KAJAL V.MANGE, MUMBAI V. ITO WD 23(2)(4), MUMBAI

ITA 2301/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92281 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-04-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 09-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SACHINANAND DUBE
• Assessee Lawyers: DINESH R SHAH
• Keywords: Bonafide belief; Tax effect; Condonation of delay

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A BENCH , , BEFORE S/SH. I P BANSAL ,JUDICIAL MEMBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.2301/MUM/2012, / ASSESSMENT YEAR - 2004 - 05 SMT.KAJAL V MANGE E - 34,KONARK INDRAPRASTHA SARVODAYANAGAR,NAHUR VILLAGE, MULUND(W) MUMBAI - 80 PAN:AAMPM3826G VS I T O 23(2)(4) C - 12,PRATYAKASH KAR BHAVAN B K C,BANDRA - MUMBAI - 51 ( / ASSESSEE ) ( / RESPONDENT ) /ASSESSEE BY :SHRI DINESH R SHAH / REVENUE BY : SHRI SACHINANAND DUBE / DATE OF HEARING :06 - 04 - 2015 / DATE OF PRONOUNCEMENT :06 - 04 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DT.22.12.2011 OF THE CIT(A) - 11,MUMBAI,ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: I. THE LEARNED ASSESSING OFFICER AS WELL AS THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, ERRED IN LEVYING AND CONFIRMING THE PENALTY UNDER SECTION 271()(E) OF IT ACT, 1961 AMOUNTING TO RS. 49,558/ - . WITHOUT PREJUDICE TO OTHER GROUNDS OF APPEAL, THE ASSESSING OFFICER AS WELL AS CIT(A) HAS WRONGLY APPLIED THE EXPLANATION 4 TO SECTION 271(1)( C) OF IT ACT, 1961 FOR LEVY OF PENALTY U/S 271(I)(C). THE EXPLANATION 4 TO SECTION 271(1)( C) IS NOT APPLICABLE TO THE APPELLANT, HENCE THE PENALTY LEVIED U/S 271(1)(C) UNDER EXPLANATION 4 CAN NOT BE LEVIED AND PENALTY BE DELETED. THE APPELLANT HAS NEITHER CONCEALED ANY PARTICULARS OF ITS INCOME NOR FURNISHED INACCURATE PARTICULARS OF HER INCOM E. THE APPELLANT COMPLETELY RELIED ON THE EXPERTS ADVISE AND SHE WAS UNDER HONEST AND BONAFIDE BELIEF THAT WHATEVER INTEREST PAID AGAINST PROPERTY IS ALLOWABLE AGAINST THE INCOME FROM HOUSE PROPERTY. WITHOUT PREJUDICE TO OTHER GROUNDS OF APPEAL. THE LEARNED A.O HAS ERRED IN CALCULATING MINIMUM PENALTY AT RS.49,558/ - AGAINST MINIMUM PENALTY, IF LEVIABLE, AT RS.42,299/ - . THE APPELLANT CRAVES, LEAVE TO ADD TO, ALTER SUBSTITUTE OR WITHDRAW ANY GROUNDS OF THIS APPEAL AT ANY STAGE OF THE APPEAL. 2. DURING TH E COURSE OF HEARING BEFORE US,THE AUTHORISED REPRESENTATIVE(AR)OF THE ASSESSEE SUBMITTED THAT THERE WAS DELAY OF 14 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL, THAT SHE WAS UNDER THE IMPRESSION THAT APPEAL COULD BE FILED WITHIN A PERIOD OF 90 DAYS FROM T HE DATE OF RECEIVING THE APPELLATE ORDER,THAT ON BEING ADVISED ABOUT THE LEGAL POSITION BY AN EXPERT SHE IMMEDIATELY FILED THE APPEAL,THAT DELAY WAS NOT INTENTIONAL, THAT THE SAME SHOULD BE CONDONED. THE APPLICATION FOR CONDONATION OF DELAY IS ACCOMPANIED BY AN AFFIDAVIT OF THE ASSESSEE WHEREIN SHE HAS REITERATED THE ABOVE FACTS. CONSIDERING THE FACTS AND CIRCUMSTANCES MENTIONED IN THE APPLICATION AND THE AFFIDAVIT, WE ARE OF THE OPINION THAT IT IS A FIT CASE FOR CONDONING THE DELAY IN FILING THE APPEAL BEF ORE THE TRIBUNAL. ITA/2301/MUM/2012,AY. - 2004 - 05,KVM 2 3. EFFECTIVE GROUND OF APPEAL IS ABOUT PENALTY LEVIED US.271(1)(C)OF THE ACT, AMOUNTING TO RS.49,558/ - BY THE AO FOR FILING INACCURATE PARTICULAR OF INCOME.R ETURN OF INCOME, DECLARING TOTAL INCOME OF RS. 1,68,174/ - ,WAS FILED BY THE ASSESSEE ON 27.10.2004. THE ASSESSMENT WAS COMPLETED U/S.143 (3) R.W.S 147 OF THE ACT AND INTEREST ON BORROWED CA PITAL OF RS. 1,40,980/ - WAS DISALLOWED U/S.24 (B) OF THE ACT. FROM RETURN,THE AO FOUND THAT THE ASSESSEE HAD CLAIMED INTEREST ON BORROWED FUNDS OF RS.17.7 8 LAKHS, BEING LOAN FROM BANK OF PUNJAB AGAINST INCOME FROM HOUSE PROPERTY. HE FURTHER FOUND THAT THE PROPERTY LET OUT WAS A COMMERCIAL PROPERTY AT SURAT, THAT THE ASSESSEE WAS 1/3 RD OWNER OF THE PROPERTY, THAT ALL THE THREE CO - OWNERS ENTERED INTO LEASE A GREEMENT WITH BANK OF PUNJAB LIMITED, THE AGREEMENTS WERE ENTERED INTO ON 22.5.2003, THAT THE CO - OWNERS APPROACHED THE BANK OVER A TERM LOAN AGAINST THE RENT RECEIVABLE, THAT THE BANK SAN CTIONED THE TERM LOAN FACILITY. AFTER CONSIDERING THE AGREEMENTS ENTER ED WITH THE BANK, THE AO HELD THAT TAKING OF LOAN WAS AN ACT SUBSEQUENT TO ACQUISITION OF THE IMPUGNED PROPERTY, THE ISSUE FELL BEYOND THE PROV ISIONS OF SEC.24(B) OF THE ACT, THAT SHE WAS NOT ENTITLED FOR THE SAID DEDUCTION .ON 5.10,2006,S HE WAS ASKED TO SHO W AS TO WHY THE CLAIM OF INTEREST SHOULD NOT BE DISALLOWED. NOT BEING SATISFIED WITH THE EXPLANATION FURNISHED BY ASSESSEE THE AO ISSUED A NOTICE FOR LEVYING PENALTY 271(1)(C) OF THE ACT FOR FURNISH - ING INACCURATE PARTICULARS.VIDE HER LETTER DT.22.3.2010 , THE ASSESSEE STATED THAT SHE WAS UNDER A BONAFIDE BELIEF, THAT INFORMATION REGARDING PAYMENT OF INTEREST WAS DISCLOSED, THAT SHE HAD NOT CONCEALED THE PARTICULARS OF INCOME . AFTER CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE, THE AO HELD HER EXPLANAT ION WAS V ERY GENERAL IN NATURE, THAT THE ADDITIONS MADE BY THE THEN AO WERE CONFIRMED I N APPELLATE PROCEEDINGS, THAT SHE HAD FURNISHED INACCURATE PARTICULARS OF INCOME INVOKING THE PROVISIONS OF SEC.271(1)(C).THE AO LEVIED PENALTY OF RS.49,558/ - . 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM,THE ASSESSEE ARGUED THAT SHE WAS NOT CONVERSANT WITH ACCOUNTS AND TAXATION MATTERS, THAT SHE HAD FILED RETURN OF INCOME AS PER ADVICE GIVEN BY HER CHARTER ED ACCOUNTANT, THAT SHE HAD NOT CONCEALED ANY INCOME WHILE FILING THE RETURN , THAT SHE HAD PAID INTEREST ON LOANS TOTALLING TO RS.32.40 LACS INCLUDING LOAN FROM BANK OF PUNJAB LTD., THAT SHE HAD INVESTED MONEY IN PURCHASI NG THE PREMISES AT MULUND ALSO, THAT MULUND PROPERTY WAS LET OUT IN THE NEXT ASSESSMENT YEAR. AFTER CONSIDER - ING HER SUBMISSIONS AND THE PENALTY ORDER,THE FAA UPHELD THE ORDER OF THE AO. 4. BEFORE US THE AR SUBMITTED THAT INTEREST PAID BY THE ASSESSEE WAS PART OF TOTAL INTEREST, THAT SHE WAS U NDER THE BONAFIDE BELIEF, THAT DISALLOWANCE OF THE CLAIM IN THE ASSESSMENT PROCEEDINGS SHOULD NOT RESULT IN LEVY OF CONCEALMENT PENALTY. HE R ELIED ON THE CASES OF RELIANCE P ETRO - PRODUCTS LTD.(322ITR158),IFCI LTD.(328ITR611), MAHAVIR IRRIGATION PVT . LTD.(61DTR 218 ) .DR SUPPORTED THE ORDER OF THE FAA. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE BEFORE US. WE FIND THAT THE AO HAD DISALLOWED THE CLAIM MADE BY THE ASSESSEE UNDER THE H EAD INTEREST PAID, THAT THE FAA CONFIRMED THE ADDITION B Y DECIDING THE APPEAL, THAT AO HAD LEVIED PENALTY U/S.271(1)(C) OF THE ACT.WE ARE OF THE OPINION THAT ANY ADDITION MADE BY THE AO SHOULD NOT LEAD TO AUTOMATIC LEVY OF CONCEALMENT PENALTY . MAKING A DISALLOWANCE IS DIFFERENT FROM LEVYING PE NALTY U/S.271(1)(C) OF THE ACT.FACT OF THE CASE ARE THAT S HE HAD PAID INTEREST AMOUNTING TO RS. RS.32.40 LACS ,THAT SHE WAS UNDER THE BONAFIDE BELIEF THAT THE SAME WAS AN ALLOWABLE EXPENDITURE ,THAT SHE HAD FILED ONE OF THE PLAUSIBLE EXPLANATI - ON BEFORE THE AO DURING PENALTY PROCEEDINGS. CONSIDERING THE BACKGROUND AND THE TAX EFFECT INVOLVED WE ARE OF THE OPINION THAT IT WAS NOT A FIT CASE OF LEVY/CONFIRMING THE ITA/2301/MUM/2012,AY. - 2004 - 05,KVM 3 PENALTY.SO , FOLLOWING THE PRINCIPLES ENUMERATED IN THE CASES OF RELIANCE P ETRO - PRODUCTS LTD. AND MAHAVIR IRRIGATION PV T .LTD.(SUPRA),WE ARE REVERS ING THE ORDER OF FAA .E FFECTIVE GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS ALLOWED . . ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH , APRIL ,2015. 6 , 2015 SD/ - SD/ - ( /I P BANSAL) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 06.04 .2015 SK / JV. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.