Zohrabibi E. Dalal, Ahmedabad V. The ADIT(Intl.Taxn.), Ahmedabad

ITA 2707/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9075 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-03-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 20-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RICHHA RASTOGI
• Assessee Lawyers: ANIL R SHAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NOS: 2706 TO 2708/AHD/2013 (ASSESSMENT YEAR: 2006-07) EBRAHIM UMARJEE DALAL, AT POST: KANTHARIA, DIST. BHARUCH PAN NO. AJEPD3794A ZOHRABIBI E. DALAL AT POST: KANTHARIA, DIST. BHARUCH PAN NO. AGSPJ6554E AND SAJID EBRAHIM DALAL, AT POST: KANTHARIA, DIST. BHARUCH PAN NO. AJFPD 7293L V/S ADIT (INTL. TAXN.,), AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY : MS. KINJAL SHAH & ANIL R. S HAH AR RESPONDENT BY : MS. RICHHA RASTOGI, SR. D.R. ( )/ ORDER DATE OF HEARING : 06 -03-201 7 DATE OF PRONOUNCEMENT : 08 -03-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: ITA NOS. 270 6 TO 2708/AHD/2013 . A.Y. 2006- 07 2 1. ITA NOS. 2706 TO 2708/AHD/2013 ARE THREE SEPARATE A PPEALS OF THE ASSESSEE PREFERRED AGAINST THREE SEPARATE ORDERS OF THE LD. CIT(A), GANDHINAGAR DATED 23.08.2013 PERTAINING TO A.Y. 200 6-07. 2. REPRESENTATIVES OF BOTH SIDES AGREED THAT THE ISSUE S ARE COMMON; THEREFORE, ALL THESE APPEALS WERE HEARD TOGETHER AN D ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. FACTS OF ITA NO. 2708/AHD/2013 ARE TAKEN AS THE LEA D YEAR. 4. THE COMMON GRIEVANCE IN THE IMPUGNED APPEALS RELATE S TO THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. 5. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE RESPEC TIVE ASSESSMENT ORDERS WHEREIN DURING THE COURSE OF THE ASSESSMENT PROCEED INGS, THE A.O. NOTICED THAT THE ASSESSEE HAS CLAIMED INTEREST ON BORROWED CAPITAL UTILIZED FOR THE CONSTRUCTION OF THE HOUSE PROPERTY. THE A.O. FOUND THAT THE HOUSE PROPERTY WAS NOT COMPLETED DURING THE PREVIOUS YEAR UNDER CO NSIDERATION AND, THEREFORE, THE INTEREST PAYMENT IS NOT ALLOWABLE U/ S. 24 OF THE ACT AS IT RELATES TO THE PRE-CONSTRUCTION PERIOD. ACCORDINGL Y, THE CLAIM OF INTEREST WAS DISALLOWED AND PENAL PROCEEDINGS WERE SEPARATEL Y INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 6. DURING THE COURSE OF THE PENAL PROCEEDINGS, THE ASS ESSEE CONTENDED THAT IT WAS UNDER A BONA FIDE BELIEF THAT THE INTEREST ON B ORROWED FUNDS WAS ITA NOS. 270 6 TO 2708/AHD/2013 . A.Y. 2006- 07 3 ALLOWABLE FOR THE YEAR UNDER CONSIDERATION. THEREFO RE, NO PENALTY SHOULD BE LEVIED. THE CONTENTION OF THE ASSESSEE DID NOT FIND ANY FAVOUR WITH THE A.O. WHO PROCEEDED BY LEVYING PENALTY ON THE AMOUNT OF I NTEREST DISALLOWED. 7. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 8. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REITERA TED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. PER CONTRA, THE LD. D .R. STRONGLY SUPPORTED THE FINDINGS OF THE LD. CIT(A). 9. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORI TIES BELOW AND HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS IN IS SUE BEFORE US. THERE IS NO DISPUTE THAT THE ASSESSEE HAS CHARGED INTEREST PAID ON FUNDS BORROWED FOR THE CONSTRUCTION OF HOUSE PROPERTY. INADVERTENTLY, THE ASSESSEE CLAIMED THE INTEREST PAYMENT AS AN ELIGIBLE DEDUCTION NOT REALI ZING THAT THE CONSTRUCTION OF THE HOUSE PROPERTY WAS COMPLETED ON LY AT THE FAG END OF THE FINANCIAL YEAR AND THE ASSESSEE CLAIMED THE INT EREST FOR THE ENTIRE YEAR UNDER CONSIDERATION. 10. WE FIND THAT THE FIRST APPELLATE AUTHORITY IN THE Q UANTUM APPEAL ALLOWED THE CLAIM OF INTEREST FOR A PERIOD OF SEVEN DAYS FI NDING THAT THE CONSTRUCTION OF THE HOUSE PROPERTY WAS COMPLETED ON 24 TH MARCH. 11. IN OUR CONSIDERED OPINION AND ON THE UNDERSTANDING OF THE GIVEN FACTS, THERE REMAINS NO DISPUTE THAT THE CONSTRUCTION OF T HE HOUSE PROPERTY WAS ITA NOS. 270 6 TO 2708/AHD/2013 . A.Y. 2006- 07 4 COMPLETED DURING THE YEAR UNDER CONSIDERATION ITSEL F, THOUGH IT WAS COMPLETED ON 24 TH MARCH AND THE ASSESSEE UNDER WRONG BELIEF CLAIMED THE INTEREST EXPENDITURE FOR THE WHOLE YEAR UNDER CONSI DERATION. ON THESE FACTS, WE DO NOT FIND THIS TO BE A FIT CASE FOR THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. WE DRAW SUPPORT FROM THE DECI SION OF THE HONBLE SUPREME COURT GIVEN IN THE CASE OF RELIANCE PETRO P RODUCTS 322 ITR 158. WE, ACCORDINGLY, SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE PENALTY LEVIED FROM THE HANDS OF THE APPELLANTS. 12. AS MENTIONED ELSEWHERE, SINCE FACTS ARE COMMON IN A LL THE IMPUGNED APPEALS, ALL THE THREE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 08 - 03- 20 17 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 08 /03/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD