SURESH SHIVLAL BHASIN, MUMBAI V. ASST CIT 25(1), MUMBAI

ITA 1705/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0836 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 10-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER & SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NOS.1705 & 1707/MUM/2017 ASSESSMENT YEARS : 2011-12 & 2009-10 SHRI SURESH SHIVLAL BHASIN, 301 GREEN ACRES, LOKHANDWALA COMPLEX, ANDHERI (W), MUMBAI 400 053. PAN AADPB0721E VS. ASST. CIT 25(1), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI CHAUDHARY ARUN KUMAR SINGH DATE OF HEARING : 1 3 . 11 .201 8 DATE OF PRONOUNCEMENT : 30 .11 .201 8 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER THE AFORESAID APPEALS BY THE ASSESSEE ARE AGAINST TWO SEPARATE ORDERS OF LEARNED CIT(A)-37, MUMBAI, CONFIRMING PENALTY IM POSED U/S. 271(1)(C) OF THE ACT FOR THE A.YS 2009-10 AND 2011-12. 2. WHEN THE APPEALS WERE CALLED FOR HEARING NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE INSPITE OF HEARING NOTICE IS SUED BY THE REGISTRY THROUGH REGISTERED POST. ON THE PREVIOUS OCCASION ALSO WHEN THE APPEAL WAS FIXED FOR HEARING NO ONE APPEARED FOR THE ASSESSEE. IN THE AFORESAID CIRCUMSTANCES, WE PROCEED TO DISPOSE OF THE APPEAL EX-PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DR. ITA NOS.1705 & 1707/MUM/2017 SURESH SHIVLAL BHASIN 2 3. BRIEFLY, FACTS WHICH ARE MORE OR LESS COMMON IN BOTH THE APPEALS ARE AS FOLLOWS. THE ASSESSEE, AN INDIVIDUAL, FILED HIS RE TURN OF INCOME FOR A.Y. 2009- 10 ON 25.09.2009 DECLARING TOTAL INCOME AT ` 1,25,39,250/-. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ING THAT THE ASSESSEE HAS CLAIMED INTEREST EXPENDITURE OF ` 11,81,282/- AGAINST INTEREST INCOME FROM FIXED DEPOSIT, DISALLOWED THE SAME. SIMILARLY, THE ASSESSING OFFICER ADDED AN AMOUNT OF ` 7,426/- ON ACCOUNT OF NOTIONAL INCOME FROM HOUSE P ROPERTY. THUS, IN THE PROCESS, THE ASSESSING OFFICER DETERMI NED THE TOTAL INCOME AT ` 1,37,29,960/- FOR A.Y. 2009-10. FOR A.Y. 2011-12, THE ASSESSEE FILED HIS RETURN OF INCOME ON 23.09.2011, DECLARING TOTAL INC OME OF ` 96,68,780/-. AS WAS THE CASE IN A.Y. 2009-10, IN A.Y. 2011-12 ALSO THE ASSESSING OFFICER DISALLOWED INTEREST EXPENDITURE OF ` 30,95,365/- CLAIMED AGAINST INTEREST INCOME FROM FIXED DEPOSIT AND MADE ADDITION OF ` 2,12,436/- ON ACCOUNT OF NOTIONAL INCOME FROM HOUSE PROPERTY. IN THE PROCES S THE TOTAL INCOME WAS DETERMINED AT ` 1,29,66,590/- . ON THE BASIS OF AFORESAID ADDITIO NS MADE, THE ASSESSING OFFICER INITIATED PROCEEDINGS FOR IMP OSITION OF PENALTY U/S. 271(1)(C) OF THE ACT IN BOTH THE ASSESSMENT YEARS. IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER, THOUG H, THE ASSESSEE FURNISHED EXPLANATION OBJECTING TO THE IMPOSITION OF PENALTY, THE ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE AND IMPOSE D PENALTY U/S. 271(1)(C) OF THE ACT FOR AN AMOUNT OF ` 4,04,721/- IN A.Y. 2009-10 AND ` 10,19,021/- IN ITA NOS.1705 & 1707/MUM/2017 SURESH SHIVLAL BHASIN 3 A.Y. 2011-12 ALLEGING CONCEALMENT OF INCOME AND FUR NISHING OF INACCURATE PARTICULARS OF INCOME. BEING AGGRIEVED OF THE PENA LTY ORDERS SO PASSED, ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A) . HOWEVER, THE LEARNED CIT(A) ALSO CONFIRMED THE PENALTY IMPOSED U/S. 271( 1)(C) OF THE ACT IN BOTH THE ASSESSMENT YEARS UNDER APPEAL. 