IN INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI BEFORE SHRI B.R.BASKARAN (AM) AND SHRI RAM LAL NEGI (JM) ITA No 1989/MUM/2014 Assessment Year: 2002-03 Sambhav Tirth Co-op. Hsg. Socty ITO Wd. 16(2)(1), Ltd., Mumbai. 2A, Bhulabhai Desai Road, Haji Ali, Mumbai- 400 026. Vs. PAN:- AAAAS4937M (Appellant) (Respondent) Appellant by : Shri. Rakesh Joshi. Respondent by : Shri. Captain Pradeep Arya Date of Hearing: 27/09/2016 Date of Pronouncement: 30/09/2016 ORDER PER RAM LAL NEGI, JM This appeal has been preferred by assessee against order dated 27/01/2014 passed by Ld. CIT(Appeals)-27 Mumbai for Asst. Year 2002-03, whereby Ld. CIT(A) dismissed appeal filed by assessee against penalty order passed by A.O u/s 271(1)(c) of Income Tax Act, 1961 (in short Act ). 2. Brief facts of case are that appellant/assessee filed its return of income for A.Y. 2002-03 declaring total income of Rs. 5,63,885/-. assessment order u/s 143(3) read with section 147 of Act was completed by Ld. A.O on 31/12/2008, inter alia making addition of Rs. 16,50,000/- received as compensation from M/s Deesha Lease Pvt. Ltd. In first appeal 2 ITA No 1989/MUM/2014 Assessment Year: 2002-03 aforesaid addition was confirmed by Ld. CIT(A), however, amount of Rs.10,00,000/- was deleted by ITAT in second appeal. Accordingly, AO imposed penalty u/s 271(1)(c) of Act on remaining amount of Rs. 6,50,000/-. assessee challenged penalty order before Ld. CIT(A). Ld. CIT(A) after hearing assessee confirmed penalty imposed by AO. Aggrieved, assessee is in appeal before Tribunal raising following ground of appeal:- 1. Learned CIT(A) has erred in confirming penalty of Rs. 1,97,470/- levied by Assessing Officer under section 271(1)(c) of Income Tax Act, 1961. 3. Before us Ld. Authorised Representative (AR) submitted that assessee, co-operative Housing Society, filed its return of income for A.Y. 2002-03 on 14/10/2002 and assessment u/s 143(3) of Act was completed determining total income at Rs. 19,26,106/-. Later on case was reopened and assessment order u/s 143(3) read with section 147 of Act was passed making various additions amounting to Rs. 28,16,750/-. In appeal Ld. CIT(A) partly allowed appeal of assessee. In second appeal ITAT vide its order dated 22/07/2011 deleted amount Rs. 10,00,000/- out of addition of Rs. 16,50,000/- confirmed CIT(A) on account of payment received from M/s Deesha Lease Pvt. Ltd. 4. Ld. A.R. further submitted that since amount in question had been shown in annual accounts of assessee, though claimed as exempt under mutuality concept, Ld. CIT(A) has wrongly confirmed penalty levied by AO. Moreover, in response to notice u/s 148 of Act, return of income was filed by administrator appointed by Registrar of Society. Therefore, assessee has neither concealed any income nor furnished any 3 ITA No 1989/MUM/2014 Assessment Year: 2002-03 incorrect particulars thereof. Relying on judgment of Hon ble Supreme Court in CIT vs. Reliance Petroproducts (322 ITR 158), Ld. A.R. submitted that mere making of claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding income of assessee. Hence, impugned order is liable to be set aside. 5. On other hand Ld. Departmental Representative (DR) relying on concurrent finding of authorities below submitted that since assessee has furnished wrong particulars of income, Ld. CIT(A) has rightly confirmed penalty order passed by AO. 6. We have heard rival submissions and also perused material placed on record. only issue to be adjudicated in this case is whether making of claim in question by assessee, which was not acceptable to tax authorities amounts to furnishing of incorrect particulars of income within meaning of section 271(1)(c) of Act? We find that A.O has levied penalty of Rs.1,97,470/- treating amount of Rs. 6,50,000/- as income of assessee from other sources, rejecting contention of assessee that since amount was received from M/s Deesha Lease Pvt. Ltd., nominal member of society, therefore amount is exempt under mutuality concept. assessee did not challenge assessment order. So, AO only changed head of income and added amount in question to income of assessee. Now question arises whether this attempt of assessee amounts to furnishing incorrect particulars so as to impose penalty u/271(1)(c) of Act? In Reliance Petroproducts P. Ltd.(supra), Hon ble Supreme Court has held that mere making of claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars of income regarding income of assessee. Hence, in our considered opinion, case of 4 ITA No 1989/MUM/2014 Assessment Year: 2002-03 assessee is squarely covered by aforesaid judgment of Hon ble Supreme Court. 7. We therefore, respectfully following ratio laid down by Hon ble Supreme Court in aforesaid case hold that it is not fit fit case where penalty u/s 271(1)(c) of Act can be imposed. In our considered opinion impugned order is not in accordance with law laid down by Hon ble Supreme Court. We, therefore, set aside impugned order passed by Ld. CIT(A) and allow sole ground of appeal of assessee. 8. In result appeal filed by assessee for Asst. year 2002-03 is allowed. Order pronounced in open court on 30th September, 2016 Sd/- Sd/- (B.R.BASKARAN) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated:30/09/2016 Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT(A)- 4.CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ,ITAT, Mumbai Pramila Sambhav Tirth Co-op. Hsg. Socty Ltd. v. ITO, Wd-16(2)(1), Mumbai