SHRI VIVEK JAIN, Jaipur V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-7, Jaipur

ITA 1427/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8632 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 11-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 271(1)(c); 143(3); 54F

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 1427/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2012-13 SHRI VIVEK JAIN 3, C-49, SUNARESH PRIYADARSHANI MARG, TILAK NAGAR, JAIPUR. CUKE VS. THE DCIT, CIRCLE-7, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACNPJ 3952 H VIHYKFKHZ@ A PPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI ROHAN SOGANI (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : ANURADHA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 06/03/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 02/04/2019 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 08.10.2018 OF THE LD. CIT(A), JAIPUR ARISING FROM T HE PENALTY ORDER PASSED U/S 271(1)(C) OF THE I.T. ACT FOR THE ASSESS MENT YEAR 2012-13. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE PENALTY AMOUNTIN G TO RS. ITA NO.1427/JP/2018 SHRI VIVEK JAIN VS. DCIT 2 1,15,353/- U/S 271(1)(C) OF THE INCOME TAX ACT, 196 1. THE ACTION OF LD. CIT(A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AN D AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY DELETI NG THE SAID PENALTY OF RS. 1,15,323/-. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. AO HAS ERRED IN IMPOSING PENALTY U/S 271(1)(C) WITH OUT SPECIFICALLY POINTING OUT WHETHER THE PENALTY WAS P ROPOSED ON CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISH ING INACCURATE PARTICULARS OF INCOME. THE ACTION OF THE LD. AO IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE PENALTY IMPOS ED U/S 271(1)(C). 3. THE ASSESSEE CRAVES HIS RIGHT TO ADD, AMEND OR A LTER ANY OF THE GROUNDS ON OR BEFORE THE HEARING. 2. AT THE TIME HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE HAS STATED AT BAR THAT THE ASSESSEE DOES NOT PRESS GROU ND NO. 2 AND THE SAME MAY BE DISMISSED AS NOT PRESSED. THE LD. DR HA S RAISED NO OBJECTION IF GROUND NO. 2 OF THE ASSESSEES APPEAL IS DISMISSED AS NOT PRESSED. ACCORDINGLY THE GROUND NO. 2 OF THE ASSESS EES APPEAL IS DISMISSED BEING NOT PRESSED. 3. GROUND NO. 1 REGARDING LEVY OF PENALTY U/S 271(1 )(C) OF THE I.T. ACT WHICH WAS CONFIRMED BY THE ASSESSEE TO THE EXTE NT OF RS. 1,15,353/-. THE ASSESSEE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME ON 03.10.2012 DECLARING TOTAL INCOME OF RS. 50,63,6 80/-. SUBSEQUENTLY THE INCOME WAS REVISED ON 25.02.2014 TO RS. 63,01,3 50/-. THE ASSESSING OFFICER WHILE COMPLETED THE ASSESSMENT DI SALLOWED THE CLAIM ITA NO.1427/JP/2018 SHRI VIVEK JAIN VS. DCIT 3 OF DEDUCTION U/S 54F OF THE I. T. ACT OF RS. 30,00, 000/- ON THE GROUND THAT THE ASSESSEE HAS PURCHASED A RESIDENTIAL PROPE RTY IN THE NAME OF HIS WIFE SMT. NIKITA JAIN. THE AO HAS ALSO DISALLOW ED THE CLAIM OF INTEREST TO THE EXTENT OF RS. 3,73,310/- ON THE GRO UND THAT OF THE PROPERTY IS SELF OCCUPIED AND IS RENTED. THUS WHI LE COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT THE AO HAS MADE DI SALLOWANCE OF RS. 33,73,310/-. THE PENALTY PROCEEDINGS WERE INITIATED U/S 271(1)(C) OF THE ACT IN RESPECT OF THESE TWO ADDITIONS/DISALLOW ANCES MADE BY THE AO AND THE PENALTY OF RS. 10,42,353/- WAS LEVIED AT 100% OF TAX TO BE EVADED VIDE ORDER DATED 28.02.2017 PASSED U/S 271(1 )(C) OF THE IT ACT. ON APPEAL, THE LD. CIT(A) HAS DELETED THE PENALTY L EVIED IN RESPECT OF DISALLOWANCE DEDUCTION U/S 54F OF THE ACT AS THE SA ID CLAIM WAS ALLOWED IN THE QUANTUM APPEAL BY THE LD. CIT(A) HOWEVER, TH E LD. CIT(A) HAS CONFIRMED THE PENALTY TO THE EXTENT OF RS. 1,15,353 /- AGAINST THE DISALLOWANCE OF INTEREST U/S 24(B) OF THE IT ACT OF RS. 3,73,310/-. 4. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMIT TED THAT THE ASSESSEE HAS TAKEN LOAN FOR ACQUISITION OF THE HOUS E PROPERTY IN QUESTION WHICH WAS SELF OCCUPIED AS WELL AS LET OUT PARTLY. THE ASSESSEE HAS OFFERED RENTAL INCOME TO TAX AFTER CLAIMING OF DEDUCTION U/S 24(B) OF THE ACT OF THE ENTIRE INTEREST ON THE HOUSING LOAN HOWEVER, THE ITA NO.1427/JP/2018 SHRI VIVEK JAIN VS. DCIT 4 ASSESSING OFFICER HAS MADE DISALLOWANCE OF RS. 3,73 ,310/- BY CONSIDERING THE FACT THAT OF THE HOUSE PROPERTY I S SELF OCCUPIED AND LET OUT THEREFORE, A PROPORTIONATE DISALLOWANCE W AS MADE BY THE AO. THE LD. AR HAS SUBMITTED THAT WHEN THE CLAIM OF THE ASSESSEE IS NOT FOUND TO BE BOGUS BUT IT IS BONAFIDE CLAIM OF INTER EST EXPENDITURE ON THE HOUSE LOAN THEN RESTRICTING THE CLAIM OF THE INTERE ST TO RS. 3,24,436/- AND BALANCE RS. 3,73,310/- WAS DISALLOWED WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME OR C ONCEALMENT OF PARTICULARS OF INCOME. THE ASSESSEE HAS MADE THE CL AIM OF ACTUAL INTEREST BUT AS PER THE PROVISIONS OF THE ACT THE C LAIM OF THE ASSESSEE WAS PARTLY ALLOWED IN TERMS OF THE PROVISIONS OF SE CTION 24(B) OF THE ACT AND THE BALANCE AMOUNT WAS DISALLOWED DUE TO THE RE ASONS THAT THE MAXIMUM ALLOWABLE CLAIM IN RESPECT OF SELF OCCUPIED IS RS. 1,50,000/- AND A PROPORTIONATE AMOUNT OF INTEREST FOR SHARE OF THE LET OUT PORTION IS RS. 1,74,436/- WHEREAS THE ASSESSEE CLAI MED THE ENTIRE INTEREST EXPENDITURE OF RS. 6,97,746/-. THE LD. AR HAS THUS CONTENDED THAT EVEN OTHERWISE IT IS BONA-FIDE AND INADVERTENT MISTAKE WHEN ALL THE RELEVANT PARTICULARS WERE DULY DISCLOSED IN THE RET URN OF INCOME. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE D ECISION OF HONBLE SUPREME COURT IN CASE OF CIT VS. RELIANCE PETROPRODUCTS (P.) LTD. ITA NO.1427/JP/2018 SHRI VIVEK JAIN VS. DCIT 5 322 ITR 158 AS WELL AS THE DECISION IN CASE OF PRICE WATERHOUSE COOPERS (P.) LTD. VS. CIT 348 ITR 306 . THE LD. AR HAS PLEADED THAT THE PENALTY CONFIRMED BY THE LD. CIT(A) MAY BE DELE TED. 5. ON THE OTHER HAND, LD. DR HAS SUBMITTED THAT THE ASSESSEE HAS MADE AN EXCESSIVE CLAIM OF INTEREST WHICH IS NOT PE RMISSIBLE AS PER THE PROVISIONS OF ACT. SINCE, THE RESIDENTIAL HOUSE WAS OCCUPIED TO THE EXTENT AND WAS LET OUT THE REMAINING PORTION I.E. PART OF THE HOUSE. THE DEDUCTION ON ACCOUNT OF INTEREST U/S 24( B) OF THE ACT IN RESPECT OF SELF OCCUPIED HOUSE IS ALLOWABLE ONLY TO THE EXTENT OF RS. 1,50,000/- AND OF THE TOTAL INTEREST OF HOUSING L OAN AGAINST THE RENTAL INCOME. THIS IS NOT DEBATABLE ISSUE THEREFORE, IT I S A CLEAR CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE WHEN AN EXCESSIVE CLAIM WAS MADE FOR DEDUCTION OF INTEREST EXPENDITURE. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAD PURCHASED A RE SIDENTIAL FLAT SITUATED AT C-49, PRIYADARSHANI MARG, TILAK NAGAR, JAIPUR BY UTILISING THE HOUSING THE LOAN TAKEN FROM HDFC BANK. DURING THE P REVIOUS YEAR THE RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE PAID INTEREST OF RS. 6,97,746/- TO HDFC BANK. IN THE RET URN OF INCOME, THE ITA NO.1427/JP/2018 SHRI VIVEK JAIN VS. DCIT 6 ASSESSEE HAS CLAIMED ENTIRE INTEREST PAID OF RS. 6, 97,746/- U/S 24(B) OF THE ACT. HOWEVER, THE AO NOTED THAT OF THE SAID F LAT WAS SELF OCCUPIED BY THE ASSESSEE FOR HIS RESIDENTIAL PURPOS E AND WAS RENTED @ RS. 5000/- P.M. THE AO HAS CALCULATED ALLOWABLE I NTEREST DEDUCTION U/S 24(B) OF THE ACT WHICH IS RS. 1,50,000/- IN RES PECT OF SELF OCCUPIED PORTION AND SHARE OF THE TOTAL INTEREST PAID COME S TO RS. 1,74,436/-. ACCORDINGLY, THE AO COMPUTED THE ALLOWABLE DEDUCTIO N OF INTEREST OF RS. 3,24,436/- AND THE BALANCE RS. 3,73,310/- WAS DISAL LOWED. THE AO LEVIED THE PENALTY U/S 271(1)(C) OF THE ACT IN RESP ECT OF THE SAID DISALLOWANCE OF CLAIM OF DEDUCTION ON ACCOUNT OF IN TEREST. THERE IS NO DISPUTE THAT THE ASSESSEE HAS PAID INTEREST OF RS. 6,97,746/- ON HOUSING LOAN AND CLAIM THE SAME U/S 24(B) OF THE ACT. THUS, THE NECESSARY PARTICULARS REGARDING THE INCOME AND THE CLAIM OF D EDUCTION U/S 24(B) OF THE ACT WERE DISCLOSED BY THE ASSESSEE IN THE RE TURN OF INCOME. HOWEVER, THE AO FOUND THAT THE AMOUNT OF INTEREST A LLOWABLE U/S 24(B) OF THE ACT IS ONLY RS. 3,24,436/- AS AGAINST THE TO TAL INTEREST PAYMENT OF RS. 6,97,746/-. ONCE, THE ASSESSEE HAS DISCLOSED PA RTICULARS OF INCOME AS WELL AS THE CLAIM ON ACCOUNT OF INTEREST PAYMENT OF HOUSING LOAN IN THE RETURN OF INCOME THEN, THE SAID CLAIM OF INTERE ST WAS NOT FULLY ALLOWABLE UNDER THE PROVISIONS OF SECTION 24(B) OF THE ACT ON ACCOUNT OF ITA NO.1427/JP/2018 SHRI VIVEK JAIN VS. DCIT 7 PART OF THE RESIDENTIAL HOUSE WAS SELF OCCUPIED BY THE ASSESSEE WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF PARTICULARS OF INCOME. THE PAYMENT O F THE INTEREST OF RS. 6,97,746/- OF THE HOUSE LOAN IS NOT IN DISPUTE THEREFORE, IF THE SAID CLAIM IS NOT FULLY ALLOWABLE UNDER THE PROVISIONS O F THE ACT WOULD NOT IPSO FACTO LED TO THE CONCLUSION THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME. IT IS ONLY RE-COMPUTATION OF DEDUCTION OF INTEREST EXPENDITURE AS PER THE PROVISIONS OF SECTION 24(B) OF THE ACT IN LIGHT OF THE FACT THAT THE ASSESSEE HAD SELF OCCUPIED PART O F THE RESIDENTIAL HOUSE AND THEREBY THE CLAIM OF THE ASSESSEE WAS PAR TLY ALLOWED AND PARTLY DISALLOWED. ACCORDINGLY, IN THE FACTS AND CI RCUMSTANCES OF THE CASE, ONCE THE PRIMARY FACT AS DISCLOSED BY THE ASS ESSEE ARE NOT FOUND TO BE INCORRECT THEN THE CLAIM OF DEDUCTION ON ACCO UNT OF INTEREST MAY BE PARTLY NOT ALLOWABLE U/S 24(B) OF THE ACT WOULD NOT ATTRACT THE PENALTY PROVISIONS OF SECTION 271(1)(C) OF THE ACT. THE EXPLANATION OF THE ASSESSEE IS ALSO REASONABLE THOUGH IT MAY NOT B E ACCEPTABLE AS PER THE LIMITATION PROVIDED U/S 24(B) OF THE ACT. ACCOR DINGLY, WE DELETE THE PENALTY OF LEVY U/S 271(1)(C) OF THE ACT ON ACCOUNT OF DISALLOWANCE OF INTEREST U/S 24(B) OF THE ACT. ITA NO.1427/JP/2018 SHRI VIVEK JAIN VS. DCIT 8 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 02/04/2019 SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 02/04/2019. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI VIVEK JAIN, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CIRCLE-7, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 1427/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR