PRAGNESH JAYANTILAL GANGAR, MUMBAI V. ASST CIT 17(2), MUMBAI

ITA 2042/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4301 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 26-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHA K NARANG
• Assessee Lawyers: M C NANIWADEKAR

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN , AM AND AMARJIT SINGH , JM ./ I.T.A. NO . 2042 / MUM/ 201 4 ( / ASSESSMENT YEA R : 20 08 - 09 ) PRAGNESH JAY ANTILAL GANGAR, MEHER VILLA, 737 PARSI COLONY, DR.GHANTI ROAD, DADAR T T MUMBAI - 400014 / VS. DY . COMMISSIONER OF INCOME TAX - 17(2), 2 ND FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI - 400012 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : AACPG8895P / APPELLANT BY SHRI M C NANIWADEKAR / RESPONDENT BY MS.RADHA K NARANG / DATE OF HEARING : 2 9 .12.2015 / DATE OF PRONOUNCEMENT: 1. 1.2016 / O R D E R P ER B R BASKARAN, AM : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 9 - 1 2 - 201 3 PASSED BY LD CIT(A) - 29 , MUMBAI CONFIRMING THE PENALTY OF RS.77234/ - LEVIED BY THE AO U/ S 271(1)(C) OF THE ACT FOR THE ASSESSMENT YEAR 2008 - 09 . 2 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE AO NOTICED THAT THE ASSESSEE HAD LET OUT A PROPERTY SITUATED AT EMPIRE MAHAL, DADAR FOR A SUM OF RS.6,40,000/ - . THE ASSESSEE DEC LARED THE SAME AS INCOME FROM HOUSE PROPERTY AND CLAIMED DEDUCTION OF 30% UNDER SECTION 24(B) OF THE ACT. ON EXAMINATION OF RELEVANT DETAILS, THE AO NOTICED THAT THE ABOVE SAID PROPERTY WAS NOT OWNED BY THE ASSESSEE AND ITA NO. 2042/ MUM/ 201 4 2 HE HAD HELD TENANCY RIGHT OVER THE SAME. ACCORDINGLY, THE AO TOOK THE VIEW THAT THE RENTAL INCOME RECEIVED BY THE ASSESSEE IS REQUIRED TO BE ASSE SS ED UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASSESSEE ALSO AG RE ED WITH THE VIEW TAKEN BY THE AO AND ACCORDINGLY FILED REVISED WORKING OF STATEMENT OF TOTAL INCOME SHOWING RENTAL INCOME OF RS.6,40,000/ - UNDER THE HEAD INCOME FROM OTHER SOURCES. 3 . IN THIS PROCESS, THE TOTAL INCOME CAME OF THE ASSESSEE CAME TO BE INCREASED BY T HE AMOUNT OF DEDUCTION CLAIMED UNDER SECTION 24(B) OF T HE ACT. THE AO INITIATED PENALTY PROCEEDINGS AND LEVIED PENALTY OF RS.77,234/ - FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND THE SAME WAS ALSO CONFIRMED BY THE LD. CIT(A). 4 . THE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E HAD FULL CONTROL OVER THE PROPERTY AND THE HONBLE DELHI HIGH COURT IN THE CASE OF SMARTS (P) LTD V/S CIT (2008) 166 TAXMAN 53 (DELHI) HAS HELD THAT OWNERSHIP OF PREMISES IS NOT AN ESSENTIAL CONDITION FOR ASSESSING THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ACCORDINGLY, THE LD.AR SUBMITTED THAT THE VIEW TAKEN BY THE ASSESSEE WAS SUPPORTED BY THE DECISION OF HONBLE DELHI HIGH COURT AND HENCE, THE RETURN OF INCOME FILED BY THE ASSESSEE CANNOT BE CONSIDERED TO BE A CASE OF FURNISHING OF INACC URATE PARTICULARS OF INCOME. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSEE HAS OTHERWISE DISCLOSED ALL THE DETAILS RELATING TO THE RENTAL INCOME AND IT IS A CASE OF ONLY CHANGE OF HEAD OF INCOME UNDER WHICH THE RENTAL INCOME WAS ASSESSABLE. 5 . ON THE CONTRARY, THE LD.DR SUBMITTED THAT THE ASSESSEE HAS NOT ESTABLISHED THAT HE HAD FULL CONTROL OVER THE PROPERTY SO AS TO CLAIM THAT THE DECISION RENDERED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF SMARTS (P) LTD (SUPRA) IS APPLICABLE TO THE FACTS OF TH E INSTANT CASE. THE LD. DR FURTHER SUBMITTED THAT THE INTENTION OF THE ASSESSEE IN DECLARING THE ITA NO. 2042/ MUM/ 201 4 3 RETURNED INCOME DERIVED FROM THE SUBLETTING OF A TENANTED PROPERTY IS ONLY TO AVAIL THE STANDARD DEDUCTION PRESCRIBED U/S 24(B) OF THE ACT . ACCORDINGLY, THE LD. DR SUBMITTED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME BY DECLARING THE RENTAL INCOME RECEIVED BY HIM UNDER THE WRONG HEAD. 6. HAVING HEA R D THE SUBMISSIONS OF THE PARTIES, WE ARE OF THE VIEW THAT THE PENALTY LEVIED U/S 271(1) (C) OF THE ACT IS NOT EXIGIBLE UNDER THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. THE VIEW TAKEN BY THE ASSESSEE THAT RENTAL INCOME RECEIVED BY HIM FROM SUB - LETT ING PROPERTY IS ASSESSABLE UNDER THE HE A D INCOME F ROM HOUSE PROPERTY I N A WAY GET SUPPOR T S FROM THE DECISION RENDERED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF SMARTS (P) LTD (SUPRA). HENCE, IT CANNOT BE CONSIDERED TO BE A CASE OF INTENTIONAL DECLARATION OF RENTAL INCOME UNDER THE WRONG HEAD. FURTHER, THE ASSESSEE HAS FURNISHED ALL THE DETAILS RELATING TO THE RENTAL INCOME BEFORE THE AO AND HAS ALSO AGREED THAT THE VIEW TAKEN BY THE AO ONLY TO AVOID THE CONTROVERSY. SINCE, THE VIEW TAKEN BY THE ASSESSEE FINDS SUPPORT FROM THE DECISION OF THE HONBLE DELHI HIGH COURT, WE DO NOT AGREE WIT H THE VIEW TAKEN BY THE AO AND CONFIRMED BY THE LD. CIT(A) THAT IT IS A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND DIRECT THE AO TO DELETE THE IMPUGNED PENALTY . 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED ACCORDINGLY ON 1ST JAN,2016 . 1ST JAN, 2016 SD SD ( AMARJIT SINGH ) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 1ST JAN , 2015 . ITA NO. 2042/ MUM/ 201 4 4 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / TH E RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI