ACIT 19(2), MUMBAI V. PRAMILA R. WADHAWAN, MUMBAI

ITA 3250/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3699 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 16-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 07-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S DALYANI
• Keywords: Difference of opinion
• Section: 54F

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI PAWAN SINGH , JM ./ ITA NO. 3250 / MUM/20 1 4 ( / ASSESSMENT YEAR : 20 0 7 - 200 8 ) ACIT - 19(2), MUMBAI VS. SMT. PRAMILA R. WADHWAN, 12, DWADESH, 17 TH ROAD, SANTACRUZ (W), MUMBAI - 54 ./ ./ PAN/GIR NO. : A A A PW 3384 P ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI R.S.DALYANI /AS SESSEE BY : SHRI MIHIR NANIWADEKAR / DATE OF HEARING : 08 /0 8 /2016 / DATE OF PRONOUNCEMENT 12 / 08 /201 6 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE OR DER OF CIT(A), MUMBAI, FOR THE ASSESSMENT YEAR 2007 - 08 , IN THE MATTER OF IMPOSITION OF PENALTY U/S.271(1)(C) OF I.T.ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FROM THE RECORD WE FOUND THAT THE AO HAS LEVIED PENALTY WITH REGARD TO THE DIS ALLOWANCE MADE U/S.54F. BY THE IMPUGNED ORDER THE CIT(A) DELETED THE SAME AFTER OBSERVING AS UNDER : - 14. THE VARIOUS JUDICIAL AUTHORITIES HAVE ADVOCATED THE LEGAL PRINCIPLE THAT THE PENALTY PROCEEDINGS AND THE ASSESSMENT PROCEEDINGS ARE TWO SEPARATE PROCE EDINGS AND EVERY ADDITION MADE DURING THE ASSESSMENT PROCEEDINGS WOULD NOT LEAD TO THE IMPOSITION OF PENALTY U/S 271 (1 )(C). IN VARIOUS JUDICIAL PRONOUNCEMENTS ON THE ISSUE OF LEVY OF PENALTY, THE COURTS HAVE ITA NO. 3250 /1 4 2 HELD THAT IN ORDER TO EXPOSE ANY PERSON TO THE PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PENAL PROVISION, THE PENALTY CANNOT BE LEVIED. MAKING AN ADDITION TO THE INCOME OR THE DISALLOWANCE OF THE LEGAL CLAIM MADE BY THE APPELLANT SHOULD NOT BE CONSTRUED AS FILLING OF INACCURATE PARTICULARS O F INCOME AND WOULD NOT AUTOMATICALLY LEAD TO THE IMPOSITION OF PENALTY. BEFORE LEVYING OF PENALTY U/S 271 (1 )(C), THE AO HAS TO CONCLUSIVELY PROVE THAT THE CONDITIONS AS POSTULATED IN THE EXPLANATION TO SECTION 271(1)(C) ARE SATISFIED. IN OTHER WORDS, IN ORDER TO IMPOSE PENALTY, THE AO NEED TO PLACE ON RECORD SOME POSITIVE EVIDENCE REGARDING THE CONCEALMENT OF INCOME OR FILING OF THE INACCURATE PARTICULARS OF INCOME ON THE PART OF THE APPELLANT. THE RATIONALE AND REASONING FOR DISALLOWANCE WHILE PASSING T HE ASSESSMENT ORDER CANNOT BE THE SAME FOR LEVY OF PENALTY. 15. THE ADDITIONS MADE IN THE INSTANT CASE ARE ON ACCOUNT OF DISALLOWANCES MADE FOR CLAIM OF DEDUCTION U/S 54F. THE FACTS RELATING TO WHICH WERE AVAILABLE IN THE RETURN OF INCOME FILED FOR THE Y EAR UNDER CONSIDERATION. THESE FACTS WERE NOT UNEARTHED BY THE AO DURING THE' ASSESSMENT PROCEEDINGS AND WERE AVAILABLE ON RECORD AT THE START OF THE ASSESSMENT PROCEEDINGS. THERE ARE NUMBER OF JUDICIAL PRONOUNCEMENTS ON THE ISSUE OF DISALLOWANCE OF ANY DE DUCTION. WHEREIN IT IS HELD THAT THE CLAIM OF ANY LEGAL DEDUCTION MADE BY THE APPELLANT IN THE RETURN OF INCOME UNDER A BONA FIDE BELIEF OF THE SAME BEING AN ALLOWABLE DEDUCTION, WOULD NOT ATTRACT THE PENALTY U/S 271 (1 )(C). 16. THE DISALLOWANCE UNDER S ECTION 54F IN THE CASE OF THE APPELLANT WAS A LEGAL CLAIM OF DEDUCTION MADE BY THE APPELLANT WHICH ACCORDING TO AO, WAS WRONGLY CLAIMED IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION. THE APPELLANT HAD MADE A CLAIM OF DEDUCTION U/S 54F ON A N AMOUNT OF RS. 1,84,59,7101 WHICH THE AO DISALLOWED STATING THAT THE APPELLANT IS NOT ELIGIBLE FOR SUCH DEDUCTION. SUCH A DISALLOWANCE' OF THE. CLAIM U/S 54F CANNOT BE INTERPRETED AS FILING OF THE INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME . THE APPELLANT HAD MADE THIS LEGAL CLAIM OF DEDUCTION U/S 54F AFTER DISCLOSING THE RELEVANT BASIC FACTS OF SELLING OF LEASEHOLD RIGHTS OF THE PROPERTY AND CLAIMING THE DEDUCTION AS PER PROVISIONS OF SECTION 54F. IT CANNOT BE DENIED THAT THE APPELLANT MIGH T HAVE CLAIMED THE DEDUCTION UNDER THE IGNORANCE OF THE PROVISIONS OF THE ACT AND SUCH A CLAIM MAY NOT BE CORRECT CLAIM STRICTLY ACCORDING TO THE PROVISIONS OF THE ACT, BUT THE FACT REMAINS THAT THE COMPLETE INFORMATION IN RESPECT OF THIS CLAIM WAS FILED B Y THE APPELLANT IN THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THE AO CAME TO KNOW THE FACTS RELATING TO THE CLAIM OF DEDUCTION U/S 54F FROM THE RETURN OF INCOME FILED BY THE APPELLANT. THE CLAIM OF DEDUCTION ITSELF WAS NOT FALSE OR BOGUS. THE D EDUCTION WAS DISALLOWED BY THE AO NOT DUE TO FALSENESS OF SUCH CLAIM MADE BUT DUE TO THE PROVISIONS OF THE SECTION 54F, WHICH MADE THE APPELLANT INELIGIBLE FOR DEDUCTION. THE APPELLANT HAS GIVEN THE BONA FIDE EXPLANATION OF MAKING SUCH A CLAIM O F EXEMPTION U/S 54F, WHICH HAS NOT BEEN ACCEPTED BY THE AO. THUS THERE IS A ITA NO. 3250 /1 4 3 DIFFERENCE OF OPINION ON THE ALLOWABILITY OF THE CLAIM OF DEDUCTION U/S 54F BETWEEN THE APPELLANT AND THE AO. IT IS NOT THE CASE OF THE AO THAT HE HAS MADE SOME INDEPENDENT ENQUIRIES RESULTIN G INTO THE DETECTION OF SOME CONCEALED INCOME OR BOUGUS NATURE OF THE CLAIM MADE IN RESPECT OF THIS DEDUCTION. THE ADDITION MADE BY THE AO ARE ON ACCOUNT OF THE DISALLOWANCE OF A LEGAL CLAIM OF DEDUCTION U/S 54F AND NOT ON ACCOUNT OF THE FALSIFICATION OF A NY FACTS RELATING THE SALE OF PROPERTY. 17. IN THE CASE OF SMT. GIRALESH VS. IT O IN I.T.A. NOS. 4646 & 4647/ D EL/2011, THE ITAT DELHI, WHILE DECIDING A SIMILAR MATTER, HAS IN ITS ORDER DATED 08/02/2013 HAS HELD THAT 'SO FAR AS THE DENIAL OF THE CLAIMED DEDUCTION U/S 54F OF THE ACT IS CONCERNED, THE' ASSESSEE HAD ALSO FURNISHED NECESSARY INFORMATION IN THIS REGARD O N THE BASIS OF WHICH ONLY THE AO CAME TO THE CONCLUSION THAT BENEFIT IS NOT AVAILABLE ON THE INVESTMENT OF SALE PROCEEDS IN A VACANT PLOT. WE T HUS FIND THAT THERE WAS NO CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF ON THE PART OF THE ASSESSEE ON THE ABOVE ADDITION/DISALLOWANCE TO ATTRACT THE PENAL PROVISIONS LAID DOWN U/S 271 (1) (C) OF THE ACT. THE PENALTY LE VIED AT RS.83,070/ U/S 271 (1) (C) OF THE ACT ON THE ABOVE ADDITION/DISALLOWANCE WAS THUS NOT JUSTIFIED IN ABSENCE OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULAR. ' 18. A MERE MAKING OF THE CLAIM OF DEDUCTION UNDER A BONA FI DE BELIEF OF THE SAME BEING ALLOWABLE, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE APPELLANT. IN THE INSTANT CASE, THE APPELLANT HAD FURNISH E D ALL THE DETAILS OF ITS DEDUCTION CLAIMED IN ITS RETURN OF INCOME AND SUCH DETAILS, IN THEMSELVES MAY NOT BE COMPLETE OR CORRECT, BUT SUCH A CLAIM MADE WAS NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE A O TO ACCEPT A PPELLANT'S CLAIM OF DEDUCTION U/ S 54F AS MADE IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE DEDUCTION, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE A O , THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY UNDER S. 271(1)(C). 19. THE ABOVE PRINCIPLE HAS BEEN LAID DOWN BY THE HON,BLE SUPREME COURT IN THE CASE OF ERR VS. RELIANCE PETROPRODUCTS (P) LTD. (2010) 230 ETR (SE) 320 : (2010) 322 ITR 158 (SE), WHEREIN IT IS HELD BY THE APEX COURT THAT 'READING THE WORDS 'INACCURATE' AND ''PARTICULARS'' IN CONJUNCTION, THEY MUST MEAN TH E DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER S. 271(1)(C). A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, ITA NO. 3250 /1 4 4 WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESS EE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS.' 20. IN MY OPINION, THE ISSUE OF IMPOSITION OF PENALTY ULS 271 (1)(C) ON ACCOUNT OF DISALLOWANCE OF ANY DEDUCTION OR THE REJECTION OF ANY LEGAL CLAIM MADE IN THE RETURN OF INC OME FILED, HAS BEEN FINALLY SETTLED BY THE ABOVE JUDICIAL PRONOUNCEMENT OF THE HON'BLE SUPREME COURT OF INDIA AND THE PRINCIPLE LAID DOWN BY THE APE~ COURT HAS TO BE FOLLOWED. 21. IN VIEW OF THE ABOVE JUDICIAL PRONOUNCEMENT AND THE FACTS AND CIRCUMSTANCE S OF THE CASE UNDER CONSIDERATION, I AM OF THE CONSIDERED OPINION, THAT THE PENALTY U / S 271(1)(C) OF THE I.T. ACT. 1961 AMOUNTING TO RS. 41,50,0001 IN THE CASE OF THE APPELLANT FOR THE AY. 2007 08 IS NOT LEVIABLE AND THEREFORE CANCELLED. 3. WE HAVE CONS IDERED RIVAL CONTENTIONS. THE DISALLOWANCE MADE U/S.54F IS A LEGAL CLAIM MADE BY THE ASSESSEE. SUCH A DISALLOWANCE OF CLAIM U/S.54F CANNOT BE INTERPRETED AS FILING OF INACCURATE PARTICULAR OF INCOME OR CONCEALMENT OF INCOME. THE LEGAL CLAIM U/S.54F WAS FIL ED AFTER DISCLOSING ALL THE RELEVANT AND BASIC FACTS OF SELLING OF LEASE RIGHTS OF PROPERTY AND CLAIM THE DEDUCTION AS PER PROVISIONS OF SECTION 54F. THE CIT(A) WHILE DELETING THE PENALTY OBSERVED THAT THERE IS A DIFFERENCE OF OPINION OF THE ALLOWABILITY O F CLAIM OF DEDUCTION U/S.54F BETWEEN THE ASSESSEE AND THE AO AND OBSERVED THAT IT IS NOT THE CASE OF AO THAT HE HAS MADE SOME INDEPENDENT ENQUIRIES RESULTING INTO DETECTION OF SOME CONCEALMENT OF INCOME OR BOGUS NATURE OF CLAIM MADE IN THIS RESPECT OF THIS DEDUCTION. THE DETAILED FINDING RECORDED BY CIT(A) AT PARA 16 TO 21 HAVE NOT BEEN CONTROVERTED BY LD. DR BY BRINING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). 4 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 3250 /1 4 5 O RDER PRONOUNCED IN THE OPEN COURT ON THIS 12 / 08 / 201 6 . SD/ - SD/ - PAWAN SINGH R.C.SHARMA / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 12 / 0 8 /201 6 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6 . / GUARD FILE. //TRUE COPY//