Shri Narendra Mohanlal Patel, JAMNAGAR V. The Income Tax Officer, Ward-3(2), JAMNAGAR

ITA 256/RJT/2013

• Counselvise Citation: 25624914 RSA 2013
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 29-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 27-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: J C RANPURA
• Keywords: Salary income; Wrong claim; Difference of opinion
• Section: 27; 2; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO. 256/RJT/2013 ASSESSMENT YEAR : 2007-08 SHRI NARENDRA MOHANLAL PATEL, C/O. SANJAY OIL CAKE INDUSTRIES, BEDESHWAR, JAMNAGAR PAN : ADVPP 8201 A ( / APPELLANT) THE ITO, WARD-3(2) JAMNAGAR / RESPONDENT / ASSESSEE BY SHRI J. C. RANPURA, CA / REVENUE BY SHRI M. K. SINGH, ;DR / DATE OF HEARING 29.11.2013 !'# / DATE OF PRONOUNCEMENT 13.12.2013 / ORDER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DA TED 22.03.2013 OF CIT(A), JAMNAGAR CONFIRMING THE PENALTY OF RS.69,75 4/- LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 F OR THE ASSESSMENT YEAR 2007-08. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL, DRAWING INCOME FROM SALARY AND INTEREST INCOME. FOR THE ASSESSMENT YEAR UNDER APPEAL, HE FILED RETURN OF INCOME ON 03.03.2008 DECLARING TOTAL INCOME AT RS.2 6,270/-. THE ASSESSING OFFICER FRAMED THE ASSESSMENT U/S 143(3) OF THE INCOME-TAX ACT ON 07.12.2009 ASSESSING TOTAL INCOME AT RS.3,62,000/-, WHEREIN HE MADE FOLL OWING TWO ADDITIONS / DISALLOWANCES:- I) DISALLOWANCE OF EXCESS DEDUCTION CLAIMED AT RS.6 6,000/- IN RESPECT OF HOUSE RENT PAID. II) DISALLOWANCE OF SET OFF CLAIMED AT RS.2,96,787/ - TOWARDS NET INTEREST LOSS AGAINST INCOME FROM SALARY. AFTER MAKING THE AFORESAID TWO DISALLOWANCES, THE A SSESSING OFFICER ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS.3,62,000/- A S AGAINST DECLARED INCOME OF RS.26,270/-. IN RESPECT OF BOTH THE AFORESAID ADDIT IONS/DISALLOWANCES, THE ASSESSING OFFICER ALSO ISSUED NOTICES U/S 271(1)(C) OF THE IN COME-TAX ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME UNDER THE HEAD SAL ARY INCOME; I.E., ON DIFFERENCE OF RS.3,10,787/- AND FOR WRONG CLAIM OF RS.84,000/- AS DEDUCTION OF HOUSE RENT PAID FROM INTEREST INCOME, THE ASSESSING OFFICER INITIAT ED PENALTY PROCEEDINGS U/S 2 256-RJT-2013 - SHRI RARENDRA MOHANLAL PATEL (SMC) 271(1)(C) OF THE INCOME-TAX ACT, 1961. SUBSEQUENTL Y, IN RESPECT OF THE AFORESAID TWO ADDITIONS/DISALLOWANCES, THE ASSESSING OFFICER VIDE PENALTY ORDER DATED 26.03.2012 LEVIED PENALTY OF RS.69,754/- BEING THE 100% OF TAX SOUGHT TO BE EVADED ON CONCEALED INCOME OF RS.3,94,787/-. ON APPEAL BEFOR E THE LD. CIT(A), THE ASSESSEE MADE THE FOLLOWING SUBMISSIONS:- '1. THE ADDITION MADE IS JUST OUT OF THE DETAILS AL READY FURNISHED BY OUR CLIENT. THOUGH WE AGREED TO HAVE BEEN CAUSED DUE TO MISTAKE OUR PART. HENCE, THERE IS NO GROUND FOR LEVY OF PENALTY ON CO NCEALED INCOME. HE A.C. THEREFORE ERRED IN LEVYING PENALTY WHICH MAY B E DELETED. IN ANY EVENT, IT APPEARS THAT EVEN THOUGH CLAIMS RE JECTED ALL THE DETAILS WERE FURNISHED IN RETURN OF INCOME OR AT THE TIME O F ASSESSMENT. 2. IT IS STATED IN FACTS THAT WORKING OF HRA WAS B Y MISTAKE, WHICH MAY WARRANT ADDITION BUT NOT PENALTY WHEN CLAIM BASED O N SALARY CERTIFICATE. 3. CLAIM UTS, 71-71(2A) IS A MISUNDERSTANDING OF L AW BEING DIFFERENCE IN UNDERSTANDING BY ASSESSEE AND BY DEPARTMENT BUT WHE N ALL FACTS BEING FURNISHED, THIS WILL NOT BE A CASE OF PENALTY. 4. RELIANCE IS PLACED AS THE CASE OF:- A) A' BAD ITAT DECISION IN THE CASE OF RAJESH V. RA THOD V/SO ACIT (OS D) CIR 10 A' BAD. COPY OF DECISION ENCLOSED WHE RE THE H'BLE ITAT HAS BEEN THAT WHERE ALL PARTICULARS BEING FURNISHED DURING THE ASSESSMENT PROCEEDING, NO PENALTY AND CHARGE OF OPI NION CAN BE LEVIED. B) THE H'BLE H.P. HIGH COURT IN THE CASE OF CIT V/S O H.P. STATE FORENT CORPO. 340 ITR 204, HAS HELD THAT WHEN ALL FACTS BE ING DISCLOSED IT WILL NOT BE A CASE OF PENALTY. IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT PENALTY LEVIED BE DELETED.' AFTER CONSIDERING THE AFORESAID SUBMISSIONS, IN THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE PENALTY LEVIED BY THE ASSESSIN G OFFICER U/S 271(1)(C) OF THE INCOME-TAX ACT FOR THE DETAILED REASON GIVEN IN PAR AGRAPH NO.6, WHICH READS AS UNDER:- 6. THE CONTENTIONS OF THE APPELLANT AND THE PENALT Y ORDER PASSED BY THE AO ARE CAREFULLY PERUSED. IT IS OBSERVED THAT THE APPE LLANT HAS COMMITTED BREACH OF LAW BY CLAIMING EXCESS AMOUNT OF DEDUCTIO N ON ACCOUNT OF HRA AND ALSO BY WAY OF CLAIMING SET OFF OF INTEREST LOS S AGAINST SALARY INCOME THERE BY VIOLATING THE PROVISIONS OF SEC. 10(13A) R .W. RULE 2A AND SEC. 71 (2A) RESPECTIVELY OF THE IT ACT. THE APPELLANT HAS EXPLAINED SUCH VIOLATION OF PROVISION OF SEC. 10 (13A) R.W. RULE 2 A AS A CLERICAL ERROR AND WITH REGARD TO WRONG SET OFF OF INTEREST LOSS CLAIM ED AGAINST SALARY INCOME THE APPELLANT HAS TRIED TO ENFORCE A NEXUS BETWEEN THE INVESTMENT IN THE COMPANY AND THE SALARY RECEIVED BY HIM FROM THE SAM E COMPANY AS A DIRECTOR. THUS, WHILE THE FIRST DEFAULT HAS BEEN EX PLAINED AS A CLERICAL ERROR AND THE SECOND WRONG CLAIM OF SET OFF HAS BEEN MADE ON A ERRONEOUS INTERPRETATION OF PROVISION OF SEC. 71 THERE BY DEL IBERATELY TRYING TO AVAIL DEDUCTION IN THE FORM OF SET OFF OF INTEREST LOSS A GAINST SALARY INCOME WHICH 3 256-RJT-2013 - SHRI RARENDRA MOHANLAL PATEL (SMC) IS CLEARLY NOT PERMISSIBLE UNDER THE PROVISION OF S EC. 71. A PLAIN READING OF THE SECTION 71 (2A) MAKES IT CLEAR THAT THE APPELLA NT IS NOT PERMITTED TO CLAIM SET OFF OF HIS INTEREST LOSS AGAINST HIS SALA RY INCOME. HENCE, THE APPELLANT IS FOUND TO HAVE FILED AN ERRONEOUS RETUR N OF INCOME THERE BY FURNISHING INACCURATE PARTICULARS WITH RESPECT TO H IS SALARY INCOME BY EXCESSIVE CLAIM OF HOUSE RENT ALLOWANCE AND BY MAKI NG WRONGFUL CLAIM OF SET OFF OF INTEREST LOSS AGAINST THE SALARY INCOME. IT IS THEREFORE A CASE WHERE THE ASSESSEE HAS FURNISHED INACCURATE PARTICU LARS OF INCOME IN HIS RETURN THEREBY ATTRACTING THE PROVISIONS OF SEC. 27 1(1)(C) OF THE IT ACT. 6.1 IT WILL BE WORTHWHILE TO NOTE THAT CONCEALMENT PENALTY AS ENVISAGED U/S. 271(1)(C) READ WITH EXPLANATION-1, WARRANTS THAT CO NCEALMENT PENALTY IS IMPOSABLE IF THE ASSESSEE HAS -(A) FURNISHED INA CCURATE PARTICULARS OF INCOME, AND/OR, (B) CONCEALED THE PARTICULARS OF IN COME, IN HIS/ITS RETURN OF INCOME. FURTHER, IN TERMS OF THE EXPLANAT ION-1, ONCE THE ASSESSEE IS ALLEGED TO HAVE FURNISHED INACCURATE PA RTICULARS OR CONCEALED PARTICULARS OF HIS/ITS, INCOME, THE ONUS SHIFTS ON TO THE ASSESSEE TO, (I) OFFER AN EXPLANATION WHICH IS FOUND TO BE TRUE OR ( II) IS ABLE TO SUBSTANTIATE AND TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE MATERIAL FACTS PERTAINING TO THE TOTAL INCOME H AVE BEEN DULY DISCLOSED. THEREFORE, DURING THE PENALTY PROCEEDING S, IF THE ASSESSEE FAILS TO OFFER A TANGIBLE AND BONA FIDE EXPLANATION WITH REGARD TO THE AMOUNT OF ADDITIONS OR DISALLOWANCE MADE BY THE AO IN THE COMPUTATION OF INCOME, THEN, ON ACCOUNT OF SUCH FAILURE ON THE PAR T OF THE ASSESSEE TO FURNISH A SATISFACTORY EXPLANATION, HE/IT SHALL BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR DEEMED TO HAVE FUR NISHED INACCURATE PARTICULARS OF SUCH INCOME WHICH HAS BEEN DETERMINE D BY WAY OF ADDITION MADE IN THE ASSESSMENT ORDER. 6.2 IN THIS CASE THE APPELLANT, BY MAKING WRONG CL AIMS OF DEDUCTION AND SET OFF OF LOSS, HAS CLEARLY FURNISHED INACCURATE PARTI CULARS OF HIS INCOME IN THE RETURN, WHICH, BUT FOR THE ASSESSMENT PROCEEDIN GS, COULD NEVER HAVE BEEN DISCOVERED BY THE AO AND ACCORDINGLY WOULD HAV E ESCAPED FROM BEING TAX APPROPRIATELY. THE INACCURATE PARTICULARS FURNISHED BY THE APPELLANT HAVE SOUGHT TO EVADE THE TAX, HENCE, THE AO HAS RIGHTLY INVOKED PROVISION OF SEC. 271(1)(C) FOR LEVY OF PEN ALTY IN THIS CASE. THE EXPLANATIONS OFFERED BY THE APPELLANT ARE SPECIOUS AND SLIPSHOD AND THE APPELLANT HAS NOT BEEN ABLE TO DISCHARGE HIS PRIMAR Y ONUS TO SUBSTANTIATE HIS EXPLANATION WITH ANY EVIDENCE OR D OCUMENTARY SUPPORT. UNDER THE CIRCUMSTANCES THE APPELLANT CANNOT BE GRA NTED THE BENEFIT OF DOUBT AND HIS EXPLANATION CANNOT BE ACCEPTED ON MER IT. THEREFORE, IN MY CONSIDERED VIEW THE AO HAS RIGHTLY LEVIED A PENALTY OF RS. 69,754/- WHICH IS UPHELD. AGGRIEVED WITH THE ORDER OF LD. CIT(A), JAMNAGAR, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 3. BEFORE THE TRIBUNAL, ON BEHALF OF THE ASSESSEE, SHRI J. C. RANPURA, CA, APPEARED AND POINTED OUT THAT THE EXCESSIVE HOUSE R ENT ALLOWANCE U/S 10 (13A) OF THE INCOME-TAX ACT WAS CLAIMED ONLY DUE TO CLERICAL ERROR COMMITTED BY THE ASSESSEES TAX CONSULTANT WHILE PREPARING THE RETUR N OF INCOME OF THE ASSESSEE. HE ALSO SUBMITTED THAT THE SAME WAS ACCEPTED AT THE AP PELLATE STAGE. WITH RESPECT TO THE CLAIM OF INTEREST LOSS AGAINST SALARY INCOME, T HE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS UNDER THE BONA FIDE BELIEF THAT THE SET OFF WAS 4 256-RJT-2013 - SHRI RARENDRA MOHANLAL PATEL (SMC) ALLOWABLE. THE LD. COUNSEL OF THE ASSESSEE SUBMITTE D THAT THE EXCESSIVE HOUSE RENT ALLOWANCE BEING RS.66,000/- AND SET OFF OF INTEREST LOSS AGAINST SALARY INCOME WAS MADE DUE TO INCOMPLETE KNOWLEDGE OF THE ASSESSEE RE GARDING THE PROVISIONS OF THE INCOME-TAX ACT, 1961 AND SUBSEQUENTLY THE APPEAL WA S WITHDRAWN. HE ALSO SUBMITTED THAT, FROM THE FACTS AND CIRCUMSTANCES, T HE CLAIMS OF THE ASSESSEE WERE ON BONA FIDE BELIEF, WHICH RESULTED INTO DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER AND IN MATTER OF BONA FIDE DI FFERENCE OF OPINION, NO PENALTY IS LEVIABLE. IN THIS CONNECTION, THE LD. COUNSEL OF TH E ASSESSEE RELIED UPON THE DECISIONS OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. SAMBHAV MEDIA LTD. [2013] 32 TAXMANN.COM 371 AND CIT VS. SAMBHAV MEDIA LTD. [2013 33 TAXMANN.COM 97, WHEREBY THE HONBLE HIGH COURT HELD THAT WHERE DISALLOWANCE WAD DUE TO DIFFERENCE OF OPINION, NO PENALTY U/S 271 (1)(C) OF THE ACT COULD BE IMPOSED. COPIES OF THE AFORESAID JUDGMENTS ARE PLACED ON RECORD. 4. THE LD. COUNSEL OF THE ASSESSEE ALSO PRODUCED A COPY OF FORM NO.16 BEING THE TDS CERTIFICATE FROM SALARY ISSUED BY THE EMPLO YER AND FORM NO.16A SHOWING DEDUCTION OF TDS FROM INTEREST INCOME. THE LD. COU NSEL OF THE ASSESSEE PLEADED THAT THE ASSESSEE HAS DISCLOSED FULL AMOUNT OF SALA RY AND INTEREST INCOME AS PER FORM NOS. 16 AND 16A. HE CONTENDED THAT IN FORM NO. 16 THE ASSESSEES EMPLOYER TREATED THE ENTIRE HOUSE RENT ALLOWANCE AS EXEMPT, WHEREAS ACTUAL AMOUNT ADMISSIBLE AS PER RULE 2A WORKS OUT TO RS.48,000/-. IN THIS MANNER, THE TAXATION CONSULTANT OF THE ASSESSEE NAMELY M/S. J.N. AHYA & CO. WHO PREPARED THE RETURN OF INCOME OF THE ASSESSEE CLAIMED EXCESS DEDUCTION OF RS.66,000/- IN RESPECT OF HOUSE RENT ALLOWANCES. ONE MORE MISTAKE COMMITTED BY THE TAXATION CONSULTANT OF THE ASSESSEE IS THAT IN THE RETURN OF INCOME HE CLAIMED HOUSE RENT PAID RS.84,000/- AS DEDUCTION. THIS WAS CLAIMED THROUGH OVERSIGHT AS HO USE RENT PAID DEDUCTION IS TO BE ALLOWED AGAINST THE HRA. WITH REGARD TO THE INTERE ST EXPENSES DEDUCTED, THE LD. COUNSEL OF THE ASSESSEE CLARIFIED THAT THE ASSESSEE RECEIVED REMUNERATION, SHARE OF PROFIT/LOSS FROM NAVRANG TILES INDUSTRIES AND INTER EST INCOME AS MENTIONED IN INCOME FROM OTHER SOURCES SHEET ATTACHED WITH COMPUTATION OF INCOME FILED WITH THE RETURN OF INCOME. THE ASSESSEE HAS BORROWED FUNDS AND INVESTE D IN PARTNERSHIP FIRM AS WELL AS IN SHARE ACQUIRED OF GASCON AUTO PVT. LTD. (WHER EFROM HE GETS REMUNERATION). 5 256-RJT-2013 - SHRI RARENDRA MOHANLAL PATEL (SMC) DUE TO THIS INVESTMENT, HE BECAME A DIRECTOR OF THE COMPANY AND RECEIVED REMUNERATION FROM THE COMPANY. THE TAXATION CONSULT ANT OF THE ASSESSEE BY MISTAKE CLAIMED THE INTEREST PAID AS DEDUCTION ON T HE BELIEF THAT THERE WAS DIRECT NEXUS BETWEEN THE BORROWED FUND INVESTED AND EARNIN G INCOME THEREFROM (BY WHATEVER NAME CALLED.) IN THIS MANNER, THE TAXATION CONSULTANT OF THE ASSESSEE WAS OF THE VIEW THAT BORROWED FUND INVESTED AND EARNED INCOME IS ALLOWABLE U/S 71 OF THE INCOME-TAX ACT, 1961. AFTER NARRATING THE ABOVE SAID FACTS, THE LD. COUNS EL OF THE ASSESSEE SUBMITTED THAT THE LAW DOES NOT BAR AN ASSESSEE FOR MAKING A CLAIM, WHICH HE BELIEVES MAY BE ACCEPTED OR IS PLAUSIBLE. WHEN SUCH A CLAIM IS MADE WHILE FILING RETURN OF INCOME OR DURING REGULAR OR SCRUTINY ASSESSMENT, LIBERAL VIEW IS REQUIRED TO BE TAKEN AS NECESSARILY THE CLAIM IS BOUND TO BE CLOSELY SCRUTI NIZED BY THE DEPARTMENT. FULL PROBE AND APPRAISAL IS NATURAL AND NORMAL AND THEREFORE I N CONSEQUENCE, THREAT OF PENALTY CANNOT COME AS GANG OR HAUNT AS ASSESSEE FOR MAKING CLAIM WHICH MAY BE ERRONEOUS OR WRONG, WHEN IT IS MADE DURING ASSESSME NT PROCEEDING. IN SUCH CASES OF BONA FIDE CLAIM, PENALTY SHOULD NOT BE IMPOSED U NLESS THERE IS GOOD GROUND OR REASON TO WHO THAT FACTUAL CONCEALMENT HAS BEEN MAD E OR INACCURATE PARTICULARS HAD BEEN PROVIDED. IN THIS REGARD, LD. COUNSEL OF THE A SSESSEE RELIED UPON THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. DCM LTD. [2013] 37 TAXMANN.COM 447. HE FURTHER SUBMITTED THAT THERE WAS NOTHING CO NTRARY ON RECORD TO DEMONSTRATE THE CLAIMS OF DEDUCTION WERE NOT BONA FIDE OR WERE BOGUS AND THEREFORE, THERE IS NO CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE W HICH MAY CALL FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. IN THIS CONNECTION, HE AL SO PLACED RELIANCE ON THE DECISION OF ITAT MUMBAI BENCH B IN THE CASE OF BENNET COLEMAN & CO. LTD VS. ACIT [2013] 36 TAXMANN.COM 75. COPY OF THE SAID JUDGMENT IS PLACED ON RECORD. THE LD. COUNSEL OF THE ASSESSEE ALSO RELIED UPON DECISIONS OF THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P.) LTD. 332 ITR 15 8 AND HONBLE HIGH COURT OF DELHI IN THE CASES OF (I) DEVSONS (P.) LTD VS. CIT [2010] 329 ITR 483 AND (II) KARAN REGHAV EXPORTS (P.) LTD. VS. CIT 349 ITR 112. CONTINUING H IS ARGUMENTS, HE SUBMITTED THAT, UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE PENALTY IMPOSED BY THE 6 256-RJT-2013 - SHRI RARENDRA MOHANLAL PATEL (SMC) ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX A CT AND CONFIRMED BY THE LD. CIT(A), JAMNAGAR IS TOTALLY UNJUSTIFIED AND DESERVE S TO BE DELETED. 5. ON THE OTHER HAND, SHRI M.K. SINGH, DR, APPEARED ON BEHALF OF THE REVENUE, VEHEMENTLY SUPPORTED THE ORDER OF LD CIT(A). HE POI NTED OUT THAT THE ASSESSEE HAS COMMITTED BREACH OF LAW BY CLAIMING EXCESS AMOUNT O F DEDUCTION ON ACCOUNT OF HRA AND ALSO BY WAY OF CLAIMING SET OFF OF INTEREST LOS S AGAINST SALARY INCOME THEREBY VIOLATING THE PROVISIONS OF SECTION 10(13A) READ WI TH RULE 2A AND SECTION 71(2A) OF THE INCOME-TAX ACT. HE ALSO SUBMITTED THAT THE ASSE SSEE CLAIMED SUCH VIOLATION OF PROVISION OF SECTION 10(13A) R.W. RULE 2A AS A CLER ICAL ERROR AND WITH REGARD TO WRONG SET OFF OF INTEREST LOSS CLAIMED AGAINST SALARY INC OME, THE ASSESSEE TRIED TO ENFORCE A NEXUS BETWEEN THE INVESTMENT IN THE COMPANY AND THE SALARY RECEIVED BY HIM FROM THE SAME COMPANY AS A DIRECTOR. THUS, WHILE THE FIR ST DEFAULT HAS BEEN EXPLAINED AS A CLERICAL ERROR AND THE SECOND WRONG CLAIM OF SET OF F HAS BEEN MADE ON A ERRONEOUS INTERPRETATION OF PROVISION OF SECTION 71, THEREBY DELIBERATELY TRYING TO AVAIL DEDUCTION IN THE FORM OF SET OFF OF INTEREST LOSS AGAINST SAL ARY INCOME WHICH IS CLEARLY NOT PERMISSIBLE UNDER THE PROVISION OF SECTION 71. A PL AIN READING OF THE SECTION 71(2A) MAKES IT CLEAR THAT THE APPELLANT IS NOT PERMITTED TO CLAIM SET OFF OF HIS INTEREST LOSS AGAINST HIS SALARY INCOME. HENCE, THE ASSESSEE IS F OUND TO HAVE FILED AN ERRONEOUS RETURN OF INCOME THEREBY FURNISHING INACCURATE PART ICULARS WITH RESPECT TO HIS SALARY INCOME BY EXCESSIVE CLAIM OF HOUSE RENT ALLOWANCE A ND BY MAKING WRONGFUL CLAIM OF SET OFF INTEREST LOSS AGAINST THE SALARY INCOME. TH EREFORE, THE VIEW TAKEN BY THE LD. CIT(A) IN CONFIRMING THE PENALTY OF RS.69,754/- LEV IED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX ACT BE UPHELD. 6. HAVING HEARD BOTH SIDES, I HAVE CAREFULLY GONE T HROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT IN THE RETURN OF INCOME FURNISHED, THE ASSESSEE HAS DECLARED THE FULL SALARY INCOME AND IN TEREST INCOME AS PER TDS CERTIFICATE ISSUED TO HIM IN FORM NOS.16 AND 16A. I T APPEARS THAT WHILE FILING THE RETURN OF INCOME, THE TAXATION CONSULTANT OF THE AS SESSEE NAMELY M/S. J.N. AHYA & CO. COMMITTED MISTAKE IN CLAIMING DEDUCTION UNDER R ULE 2A OF INCOME-TAX RULES, 1962. SIMILARLY, THROUGH OVERSIGHT AND ON ACCOUNT OF MISTAKE OF LAW, THE TAXATION CONSULTANT OF THE ASSESSEE CLAIMED THE DEDUCTION U/ S 71 OF THE INCOME-TAX ACT IN 7 256-RJT-2013 - SHRI RARENDRA MOHANLAL PATEL (SMC) RESPECT OF INTEREST EXPENSES. FROM THESE CONSPICUOU S FACTS OF THE CASE, IT IS CLEAR THAT DIFFERENCE BETWEEN THE RETURNED AND ASSESSED I NCOME IS ON ACCOUNT OF MISTAKE COMMITTED BY THE ASSESSEES TAXATION CONSULTANT NAM ELY M/S. J.N. AHYA & CO. WHO PREPARED THE RETURN OF INCOME OF THE ASSESSEE. SIN CE IN THE RETURN OF INCOME, THE ASSESSEE HAS DISCLOSED SALARY AND INTEREST INCOME A S PER FORM NO.16 AND FORM 16A RESPECTIVELY, I AM OF THE VIEW THAT THIS IS NOT A F IT CASE FOR LEVYING PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT. I, THEREFORE, CANC EL THE PENALTY OF RS.69,754/- LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOM E-TAX ACT, 1961. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 13.12.2013 !$ /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- SHRI NARENDRA MOHANLAL PATEL, C/O. SA NJAY OIL CAKE INDUSTRIES, BEDESHWAR, JAMNAGAR 2. / RESPONDENT- THE ITO, WARD-3(2), JAMNAGAR 3. ,0,1 * * 2 / CONCERNED CIT, JAMNAGAR 4. * * 2- / CIT (A), JAMNAGAR 5 . 567 1, * 1#, !$ / DR, ITAT, RAJKOT 6 . 79 :; / GUARD FILE *)& / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT