Itxa/2685/2009 Of The Commissioner Of Income Tax -8 ,Mumbai v. M/S Sukh Hotels Pvt. Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONINCOME TAX APPEAL (L) NO.203 OF 2008 The Commissioner of Income tax ..Appellant. M/s. Sukh Hotels Pvt. Ltd. ..Respondent. Mr.P.S.Sahadevan for appellant. Ms.P. Shukla i/b. B.V.Jhaveri for respondent. P.C. :- 1.Heard learned counsel for the parties. The appeal seeks to raise the following question of law :- " Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in deleting the penalty u/s.271 (1)(c) even though the assessee disclose the income which was not included in the original return and thereby concealed the particulars of income ? " 2.The proceedings by way of penalty were initiated against the respondent. The issue pertains to whether certain amounts were to be treated as revenue expenditure or capital expenditure. The assessee had treated the same in his books as revenue expenditure. The A.O. disallowed the same holding the same to be capital expenditure. That order was not challenged by the assessee. Based on that proceedings penalty proceedings were initiated against the assessee and penalty was imposed. 3.The C.I.T. (A) after considering the material on record held that there was no concealment and consequently allowed the appeal filed by the assessee. 4.The revenue, against the above order, preferred an appeal before the Tribunal. The Tribunal found that the assessee had merely treated the amount as revenue expenditure which was not accepted by the assessing officer. This was treated as a difference of opinion. As a matter of fact since the amounts were shown in the books of accounts, as such it was held that it would not amount to concealment. Reliance was placed on the judgment of the Supreme Court in the case of K.C.Builders v/s. ACIT (2004) 265 I.T.R. 552 (SC) wherein the Supreme had taken the view that the word "concealment" inherently carried with it the element of mens rea. The Supreme Court thereafter in Ashok Pai v/s. Commisioner ofIncome Tax (2007) 292 I.T.R. 11(SC)has also considered the same question and held that furnishing inadequate particulars signifies a deliberate omission for the purpose of furnishing inaccurate particulars and / or concealment. 5.In the present case, the assessee had disclosed in its books the expenditure incurred as capital expenditure. The issue only pertained to whether the same was treated as revenue or capial expenditure. Considering section 273B of the Income Tax Act if an assessee offers explanation which is reasonable it is open to the authorities to exercise discretion and not to impose penalty. In the instant case, the C.I.T. (A) after considering the record exercised its discretion. The said exercise of discretion has been upheld by the I.A.A.T. Considering the above, in our opinion, the question as framed would not arise. Consequently, the appeal is dismissed in limini with no order as to costs. (J.P.DEVADHAR, J.) (V.C.DAGA, J.)