Assistant Commissioner of Income-tax, V. Shri Sanjay Laxman Sonawane, Nashik

ITA 1066/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7351 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-09-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 30-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Salary income; Cost of acquisition; Wrong claim
• Section: 143(3); 54F

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.1066/PUN/2015 [ [ / ASSESSMENT YEAR : 2009-10 ASST. COMMISSIONER OF INCOME TAX , CIRCLE 2, WANI HOUSE, 2 ND FLOOR, MUMBAI AGRA ROAD, NASHIK 422001. . / APPELLANT V/S S HRI SANJAY L. SONAWANE, SONAWANE BUNGLOW, KULKARNI COLONY, SHARANPUR ROAD, NASHIK. PAN : ARIPS9892B. . / RESPONDENT ASSESSEE BY : SHRI SANKET JOSHI REVENUE BY : SHRI AJAY MODI / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE REVENUE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) II, NASHIK DT.15.05.2015 FOR THE ASSESSMENT YEAR 2009-10. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM SALARY, RENT, BANK INTEREST AND OTHER SOURCES. ASSESSEE FILED HIS RETURN OF INCOME / DATE OF HEARING : 20.09.2017 / DATE OF PRONOUNCEMENT: 24.10.2017 2 FOR A.Y. 2009-2010 ON 31.07.2009 DECLARING TOTAL INCOME AT RS.1,30,49,400/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.29.12.2011 AND THE TOTAL INCOME WAS DETERMINED AT RS.1,91,30,299/- INTER-ALIA BY MAKING ADDITION OF RS.60,80,899/- ON ACCOUNT OF LONG TERM CAPITAL GAIN. ON THE AFORESAID ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAINS, AO VIDE ORDER DT.24.03.2014 LEVIED PENALTY OF RS.33,48,530/- U/S 271(1)(C) OF THE ACT FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. AGGRIEVED BY THE PENALTY ORDER PASSED BY AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.15.05.2015 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A)-II, NASHIK HAS ERRED IN FACTS AND IN LAW IN DELETING THE PENALTY U/S 271(1)(C) IMPOSED ON ACCOUNT OF MAKING FALSE CLAIM OF DEDUCTION OF RS.32,50,000/- U/S 54F OF THE I.T. ACT, 1961. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN DELETING THE PENALTY U/S 271(1)(C) FOR DISALLOWANCE OF RS.2,00,000/- BEING EXPENDITURE ON RELINQUISHMENT OF RIGHTS WHICH HE FAILED TO SUBSTANTIATE THIS CLAIM IN THE ASSESSMENT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN DELETING THE PENALTY U/S 271(1)(C) FOR DISALLOWANCE OF RS.5,23,000/- AND COST OF IMPROVEMENT OF RS.15,50,000/- WHICH HE FAILED TO SUBSTANTIATE THESE CLAIMS IN THE ASSESSMENT. 4. IT IS THEREFORE PRAYED THAT ORDER OF THE LD.CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER, MAY BE RESTORED. 3. ALL THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGETHER. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTED THAT ASSESSEE HAD SOLD LAND SITUATED AT AGRA ROAD, NASHIK ON 18.06.2008 FOR RS.1,75,00,000/-. ASSESSEE HAD CONSIDERED THE COST OF ACQUISITION AT RS.9,30,000/- AND HAD CLAIMED COST OF SELLING RS.3,50,000/- APART FROM THE COST OF IMPROVEMENT OF RS.15,50,000/-. 3 HE ALSO NOTED THAT ASSESSEE HAD ALSO CLAIMED EXEMPTION U/S 54F OF RS.32,50,000/- ON ACCOUNT OF CONSTRUCTION OF RESIDENTIAL HOUSE. AO NOTED THAT FOR THE PURPOSE OF COST OF ACQUISITION, ASSESSEE HAD PAID ONLY RS.1,00,000/- AND FAILED TO PRODUCE THE DETAILS OF BALANCE COST OF ACQUISITION. WITH RESPECT TO THE COST OF SELLING OF RS.3,50,000/-, HE NOTED THAT ASSESSEE DID NOT PRODUCE THE DETAILS AND CONFIRMATIONS TO WHOM THE PAYMENTS WERE MADE. WITH RESPECT TO THE COST OF IMPROVEMENT, HE NOTED THAT ASSESSEE DID NOT SUBMIT ANY DETAILS OR VOUCHERS TO SHOW THAT THE EXPENSES WERE MADE ON IMPROVEMENT. HE ALSO NOTED THAT ASSESSEE HAD FAILED TO SUBSTANTIATE THE CLAIM U/S 54F OF THE ACT. HE ACCORDINGLY DISALLOWED THE CLAIM MADE BY THE AO AND WORKED OUT THE TAXABLE CAPITAL GAINS. ON THE AFORESAID ADDITIONS MADE, AO VIDE PENALTY ORDER DT.24.03.2014 LEVIED PENALTY OF RS.13,48,533/- U/S 271(1)(C) OF THE ACT. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A) WHO VIDE ORDER DT.15.05.2015 (IN APPEAL NO.NSKI/CIT(A)-2/153/14-15) DELETED THE PENALTY BY HOLDING AS UNDER : 7. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND RIVAL CONTENTIONS. THE AO HAS LEVIED PENALTY ON DISALLOWANCE OF VARIOUS EXPENDITURES CLAIMED BY THE APPELLANT WHILE CALCULATING CAPITAL GAIN. 7.1 IN RESPECT OF DISALLOWANCE OF' EXPENDITURE ON ACCOUNT OF BROKERAGE, IT HAS BEEN NOTICED THAT IN SUPPORT OF THE EXPENDITURE INCURRED ON ACCOUNT OF BROKERAGE RS.3,50,000/-, THE APPELLANT HAS FILED CONFIRMATIONS OF THE 2 BROKERS NAMELY MR. HARISH MENON AND MR. PRAKASH SINGH. THE APPELLANT HAS CLAIMED THAT IT IS A PRACTICE IN THE REAL ESTATE MARKET THAT GENERALLY 2% COMMISSION IS PAID AFTER SUCCESSFUL COMPLETION OF THE DEAL. THE AO. HAS NOT ACCEPTED THE ABOVE EVIDENCE IN THE FORM OF CONFIRMATION LETTERS OF BROKERS STATING THAT THE EVIDENCE FILED IS NOT SUFFICIENT. ON PERUSAL OF THE SAID CONFIRMATION LETTERS OF BROKERS, IT HAS BEEN NOTICED THAT THE SAME ARE WITHOUT PAN AND FULL ADDRESS OF THE BROKERS. THE APPELLANT HAS NOT FILED RECEIPT FOR PAYMENT TO BROKERS, WITH REVENUE STAMPS. THE PAYMENT HAS BEEN MADE IN CASH. THE APPELLANT HAS NOT FILED COPIES OF RETURNS OF INCOME, COMPUTATION OF INCOME, PROFIT AND LOSS ACCOUNT OF THE BROKERS SHOWING THAT THE PAYMENT OF BROKERAGE MADE BY THE APPELLANT HAS BEEN CONSIDERED IN GROSS INCOME OF THE BROKERS IN THEIR RETURNS OF INCOME FILED. THEREFORE, THE APPELLANT HAS NOT 4 PROVED THE CLAIM OF EXPENDITURE TO A REASONABLE EXTENT TO JUSTIFY THAT THE CLAIM WAS BONA-FIDE. THEREFORE, THE AO. IS JUSTIFIED IN LEVYING PENALTY U/S 271(1)(C) OF THE ACT ON THE ADDITION OF RS.3,50,000/-. 