MR. JAIKISHAN S. VASWANI , MUMBAI V. ACIT 17(2) , MUMBAI

ITA 1549/MUM/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2056 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 05-09-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Notional interest
• Section: 271(1)(c); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH MUMBAI Before Shri Sanjay Garg, Judicial Member & Shri Om Prakash Kant, Accountant Member I.T.A. No.1549/Mum/2021 Assessment Year: 2010-11 Mr. Jaikishan S. Vaswani.............................................................Appellant 71, Maker Towers, ‘L’ Block, Cuffe Parade, Mumbai-400005. [PAN:ADZPV0486F] vs. ACIT-17(2), Mumbai...............................................................Respondent Appearances by: Shri Shashi Bekal, appeared on behalf of the appellant. Shri S N Kabra appeared on behalf of the Respondent. Date of concluding the hearing : May 18, 2022 Date of pronouncing the order : May 18, 2022 ORDER Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 09.07.2021 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. The assessee in this appeal is aggrieved by the action of the ld. CIT(A) in confirming the levy of penalty by the Assessing Officer u/s 271(1)(c) of the Act. 3. Brief facts of the case are that earlier the property of the assessee namely Flat No.72, L Block Maker Tower, Cuffe Parade, Mumbai was let out to Bank of America till Financial Year 2007-08 at the rate of Rs.2 lakhs per month and the annual rental value from the aforesaid house property was accordingly assessed. However, during the Financial Year 2008-09, the assessee entered into a new lease agreement with the subsequent lessee i.e. ABN Amro Bank NV, whereupon, the monthly rent of the property was settled at Rs.25,000/- and security deposit of Rs.4 crores was also accepted. The assessee accordingly offered the annual rental value of the property at Rs.3 lakh on the basis of new lease agreement, which was not accepted by the Assessing Officer. During I.T.A. No.1549/Mum/2021 Assessment Year: 2010-11 Mr. Jaikishan S. Vaswani 2 the assessment proceedings, the Assessing Officer took notice of the earlier rent of Rs.2 lakh per month and also took into account the notional interest value on security deposit of Rs.4 crore and accordingly assessed the rental value of the property at Rs.2 lakh per month and made the addition of Rs.16,80,000/-. The assessee contested the aforesaid addition upto the level of the Tribunal but could not succeed. In the meantime, the Assessing Officer initiated penalty proceedings on this issue and levied the impugned penalty on account of furnishing of inaccurate particulars of income relating to the annual rental value of the house property in question. 4. The ld. CIT(A) confirmed the penalty so levied by the Assessing Officer on this issue, the assessee thus has come in appeal before us. 5. We have heard the rival contentions and gone through the records. In this case, earlier the assessee used to get the monthly rental of Rs.2 lakh from the property which was offered for taxation as per law. However, subsequently the property was let out to the new tenant namely ABN Amro Bank NV, whereupon, a new agreement was executed between the parties and whereby a security deposit of Rs.4 crores was taken by the assessee from the tenant and the rent was fixed at Rs.25,000/- per month only. The assessee accordingly computed annual rental value of the property at Rs.3 lakh and offered the same for taxation. However, the Assessing Officer as noted above, assessed the annual rental value taking into considering the earlier rent receipt of Rs.2 lakh per month and made the additions to the income of the assessee from house property accordingly. The assessee in this case did not conceal or furnish any inaccurate particulars of income. All the facts were duly disclosed. As per the terms of the agreement, the rental value of the property was fixed at Rs.25,000/- per month. Though, the Assessing Officer has estimated the rental value of the property taking into consideration the security deposit of Rs.4 crore by the assessee, however, the facts of the case do not suggest that the assessee has furnished any inaccurate particulars of income. There is no evidence on the file that the assessee has received any interest income on the aforesaid security deposits received by the assessee. Under the circumstances, in our I.T.A. No.1549/Mum/2021 Assessment Year: 2010-11 Mr. Jaikishan S. Vaswani 3 view, it is not a fit case for levy of penalty u/s 271(1)(c) of the Act. Moreover, under similar circumstances in the own case of the assessee for Assessment Year 2009-10, the Tribunal vide order dated 14.07.2017 passed in ITA No.1841/Mum/2016 has deleted the penalty. In view of this, the penalty levied/confirmed by the lower authorities u/s 271(1)(c) of the Act on this issue is ordered to be deleted. 6. In the result, the appeal of the assessee stands allowed. Mumbai, the 18 th May, 2022. Sd/- Sd/- [Om Prakash Kant] [Sanjay Garg] Accountant Member Judicial Member Dated: 18.05.2022. RS Copy of the order forwarded to: 1. Mr. Jaikishan S. Vaswani 2. ACIT-17(2), Mumbai 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Mumbai Benches