4. THE LEARNED DR RELIED UPON THE OBSERVATIONS OF T HE DEPARTMENTAL AUTHORITIES. 5. WE HAVE HEARD THE LEARNED DR AND PERUSED THE MAT ERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD, THE IMPOSIT ION OF PENALTY U/S. 271(1)(C) OF THE ACT IN BOTH THE ASSESSMENT YEARS W ERE MADE ON THE BASIS OF ADDITIONS ON ACCOUNT OF DISALLOWANCE OF INTEREST EX PENDITURE AND NOTIONAL HOUSE PROPERTY INCOME. IN SO FAR AS DISALLOWANCE O F INTEREST EXPENDITURE IS CONCERNED, AS COULD BE SEEN FROM THE SUBMISSIONS MA DE BY THE ASSESSEE BEFORE THE LEARNED CIT(A), THE ASSESSEE HAS AVAILED OF OVERDRAFT FACILITY FROM DENA BANK AND OUT OF THE FUNDS BORROWED FROM OVERDR AFT ACCOUNT INVESTMENT WAS MADE IN TAXABLE BONDS OF RBI AS WELL AS FIXED D EPOSIT. IT IS FURTHER EVIDENT FROM THE SUBMISSIONS OF THE ASSESSEE, AGAIN ST THE INTEREST INCOME EARNED FROM TAXABLE BONDS AND FIXED DEPOSITS, WHICH WAS OFFERED AS INCOME, ASSESSEE HAS SET OFF THE INTEREST EXPENDITURE INCUR RED ON ACCOUNT OF FUNDS BORROWED FROM THE OVERDRAFT ACCOUNT. THIS CLAIM OF SET OFF OF INTEREST EXPENDITURE AGAINST INTEREST INCOME HAS BEEN REJECT ED BY THE ASSESSING ITA NOS.1705 & 1707/MUM/2017 SURESH SHIVLAL BHASIN 4 OFFICER IN COURSE OF ASSESSMENT PROCEEDINGS. THUS, AS COULD BE SEEN FROM THE FACTS ON RECORD, UNDER A BONA FIDE BELIEF THAT INTEREST EXPENDITURE INCURRED ON THE OVERDRAFT FACILITY IS ALLOWABLE AGA INST THE INTEREST INCOME EARNED BY INVESTING THE FUNDS BORROWED FROM THE OVE RDRAFT ACCOUNT ASSESSEE HAS CLAIMED THE EXPENDITURE. THIS, IN OUR VIEW, NE ITHER LEADS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME NOR CONCEALMENT OF INCOME. HENCE, ASSESSEES EXPLANATION THAT THE CONDITIONS OF SECTI ON 271(1)(C) OF THE ACT ARE NOT SATISFIED APPEARS TO BE PLAUSIBLE. THAT BEIN G THE CASE, NO PENALTY U/S. 271(1)(C) OF THE ACT CAN BE IMPOSED ON ACCOUNT OF D ISALLOWANCE OF INTEREST EXPENDITURE. AS REGARDS IMPOSITION OF PENALTY ON T HE ADDITION MADE ON ACCOUNT OF NOTIONAL HOUSE PROPERTY INCOME, IT GOES WITHOUT SAYING THAT IN REALITY THE ASSESSEE HAS NOT EARNED ANY INCOME FROM HOUSE PROPERTY. THE ASSESSING OFFICER HIMSELF HAS OBSERVED THAT THE ADD ITION MADE ON ACCOUNT OF INCOME FROM HOUSE PROPERTY IS NOTIONAL. IN THAT VI EW OF THE MATTER, PENALTY U/S. 271(1)(C) OF THE ACT CANNOT BE IMPOSED IN RESP ECT OF ADDITION MADE ON ACCOUNT OF NOTIONAL INCOME FROM HOUSE PROPERTY. TH US, ON OVER ALL CONSIDERATION OF FACTS AND CIRCUMSTANCES, WE ARE OF THE OPINION THAT IMPOSITION OF PENALTY U/S. 271(1)(C) OF THE ACT, IN THE FACTS OF THE PRESENT APPEALS IS NOT JUSTIFIED. ACCORDINGLY, WE DELETE T HE PENALTY IMPOSED U/S. 271(1)(C) OF THE ACT IN BOTH THE ASSESSMENT YEARS U NDER APPEAL. ITA NOS.1705 & 1707/MUM/2017 SURESH SHIVLAL BHASIN 5 6. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 3 0 TH NOVEMBER, 2018. SD/- SD/- (RAMIT KOCHAR) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED : 30 TH NOVEMBER, 2018. SA COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE C I T(A), MUMBAI. 4. THE C I T 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER, //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI