Amit Shukla, J.M.
1. The present appeal has been preferred by the assessee challenging the impugned order 9th November 2011, passed by the learned Commissioner of Income Tax-XIX, Mumbai, for the assessment year 2007-08, in the matter of penalty levied under section 271(1)(c) M/s. Falcon Crest Condominium for 2,00,204, by the Assessing Officer and confirmed by the learned Commissioner (Appeals).
2. Facts in brief:- The assessee is a housing society and is formed as condominium of residents rather than a co-operative society. The status of the assessee is more of an Association of Persons (for short "AOP"), whose members contribute their monthly maintenance and other charges towards common cause like property tax, security charges, water tax, etc. Since the entire activity is among the members with no profit motive, the assessee's claim has been that it is based on concept of "mutuality" not liable to be tax vis-a-vis expenditure incurred. In the return of income, the assessee had shown loss of ` 50,530. The Assessing Officer in the assessment proceedings held that under the provisions of section 80P(2), the following amounts are not eligible for deduction i.e., (i) interest received on fixed deposit from bank at ` 1,39,137; (ii) licence fee on letting out of immovable property; and (iii) transfer fee, as the assessee itself, vide letter dated 24th August 2009, offered the same for disallowance. Accordingly, the Assessing Officer had made following additions in the assessment order. Interest of FDR (since this amount is 1,39,137 not covered u/s 90P(2) benefit; Amount received as licence fee on 6,31,793 letting out of immovable property; Transfer fee. 50,000 8,20,930
3. Thereafter, the assessee did not prefer any appeal before the learned Commissioner (Appeals). In the penalty proceedings, the Assessing Officer levied penalty on such disallowance mainly on the M/s. Falcon Crest Condominium ground that the assessee himself had come forward with a letter dated 24th August 2009, during the course of the assessment proceedings for disallowing the said deduction. The learned Commissioner (Appeals) too has confirmed the penalty mainly on the ground that such a disallowance was offered only when the case was selected for scrutiny. Therefore, it is a case of admitted wrong claim of deduction.
4. Before us, the learned Counsel, Mr. Madhur Agrawal, on behalf of the assessee submitted that the very premise of the Assessing Officer that the assessee has claimed deduction under section 80B is wholly erroneous, as in the return of income, the assessee has not claimed any such deduction under section 80P. In support, he drew our attention to the copy of the return of income and computation of income as placed in the paper book at Page-1 and 2. He further submitted that in this case, the Assessing Officer had sent a notice under section 142(1), requiring the assessee to furnish only the following documents.
i) Copy of bank account;
ii) Copy of balance sheet for A.Y. 2006-07; iii) Details of investment made during the year; iv) Details of family antecedent and drawings; v) Details of income from other sources.
5. There was no such query with regard to the disallowance of any claim of deduction. The assessee, suo-motu, without any query being raised on this issue, vide letter dated 24 th May 2009, has offered the disallowance on these heads. Thus, the assessee has himself made disallowance which does not warrant any penalty. Moreover, the premise of the Assessing Officer as well as the learned Commissioner (Appeals) is factually and legally incorrect. M/s. Falcon Crest Condominium
6. On the other hand, the learned Departmental Representative submitted that in any case if the assessee has himself offered for disallowance, then the Revenue need not establish concealment of income for furnishing of inaccurate particulars. He thus, strongly relied upon the order of the learned Commissioner (Appeals).
7. We have heard the rival contentions, perused the findings of the authorities below as well as the material available on record. In this case, first of all, the Assessing Officer and the learned Commissioner (Appeals) has proceeded on the premise that such a claim of expenses is not liable for deduction under section 80P(2). This very premise itself is erroneous from the records, as the assessee neither, at the time of filing of the return of income, nor at the stage of assessment proceedings, has claimed the deduction under section 80P. In the notice issued under section 142(1) dated 31st July 2009, the Assessing Officer did not raise any query or call for any details with regard to the claim of the expenses viz. interest on bank FDR and saving bank account, licence fee on leased property and transfer fee, which is evident from the contents of the details arose from the notice under section 142(1). The assessee, suo-motu, vide letter dated 24th August 2009, has given the detail reasons for claim of expenditure and why it has offered for disallowance the said expenditures. Such a disallowance has been accepted by the Assessing Officer. It is not a case where the Assessing Officer has cornered the assessee or even raised any query before the assessee offered for such disallowance. Under these facts and circumstances, we are of the opinion that levy of penalty is not warranted on such disallowance of expenditures, which has been offered by the assessee itself. Moreover, it cannot be the case of furnishing of inaccurate particulars of income as all the details were M/s. Falcon Crest Condominium furnished and the reasons were given why such a claim was made, that is, on principles of mutuality. Accordingly, we set aside the impugned order passed by the learned Commissioner (Appeals) and delete the penalty confirmed by him. Thus, the ground raised by the assessee is treated as allowed.
7. In the result, assessee's appeal is treated as allowed.