7.2 IN RESPECT OF DISALLOWANCE OF EXPENDITURE ON RELINQUISHMENT OF RIGHTS BY PLOT OWNERS RS. 2,00,000/-, IT HAS BEEN NOTICED THAT THE TOTAL EXPENDITURE CLAIMED BY THE APPELLANT AT RS. 3,00,000/- IS SUPPORTED BY THE AGREEMENT WITH THE MEMBERS OF THE SOCIETY AS PER WHICH THE APPELLANT HAS PAID RS.10,000/- TO THE SAID 10 MEMBERS AND THE BALANCE AMOUNT OF RS. 2,00,000/- OUTSTANDING AND WAS TO BE PAID AFTER COMPLETION OF DEAL AFTER RECEIPT OF TOTAL CONSIDERATION. DURING THE REMAND AND APPEAL PROCEEDINGS FOR QUANTUM APPEAL, THE APPELLANT HAD SUBMITTED THAT THE OUTSTANDING AMOUNT HAD BEEN PAID IN SUBSEQUENT YEAR. THE AO AND CIT(A) HAVE ACCEPTED THE AMOUNT PAID RS. 1,00,000/- AND HAS DISALLOWED THE OUTSTANDING AMOUNT OF RS.2,00,000/-. THE APPELLANT'S CLAIM OF THE EXPENDITURE IS SUPPORTED BY THE COPY OF THE DEED OF RELINQUISHMENT OF RIGHTS DATED 20/04/2005 WHICH HAS BEEN WITH THE CIT(A) AND THE A.O. IN VIEW OF THE ABOVE FACTS, IT IS EVIDENT THAT THE EXPLANATION FILED BY THE APPELLANT IS BONAFIDE AND HAS NOT BEEN PROVED TO BE FALSE BY THE A.O. 7.3 IN RESPECT OF DISALLOWANCE OF FENCING EXPENDITURE-OF RS. 5,23,000/-, IT HAS BEEN NOTICED THAT THE A.O. HAS MADE THE DISALLOWANCE STATING THAT SHRI VARMA IS EMPLOYEE OF THE APPELLANT AND HAS CARRIED OUT ONLY THE WORK OF THE APPELLANT AND THE VOUCHERS FILED BY SHRI VARMA ARE NOT PROPER. ON THE OTHER HAND, THE APPELLANT HAS FILED CONFIRMATION FROM SHRI VARMA, HIS PAN, COPIES OF PROFIT AND LOSS ACCOUNT AND BALANCE SHEET AND ACKN, OF HIS RETURN OF INCOME FILED SHOWING GROSS CONTRACT RECEIPTS OF RS. 10,90,509/-, WHICH INCLUDES THE WORK OF THE APPELLANT OF RS.5,23,000/-. THE APPELLANT HAS CLAIMED THAT IN THE STATEMENT RECORDED BY THE A.O., SHRI VARMA HAS CONFIRMED IN HIS STATEMENT RECORDED 'ON OATH BY THE A.O. THAT HE HAS CARRIED OUT WORK OF THE APPELLANT AND HAS RECEIVED RS. 5,23,000/-. THE A.O. HAS, HOWEVER, NOT GIVEN COPY OF THE SAID STATEMENT TO THE APPELLANT. IT HAS ALSO BEEN NOTICED THAT SHRI VARMA IS NOT AN EMPLOYEE OF THE APPELLANT BUT IS A CONTRACTOR AND HAS ALSO DONE WORK OF OTHER PARTIES IN ADDITION TO THE WORK OF THE APPELLANT. THE APPELLANT'S CLAIM OF THE EXPENDITURE IS SUPPORTED BY THE ABOVE MENTIONED EVIDENCE FILED BY THE APPELLANT IN RESPECT OF THE CONTRACTOR SHRI VARMA. IN RESPECT OF THE CONTENTION OF THE CIT(A) THAT THE IMPUGNED LAND WAS NOT IN POSSESSION OF THE APPELLANT AND HENCE, FENCING CANNOT BE MADE IS INCORRECT IN VIEW OF THE ABOVE FACTS AND ALSO IN VIEW OF THE FACT THAT AFTER RECEIVING ULC ORDER IN THE YEAR 2004-05 IN RESPECT OF THE IMPUGNED LAND, THE APPELLANT HAS CARRIED OUT WORK OF FENCING OF THE LAND. IN VIEW OF THE ABOVE FACTS, IT IS EVIDENT THAT THE EXPLANATION FILED BY THE APPELLANT IS BONAFIDE AND HAS NOT BEEN PROVED TO BE FALSE BY THE A.O. BEYOND DOUBT. 7.4 IN RESPECT OF DISALLOWANCE OF COST OF IMPROVEMENT CLAIMED AT RS. 15,50,000/-, INDEXED COST CLAIMED AT RS. 18,79,375/-, IT HAS BEEN NOTICED THAT THE WORK OF IMPROVEMENT HAS BEEN CARRIED OUT BY SANJIWANI BUILDERS AND IN SUPPORT OF THE ABOVE CLAIM, THE APPELLANT HAS FILED COPY OF RETURN OF INCOME, COMPUTATION OF INCOME, PROFIT AND LOSS ACCOUNT AND BALANCE SHEET. THE SANJIWANI BUILDERS HAS SHOWN GROSS BUSINESS RECEIPTS AT RS.30,47,562/- WHICH INCLUDES AN AMOUNT OF RS.15,50,000/- 5 TOWARDS COST OF IMPROVEMENT OF THE IMPUGNED LAND AND HAS SHOWN NET PROFIT AT RS.2,88,915/-. THE APPELLANT HAS ALSO FILED BILLS AND VOUCHERS RAISED BY SANJIWANI BUILDERS IN RESPECT OF THE SAID WORK. THE A.O. HAS NOT ALLOWED THE EXPENDITURE STATING THAT THE SAME HAS NOT BEEN PROVED BY THE APPELLANT TO THE EXTENT REQUIRED. THE CIT(A) HAS CONFIRMED THE ADDITION STATING THAT THE ASSESSEE IS NOT THE OWNER OF THE IMPUGNED LAND AND HENCE QUESTION OF INCURRING EXPENDITURE DOES NOT ARISE. IN THIS REGARD, THE APPELLANT HAS POINTED OUT THAT HIS' FATHER LATE SHRI LAXMAN KEDU SONAWANE WAS OWNING THE POSSESSION OF THE SAID PLOT OF LAND SINCE 1975 AND AFTER HIS DEMISE IN 1995 THE APPELLANT HAS ACQUIRED POSSESSION OF THE SAID PLOT. THE APPELLANT HAS POINTED OUT THAT IN ORDER TO PROTECT THE PLOT THE LAND LEVELING, SLUM REMOVING AND OTHER CIVIL WORK HAS BEEN CARRIED OUT ON THE PLOT BY INCURRING EXPENDITURE OF RS.15,50,000/- WHICH IS SUPPORTED BY THE EVIDENCE FILED ON RECORD, THE VALUE OF THE RIGHTS IN THE PLOT WERE PROTECTED BY THE APPELLANT BY INCURRING THE ABOVE EXPENDITURE WHICH HAS RESULTED INTO REALIZATION OF CONSIDERATION OF RS.1.75 CRORES IN RESPECT OF WHICH THE APPELLANT HAS PAID SUBSTANTIAL TAX ON CAPITAL GAIN EARNED. THE APPELLANT'S CLAIM OF THE EXPENDITURE IS SUPPORTED BY THE ABOVE MENTIONED EVIDENCE FILED BY THE APPELLANT IN RESPECT OF THE CONTRACTOR M/S. SANJIWANI BUILDERS IN RESPECT OF THE CONTENTION OF THE CIT(A) THAT THE IMPUGNED LAND WAS NOT IN POSSESSION OF THE APPELLANT AND HENCE IMPROVEMENT OF THE LAND. IN VIEW OF THE ABOVE FACTS, IT IS EVIDENT THAT THE EXPLANATION FILED BY THE APPELLANT IS BONAFIDE AND HAS NOT BEEN PROVED TO BE FALSE BY THE A.O. 7.5 IT IS ALSO SETTLED LAW THAT FINDINGS IN ASSESSMENT PROCEEDINGS ARE NOT CONCLUSIVE AND ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS, ARE TOTALLY DIFFERENT; BEFORE PENALTY CAN BE IMPOSED THE ENTIRETY OF CIRCUMSTANCES ARE TO BE CONSIDERED. IT IS ALSO SETTLED LAW THAT MERE DISALLOWANCE OF EXPENDITURE WITHOUT PROVING THE SAID EXPENDITURE TO BE FALSE, PARTICULARLY WHEN THE SAID EXPENDITURE IS SUPPORTED BY EVIDENCE WHICH MAY NOT BE CONCLUSIVE AND HAS NOT BEEN PROVED TO BE FALSE BY THE A.O, PENALTY U/S. 271(1) (C) OF THE ACT IS NOT LEVIABLE. THE ABOVE PROPOSITION OF LAW IS SUPPORTED BY THE FOLLOWING DECISION :- .. 7.6 THE CONTENTION OF THE APPELLANT IS ALSO SUPPORTED BY THE RATIO LAID DOWN BY THE DECISIONS RELIED ON BY THE APPELLANT. IN VIEW OF THE ABOVE FACTS AND DISCUSSION AND THE EVIDENCE FILED BY THE APPELLANT IN SUPPORT OF THE EXPENDITURE CLAIMED AND BONAFIDE EXPLANATION FILED BY THE APPELLANT AND ALSO IN VIEW OF THE RATIO LAID DOWN BY THE ABOVE REFERRED DECISIONS, I AM OF THE CONSIDERED VIEW THAT THE A.O. IS NOT JUSTIFIED IN LEVYING PENALTY U/S.271(1)(C) ON ADDITIONS OF RS.2,00,000/-, RS.5,23,000/- AND RS.18,79,375/- AND HENCE THE SAME IS CANCELLED. THE A.O. IS JUSTIFIED IN LEVYING PENALTY U/S 271(1)(C) ON ADDITION OF RS. 3,50,000/- AS HELD IN THE PRECEDING PARA AND THE SAME IS CONFIRMED. 8. IN RESPECT OF PENALTY LEVIED ON DISALLOWANCE OF DEDUCTION U/S. 54F OF THE ACT, IT HAS BEEN NOTICED THAT THE APPELLANT HAS CLAIMED DEDUCTION OF RS. 32,50,000/- U/S. 54F OF THE ACT, IN 6 RESPECT OF CONSTRUCTION OF HOUSE ON THE PLOT OF LAND IN THE NAME OF HIS MOTHER SMT. LEELAVATI SONAWANE. THE APPELLANT HAS ALSO FILED COPY OF UNREGISTERED LEASE DEED DATED 27/05/2001 ON STAMP PAPER OF RS. 20/- IN RESPECT OF THE IMPUGNED PLOT OF THE MOTHER OF THE APPELLANT. IN RESPECT OF UNREGISTERED DOCUMENT, IT HAS BEEN NOTICED THAT THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. LAXMICHAND NARPAL NAGDA 211 ITR 804 (BORN) AND HON'BLE DELHI H.C, IN THE CASE OF BALRAJ VS. CIT 254 ITR 22 (DEL) HAVE LAID DOWN THAT REGISTRATION OF DOCUMENT ON STAMP PAPER IS NOT NECESSARY. 8.1 AS PER THE SAID LEASE DEED, THE APPELLANT WAS ALLOWED TO BUILD A HOUSE FOR CONSIDERATION THAT THE APPELLANT SHALL KEEP A SEPARATE ROOM IN THE HOUSE FOR LESSER I.E SMT.LEELAVATI SONAWARE AND SHALL LOOK AFTER HER DURING HER LIFE TIME. THE PERIOD OF LEASE HAS BEEN AGREED UPTO THE DATE OF DEMISE OF LESSER AND AFTER HER DEMISE THE SAID PLOT SHALL BELONG TO THE APPELLANT. 8.2 THE APPELLANT HAS ALSO POINTED OUT THAT HIS MOTHER WAS HOUSE WIFE AND HAS PURCHASED PLOT IN HER NAME USING THE FUNDS OF HIS FATHER LATE SHRI LAXMAN KEDU SONAWANE AND HENCE THOUGH THE PLOT WAS PURCHASED IN HER NAME, THE APPELLANT BEING SON AND LEGAL HEIR OF SHRI LAXMAN KEDU SONAWANE HAS LEGAL RIGHT IN THE FUNDS USED BY HIS MOTHER FOR PURCHASING THE IMPUGNED PLOT. 8.3 IT HAS ALSO BEEN NOTICED FROM THE PROVISIONS OF SECTION 54F THAT THE SAID SECTION PROVIDES THAT IF WITHIN A PERIOD 3 YEARS AFTER THE DATE OF TRANSFER THE ASSESSEE CONSTRUCTS A RESIDENTIAL HOUSE THEN HE SHALL BE ENTITLED TO DEDUCTION U/S.54F. IT HAS NOT BEEN SPECIFICALLY PROVIDED IN THE SAID SECTION THAT THE HOUSE IS TO BE CONSTRUCTED ON THE PLOT OWNED BY THE ASSESSEE. FURTHER IN THE CASE OF CIT VS. CITIBANK N.A. 261 ITR 570 (BORN), IT HAS BEEN LAID DOWN THAT OWNERSHIP OF SUPER STRUCTURE OF HOUSE CAN BE WITHOUT LAND OWNERSHIP. THE SIMILAR RATIO HAS BEEN LAID DOWN IN FOLLOWING DECISIONS:- I) THE MADRAS CRICKET CLUB ( 2 ITR 209 (PB) (MAD) II) CIT VS. D.L RAMCHANDRA RAO 236 ITR 1 ( MAD) 8.4 FURTHER, IN THE CASE OF CHANDRAKAND S. CHOKSHI HUF, ITA NO. 3540/MUM/2013 A.Y.2009-10, ORDER DATED 26.11.2014, THE CONTENTION OF THE DEPARTMENT THAT HOW THE BUILDING CAN BE CONSTRUCTED OR SOLD WITHOUT THE OWNERSHIP OF LAND BEING TRANSFERRED HAS BEEN REJECTED BY HONBLE MUMBAI TRIBUNAL. FURTHER, THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. P.R.SHESHADRI (2010) 329 ITR 377 HAS LAID DOWN THAT DEDUCTION U/S. 54F CAN BE CLAIMED ON CONSTRUCTION MADE BY THE ASSESSEE ON THE LAND WHICH DID NOT BELONG TO HIM BUT BELONGED TO HIS SPOUSE. IN VIEW OF THE ABOVE FACTS, THE ISSUE UNDER APPEAL IS CERTAINLY DEBATABLE AND HENCE TWO VIEWS ARE POSSIBLE. IT IS SETTLED LAW THAT IN THE CASES WHERE TWO VIEWS ARE POSSIBLE AS THE ISSUE IS DEBATABLE, PENALTY U/S.271(1)(C) IS NOT LEVIABLE. . 8.5 IN THE CASE OF CIT VS. RELIANCE PETRO-PRODUCT (2010) 36 DTR (SC) 449, THE APPELLANT HAS CLAIMED INTEREST EXPENDITURE 7 AS DEDUCTION U/S. 36(1) (III) OF THE ACT, WHICH HAS BEEN DISALLOWED BY THE A.O BEING NOT ALLOWABLE. IT WAS ULTIMATELY HELD BY THE APPELLATE AUTHORITIES THAT THE CLAIM OF INTEREST EXPENDITURE IS NOT ALLOWABLE AS DEDUCTION U/S. 36(1)(III). THE A.O HAS LEVIED PENALTY U/S. 271(1) (C) IN RESPECT OF THE SAID DISALLOWANCE. THE HONBLE SUPREME COURT HAS LAID DOWN AS UNDER : FOR LEVYING PENALTY U/S. 271 (1) (C) OF THE ACT THERE HAS TO BE CONCEALMENT OF PARTICULARS OF INCOME AND SECONDLY THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF INCOME. THE MEANING OF WORD PARTICULARS USED IN SECTION 271(1) (C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM, TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE PENALTY WOULD ARISE. THE HON'BLE SUPREME COURT HAS HELD THAT THE ASSESSEE HAS DULY DISCLOSED INTEREST EXPENDITURE CLAIMED AS DEDUCTION U/S 36(1)(III) IN THE RETURN OF INCOME FILED; MERELY AS THE INTEREST HAS BEEN DISALLOWED AND THE DISALLOWANCE WAS CONFIRMED BY THE TRIBUNAL SUBSEQUENTLY, DOES NOT MEAN THAT THE ASSESSEE HAS CONCEALED INCOME OR FILED THE INACCURATE PARTICULARS THEREOF. 8.6 IN THE CASE UNDER APPEAL, THE APPELLANT HAS FILED RETURN OF INCOME ALONG WITH COMPUTATION OF INCOME, WHEREIN THE APPELLANT HAS DULY DISCLOSED EXPENDITURE TOWARDS COST OF SELLING, COST OF IMPROVEMENT AND ALSO EXPENDITURE FOR CONSTRUCTION OF HOUSE AND DEDUCTION CLAIMED U/S. 54F OF THE ACT. THE SAID CLAIMS HAVE BEEN PARTLY CONFIRMED BY THE CIT(A) IN QUANTUM APPEAL. IN VIEW OF THE ABOVE FACTS OF THE CASE UNDER APPEAL, THE APPELLANT HAS NOT FURNISHED INACCURATE PARTICULARS OF EXPENDITURE/DEDUCTION CLAIMED, WHICH HAS BEEN DISALLOWED BY THE AO. THEREFORE, THE RATIO LAID DOWN BY HON'BLE SUPREME COURT, IN THE ABOVE REFERRED DECISION THAT MERE DISALLOWANCE OF EXPENDITURE/ DEDUCTION DOES NOT ATTRACT PENALTY U/S 271(1)(C) IS SQUARELY APPLICABLE TO THE FACTS OF THE CASE OF THE APPELLANT. 8.7 IT HAS ALSO BEEN NOTICED THAT FOR CONFIRMING THE DISALLOWANCE OF DEDUCTION U/S.54F, THE AO. AND CIT(A) HAVE RELIED ON THE DECISION OF HON'BLE ITAT, PUNE, IN THE CASE OF SHRI KANTILAL C. KANKARIA (ITA NO.461/PN/2011) FOR AY.2003-04 DATED 25/07/2012 (ITAT, PUNE). IN THIS CASE THE AO HAS MADE DISALLOWANCE U/S.54F WHICH HAS BEEN CONFIRMED BY HON'BLE ITAT, PUNE. IN SPITE OF THE ABOVE FACTS, THE AO. HAS DROPPED PENALTY PROCEEDINGS VIDE 8 ORDER DATED 19/03/2012 AND NO PENALTY U/S 271(1)(C) HAS BEEN LEVIED AS THE AO. HAS FOUND THAT ON THE FACTS OF THE CASE THE PENALTY IS NOT LEVIABLE. 9. FURTHER, IN THE CASE OF JOSEPH J. MUDALIAR VS. ACIT (2014) 65 SOT 87 (MUM), IT HAS BEEN LAID DOWN THAT DISALLOWANCE OF DEDUCTION U/S 54/54F DOES NOT ATTRACT PENALTY U/S 271(1)(C) OF THE ACT PARTICULARLY AS THE CLAIM OF THE APPELLANT WAS BONAFIDE. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 5. BEFORE US, LD.D.R. SUPPORTED THE ORDER OF AO. LD.A.R. ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A). HE FURTHER BY POINTING THE ASSESSMENT ORDER SUBMITTED THAT WHILE PASSING THE ASSESSMENT ORDER, AO HAD NOT RECORDED ANY SATISFACTION FOR LEVY OF PENALTY, WHICH IS MANDATORY CONDITION. HE FURTHER SUBMITTED THAT HOWEVER WHILE PASSING THE PENALTY ORDER U/S 271(1)(C) OF THE ACT, THE AO HAS LEVIED PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. HE THEREFORE RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SAMSON PERINCHERY (ITA NO.1154 OF 2014 ORDER DT.05.01.2017) SUBMITTED THAT THE ORDER OF AO NEEDS TO BE SET ASIDE AND SUPPORTED THE ORDER OF CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO LEVY OF PENALTY U/S 271(1)(C) ON THE ADDITIONS MADE WHILE COMPUTING LONG TERM CAPITAL GAINS. WE FIND THAT LD.CIT(A) WHILE DELETING THE PENALTY HAS GIVEN A FINDING THAT ASSESSEE HAD FURNISHED EXPLANATIONS WHICH WERE BONAFIDE AND NOT PROVED TO BE FALSE BY THE AO. HE HAS FURTHER GIVEN A FINDING THAT IN THE RETURN OF INCOME FILED BY THE ASSESSEE, ASSESSEE HAD MADE FULL DISCLOSURE OF INCOME AND IT WAS NOT THE CASE 9 OF FURNISHING OF INACCURATE PARTICULARS OF INCOME, PARTICULARS OF EXPENDITURE / DEDUCTIONS CLAIMED WHICH WERE DISALLOWED BY THE AO. HE ACCORDINGLY GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. BEFORE US, REVENUE HAS NOT PLACED ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF LD.CIT(A) NOR HAS POINTED OUT ANY FALLACY IN HIS FINDINGS. WE ACCORDINGLY FIND NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A). THUS, THE GROUNDS OF REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 24 TH DAY OF OCTOBER, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 24 TH OCTOBER, 2017. YAMINI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. CIT(A)-2, NASHIK. PRL.CIT-2, NASHIK. , , / DR, ITAT, B PUNE; [ / GUARD FILE. / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE.