in 1967 for a period of 30 years and after the expiry of the initial period, the appellant had offered to grant long term lease of99 years on revised terms under which the lessee was called upon to make lumpsum upfront payment for grant of lease. I therefore find that at the relevant time when the lease....
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....unauthorized occupier made by use of his unauthorized occupation. On perusal of the order of the High Court, it appeared that at no stage it was even the case of the appellant that for the period of alleged unauthorized occupation it should be compensated by 'mesne profit' but the plea of the appellant was for compensating the "occupation charges" for the period during which the lessee had overstayed in the premises. From the order of the High Court, it also appeared that the Court neither considered the plea for grant of 'mesne profit' nor allowed or granted to the appellant 'mesneprofit' although the assessee's plea for eviction was granted by the Court. 8. The appellant's reliance on the judgment of the jurisdictional Hon'ble Calcutta High Court in the case of CIT VsUtaGhosh(supra) is therefore not applicable because the facts are distinguishable. In the case decided by the Hon'ble Calcutta High Court, after the expiry of lease, the appellant had never extended the lease but instituted eviction proceedings in the Court. The assessee's plea for eviction was granted by various Courts upto the Hon'ble Supreme Court and the Hon'b....
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....'s opinion represented fair and equitable rent for occupying the premises belonging to the appellant. The assessee was seeking to compensate itself on monthly basis for the use of the premises by the lessees against which the appellant had either instituted eviction proceedings or with whom the appellant had not reached mutually agreeable terms for the use of premises. 10. Further as observed earlier even though the appellant claimed that the appellant and/or the lessees/occupiers instituted several hundred cases, the Ld. ARs of the appellant had failed to bring on record the nature and terms of disputes between the parties. However even the one sample case submitted for my consideration where the eviction was ultimately in 2016, showed that at no stage the appellant had demanded and therefore awarded mesne profit by the Court. On the contrary the order of the High Court indicates that the Court had directed the lessee to pay occupation charges for the period during which the lessee continued to remain in possession after the original period of lease expired. In the circumstances therefore even going by the documents placed before me, I find that the appellant did not recei....
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....' whereas in cases where the terms were not settled, the invoices were raised under the nomenclature 'compensatory billings'. The basis character of the charges demanded however remained same i.e. the charges for occupation & use of the premises belonging to the appellant. The Id. ARs of the appellant has nowhere brought on record any material that even where the eviction proceedings were instituted, the appellant had stopped demanding the' occupation charges on monthly basis but prayed for payment of mesne profits for unauthorized occupation. Even in the lone instance for which documents were provided; it showed that the Court did not grant ' mesne profit but the lessee/occupier was directed to pay occupation charges for the period during which it was in occupation of the property after the lease expired. In absence of any order of any Court or competent authority which in any manner showed that the monthly claims made by the appellant were In nature of 'mesne profit', it is not possible to accept the submissions of the Id. ARs at its face value. For these reasons therefore I also do not deem it fit to deal with the various judgments relied upon by th....
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....es of the assessee and who has the power to award damages as per Rule 8 of the Public Premises (Eviction of Unauthorised Occupants) Rules 1971 (hereinafter referred to as the 'PP Rules, 1971') and who can deal with all public premises including award and damages for unauthorised use and occupation thereof by any person after the expiry of the tenancy or lease agreement etc. It is noted that section 7 of the PP Act, 1971 gives power to the Estate Officer to issue order requiring payment of arrear rent and sub-section (2) of sec. 7 of the P P Act, 1971 provides that in respect of unauthorised occupation of any public premises, the Estate Officer may by order assess the damages on account of unauthorised use and occupation of such premises. So, since the matter pertains to the properties which are awaiting the orders of Estate Officer and thereafter the Lis may pend before the various judicial forums, the arrears of rent/damages/compensation has not yet finalised/crystalised in respect of the unrealised portion of the compensation of Rs. 101 cr. (approx.). It is a settled that in the absence of transfer of capital asset, and when it has to be ascertained as to whether the receipt is ....