CHHOTALAL N. THAKKER, MUMBAI V. ITO 14(2)(1), MUMBAI

ITA 3430/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7589 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 26-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L K AGARWAL

Judgement Text

`IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: MU MBAI BEFORE SHRI T R SOOD, ACCOUNTANT MEMBER AND SHRI V DURGA RAO, JUDICIAL MEMBER ITA NO 3430/MUM/2009 (ASSESSMENT YEAR: 2004-05) CHHOTALAL N THAKKER, 1703-B, PANCHSHEEL HEIGHTS, MAHAVIR NAGAR, MUMBAI -400 067 PAN: AAAPT 4950 G VS. INCOME TAX OFFICER WARD 14(2)-(1), MUMBAI APPELLANT RESPONDENT ASSESSEE BY: SHRI DHARMESH KANSARA REVENUE BY: SHRI L K AGARWAL ORDER PER T R SOOD, ACCOUNTANT MEMBER IN THIS ASSESSEE HAS CHALLENGED THE LEVY OF PENALTY AMOUNTING TO RS 81,620/- LEVIED U/S 271(1)(C). 2. AN ADJOURNMENT APPLICATION WAS MOVED BUT LATER O N THE SAME WAS WITHDRAWN AND, THEREFORE, THE ADJOURNMENT WAS REJECTED. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT ASSE SSEE HAD CLAIMED EXPENSES ON ACCOUNT OF INTEREST FOR BORROWED CAPITAL AMOUNTING OF RS 1,15,174/- BROKERAGE AMOUNTING TO RS 43,000/- AND PROFESSIONAL FEES OF RS 15,000/- AGAINST RENTAL INCOME. 4. DURING ASSESSMENT PROCEEDINGS, ASSESSING OFFICER NOTICED THAT ASSESSEE HAS TAKEN A SUM OF RS 10,79,000/- FROM MUMBAI DISTRICT CENTRA L CO-OPERATIVE BANK AS ADVANCE RENT AND SOME OF THE MONEY WAS RAISED FOR RENOVATION. T HIS INTEREST WAS, THEREFORE, NOT ALLOWED ALONG WITH THE DISALLOWANCE OF BROKERAGE AN D PROFESSIONAL FEES AMOUNTING TO RS 43,000/- AND RS 15,000/-. ITA 3430/M/2009 CHHOTALAL N THAKKER 2 5. FURTHER, IT WAS NOTICED THAT ASSESSEE HAD RETURN ED LOSS UNDER THE HEAD INCOME FROM BUSINESS AND THE VARIOUS EXPENSES WERE CLAIME D INCLUDING AN ITEM OF RS 1,46,734/- ON ACCOUNT OF INTEREST WHICH WAS ALSO DISALLOWED BE CAUSE ASSESSEE COULD NOT GIVE REASONS WHERE SUCH MONEY HAD BEEN UTILISED. PENALT Y PROCEEDINGS WERE INITIATED IN RESPECT OF THESE ITEMS AND PENALTY WAS LEVIED BECAU SE IN RESPONSE TO THE SHOW CAUSE NOTICE ASSESSEE SUBMITTED THAT HE HAS NOT FILED ANY APPEAL AND AGREED FOR THE ADDITION AND, THEREFORE, CO-OPERATED WITH THE DEPARTMENT. A SSESSING OFFICER DID NOT AGREE AND LEVIED THE MINIMUM PENALTY OF RS 81,620/-. 6. BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE S UBMITTED THAT ASSESSEE WAS A SENIOR CITIZEN AND WAS NOT AWARE OF THE IMPLICATION OF TAX LAWS. THE LOAN WAS TAKEN FROM THE BANK FOR RENOVATION OF THE PREMISES THAT IS WHY THE INTEREST WAS CLAIMED AGAINST THE INCOME FROM HOUSE PROPERTY ALONG WITH THE BROKERAGE AND PROFESSIONAL CHARGES UNDER THE BONA FIDE BELIEF THAT SUCH EXPENSES WERE ALLOWABLE. SIMILARL Y, THE LOAN FROM BHAGWANDAS BHOGILAL & CO WAS TAKEN FOR BUSINESS PUR POSE AGAINST WHICH INTEREST OF RS 1,46,734/- WAS PAID. HE ARGUED THAT PERUSAL OF ASS ESSMENT WOULD CLEARLY SHOWS THAT HARDLY ANY DETAILED REASONS HAVE BEEN GIVEN BY THE ASSESSING OFFICER BUT ASSESSEE NOT BEING VERY CONVERSANT WITH THE LAWS AGREED WITH THE ADDITION UNDER THE IMPRESSION THAT IN VIEW OF THE CO-OPERATION NO FURTHER ACTION WOULD BE TAKEN, THEREFORE, LENIENT VIEW SHOULD BE TAKEN. 7. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE ARGUED THAT ONCE ADDITIONS WERE AGREED THIS PENALTY HAS TO BE IMPOSE D. IN THIS REGARD HE RELIED ON THE DECISION OF HONBLE KERALA HIGH COURT IN CASE OF CI T VS R KESHAVAN NAIR 287 ITR 276. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. IN CASE OF CIT VS R KESHAVAN NAIR THE PENALTY HAS BEEN CONFIRMED BY HONBLE KERA LA HIGH COURT BECAUSE IN THAT CASE A SEARCH WAS CONDUCTED IN WHICH CERTAIN BOOKS WERE FO UND WHICH SHOWED THAT INCOME WAS BEING SUPPRESSED. ON THE BASIS OF SUCH BOOKS OF AC COUNTS THE ASSESSING OFFICER COMPUTED INCOME AT RS 3,45,643/-, WHICH WAS ACCEPTE D BY ASSESSEE. HOWEVER, IN CASE ITA 3430/M/2009 CHHOTALAL N THAKKER 3 BEFORE US, NO SEARCH OR CONCEALMENT WAS THERE. ASS ESSEE CLAIMED CERTAIN EXPENSES UNDER THE BONA FIDE BELIEF AND ON THE VERY FIRST OCCASION WHEN IT WAS P OINTED OUT THAT SUCH EXPENSES ARE NOT ALLOWABLE ASSESSEE BEING A SE NIOR CITIZEN AGREED FOR THE ADDITION. FOR EXAMPLE, INTEREST CLAIMED AGAINST THE HOUSE OF PRIORITY COULD HAVE BEEN EASILY AGITATED BECAUSE THE ADVANCE WAS TAKEN FROM THE BAN K WAS USED FOR RENOVATION PURPOSES. THIS ONLY SHOWS OF BONA FIDE OF ASSESSEE AND, THEREFORE, IN THESE CIRCUMSTANCES, LEVY OF PENALTY IS NOT JUSTIFIED AND ACCORDINGLY WE DELETE THE SAME. 9. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON 23RD DAY OF FEBRUARY, 2010. SD/- (V DURGA RAO) JUDICIAL MEMBER SD/- (T R SOOD) ACCOUNTANT MEMBER MUMBAI, DATE: 23RD FEBRUARY, 2010 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) XIV, MUMBAI. 4) THE CIT- 14, MUMBAI. 5) THE DR C BENCH, ITAT, MUMBAI. BY ORDER ASSTT. REGISTRAR CHAVAN* ITAT, MUMBAI ITA 3430/M/2009 CHHOTALAL N THAKKER 4 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 18.02.2010 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 18.02.2010 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS 7 FILE SENT TO THE BENCH CLERK SR.PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER