RAJEE PATWA, MUMBAI V. ITO 25(3)(3), MUMBAI

ITA 1734/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 3980 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 10-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: Bonafide mistake
• Section: 143(3); 6

Judgement Text

P A G E | 1 ITA NO. 1734/MUM/2017 A.Y. 2012 - 13 RAJEE PATWA VS. INCOME TAX OFFICER - 25(3)(3) IN THE INCOME TAX APPELLATE TRIBUNAL ' D ' BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 1734 /MUM/2017 (ASSESSMENT YEAR: 2012 - 13 ) RAJEE PATWA B - 1102, PARIMAL APPTS, OPP ROOPDAR D BLDG. GULMOHAR ROAD, NEAR JUHU LANE, ANDHERI (WEST) MUMBAI - 400056 VS. INCOME TAX OFFICER - 25(3)(3) BANDRA KURLA COMPLEX, MUMBAI. PAN ABUPL4599G APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: SHRI CHAITANYA ANJARIA , D.R DATE OF HEARING: 29 .10.2018 DATE OF PRONOUNCEMENT: 3 1 . 10.2018 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 37, MUMBAI, DATED 26.12.2016, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC.271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT), DATED 29.09.2 015. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLL OWING GROUNDS OF THE APPEAL: PENALTY AMOUNTING TO RS.1,40,116/ - HAS BEEN LEVIED ON THE ADDITION MADE ON ACCOUNT OF INTEREST DISALLOWANCE. THE LD. COMMISSIONER OR INCOME TAX (APPEALS) ERRED IN SUSTAINING PENALTY ON ACCOUNT OF ADDITION MADE ON THE INTEREST DISALLOWANCE. THE LEVY OF PENALTY IS WRONG LOOKING TO THE FACT OF THE CASE AND DESERVES TO BE DELETED. 2. BRIEFLY STATED, THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS C OMPLETED UNDER SEC. 143(3) ON 27.03.2015 ASSESSING HER TOTAL INCOME AT P A G E | 2 ITA NO. 1734/MUM/2017 A.Y. 2012 - 13 RAJEE PATWA VS. INCOME TAX OFFICER - 25(3)(3) RS.12,93,131/ - . THE MAIN ISSUE S OF ADDITION WERE THE DISALLOWANCE OF INTEREST CLAIMED BY THE ASSESSEE UNDER SEC. 24(B) AND AN ADDITION ON ACCOUNT OF CAPITAL GAINS ON TRANSFER OF A RESIDENTIAL HOUSE PROPERTY. THE A.O WHILE CULMINATING THE ASSESSMENT INITIATED PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE. 3. IN THE COURSE OF THE PENALTY PRO CEEDINGS IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD NOT PREFERRED AN APPEAL AGAINST THE DISALLOWANCE OF INTEREST CLAIMED UNDER SEC. 24(B) . T HE A.O VIDE HIS ORDER DATED 29.09.2015 IMPOSED A PENALTY OF RS.1,40,116/ - UNDER SEC.271(1)(C) AS REGARDS THE D ISALLOWANCE OF INTEREST CLAIMED BY THE ASSESSEE UNDER SEC.24(B) OF THE ACT. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING ON THE CONTENTION S OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE SAME AND UP HELD THE PENALTY IMPOSED BY THE A.O UNDER SEC. 271(1)(C) . 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE ISSUE INVOLVED IN THE PRESENT APPEAL LIES IN NARROW COMPASS. THE ASSESSEE HAD IN HER RET URN OF INCOME FOR THE YEAR UNDER CONSIDERATION VIZ. A.Y. 2012 - 13 DISCLOSED A RENTAL INCOME OF RS.2,85,600/ - AGAINST WHICH INTEREST EXPENSE OF RS.7,02,759/ - WAS CLAIMED BY HER. ON THE BASIS OF THE AFORESAID FACTS THE ASSESSEE HAD COMPUTED THE NET LOSS FROM HOUSE PROPERTY AT RS.5,08,587/ - . IN THE COURSE OF THE ASSESSMENT PROCEEDING, IT WAS OBSERVED BY THE A.O THAT THE HOUSING LOAN WAS TAKEN BY THE ASSESSEE ALONG WITH HER HUSBAND AND MAJOR PAYMENTS OF EMI WERE MADE BY HER HUSBAND. IT WAS NOTICED BY THE A.O THA T THE ENTIRE INTEREST EXPENDITURE WAS CLAIMED AS A DEDUCTION BY THE ASSESSEE. ON BEING CONFRONTED WITH THE AFORESAID FACT, THE ASSESSEE FILED A REVISED WORKING AND AFTER REDUCING HER CLAIM OF INTEREST EXPENSES TO AN AMOUNT OF RS.2,56,810/ - , RECOMPUTED THE LOSS FROM HOUSE PROPERTY AT RS.62,369/ - . I N THE COURSE OF THE PENALTY PROCEEDINGS, THE A.O BEING OF THE VIEW THAT THE ASSESSEE HAD IN HER RETURN OF INCOME FURNISHED INACCURATE PARTICULARS OF HER INCOME IN P A G E | 3 ITA NO. 1734/MUM/2017 A.Y. 2012 - 13 RAJEE PATWA VS. INCOME TAX OFFICER - 25(3)(3) RESPECT OF THE INTEREST EXPENDITURE OF RS. 4,45,9 48/ - , THUS IMPOSED A PENALTY OF RS. 1,40,116/ - UNDER SEC.271(1)(C). 6 . WE FIND THAT THE ASSESSEE APPELLANT DESPITE BEING PUT TO NOTICE AS REGARDS THE DATE OF HEARING OF THE APPEAL HA S HOWEVER FAILED TO PUT UP AN APPEARANCE. IN THE BACKDROP OF THE AFORESAID FACTS WE ARE CONSTRAIN ED TO DISPOSE OFF THE APPEAL AFTER HEARING THE RESPONDENT REVENUE. THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) ON THE OTHER HAND RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 7 . WE HAVE HEARD THE LD. D.R AND HAVE PERUSED THE ORDERS OF THE LOWER AUTHORITIES. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE OBSERVATIONS OF THE LOW ER AUTHORITIES. ADMITTEDLY, THE ASSESSEE ALONG WITH HER HUSBAND HAD RAISED A HOUSING LOAN AND MAJOR PAYMENTS OF THE EMI WERE MADE BY HER HUSBAND. HOWEVER, THE ENTIRE INTEREST EXPENDITURE OF RS.7,02,759/ - WAS CLAIMED BY THE ASSESSEE AS A DEDUCTION AGAINST T HE RENTAL INCOME OF RS.2,85,600/ - , THEREIN RESULTING TO A NET LOSS FROM HOUSE PROPERTY OF RS.5,08,587/ - IN HER HANDS. ON BEING CONFRONTED WITH THE AFORESAID FACT, THE ASSESSEE HAD IMMEDIATELY FILED A REVISED COMPUTATION OF INCOME AND REDUCED HER CLAIM OF INTEREST EXPENDITURE TO RS.2,56,810/ - , THEREIN RESULTING TO THE REDUCTION OF THE LOSS FROM HOUSE PROPERTY TO RS.62,369/ - . 8 . WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND FIND SUBSTANTIAL FORCE IN THE CLAIM OF THE ASSESSEE THAT THE ENTIRE INTEREST EXPENDITURE OF RS.7,02,759/ - WAS ON ACCOUNT OF A BONAFIDE MISTAKE CLAIMED AS A DEDUCTION IN THE RETURN OF INCOME . WE FIND THAT IT IS NOT THE CASE OF THE REVENUE THAT EITHER THE AFORESAID AMOUNT OF THE INTEREST EXPENDITURE IS FOUND TO BE I NCORRECT , OR THAT THE HUSBAND OF THE ASSESSEE HAD ALSO RAISED A CLAIM OF DEDUCTION OF HIS SHARE OF INTEREST EXPENDITURE IN HIS RETURN OF INCOME. WE ARE OF THE CONSIDERED VIEW THAT IN THE BACKDROP OF THE AFORESAID FACTS , IT CAN SAFELY BE CONCLUDED THAT THE RAISING OF THE ENTIRE AMOUNT OF INTEREST EXPENDITURE A S A DEDUCTION BY THE ASSESSEE IN HER RETURN OF INCOME WAS ON ACCOUNT OF A BONAFIDE MISTAK E . RATHER, THE ASSESSEE ON LEARNING P A G E | 4 ITA NO. 1734/MUM/2017 A.Y. 2012 - 13 RAJEE PATWA VS. INCOME TAX OFFICER - 25(3)(3) ABOUT THE SAID MISTAKE HAD IMMEDIATELY FILED A REVISED COMPUTATION OF INCOME AND HAD RESTRICTED THE CLAIM OF DEDUCTION TO HER SHARE OF INTEREST EXPENDITURE. WE ARE OF THE CONSIDERED VIEW THAT THOUGH AN ASSESSEE IS EXPECTED TO BE CAREFUL AND VIGILANT AT THE TIME OF FILING OF THE RETURN OF INCOME SO THAT THE SAME MAY NOT SUFFER FROM ANY MISTAKE OR OMISSION , BUT AT THE SAME TIME SCOPE FOR A BONAFIDE MISTAKE CANNOT BE RULED OUT. OUR AFORESAID VIEW IS FORTIFIED BY THE JUDGMENT OF T H E HONBLE APEX COURT IN THE CASE OF PRICE WATERHOUS E COOPERS PVT. LTD. VS. CIT (2012) 348 ITR 306 (SC). THE HONBLE APEX COURT IN ITS AFORESAID JUDGMENT HAD OBSERVED THAT IMPOSITION OF PENALTY WOULD BE UNWARRANTED IN A CASE WHERE THE ASSESSEE HAD COMMITTED AN INADVERTENT AND BONAFIDE ERROR AND HAD NOT INT ENDED TO OR ATTEMPTED TO EITHER CONCEAL ITS INCOME OR FURNISH INACCURATE PARTICULARS. WE THOUGH ARE IN AGREEMENT WITH THE OBSERVATIONS OF THE LOWER AUTHORITIES THAT THE CLAIM OF DEDUCTION OF THE INTEREST EXPENDITURE RAISED BY THE ASSESSEE WAS NOT IN ORDER, BUT AS THE WAS ON ACCOUNT OF A BONAFIDE MISTAKE ON HER PART , WOULD THUS NOT JUSTIFY IMPOSITION OF PENALTY UNDER SEC.271(1)(C) . WE THUS, NOT BEING ABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE VIEW TAKEN BY THE LOWER AUTHORITIES SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE PENALTY OF RS.1,40,116/ - IMPOSED BY THE A.O UNDER SEC.271(1)(C) OF THE ACT. 9 . THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRON OUNCED IN THE OPEN COURT ON 3 1 . 10.2018 S D / - S D / - ( SHAMIM YAHYA ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 31 .10 .2018 PS. ROHIT P A G E | 5 ITA NO. 1734/MUM/2017 A.Y. 2012 - 13 RAJEE PATWA VS. INCOME TAX OFFICER - 25(3)(3) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI