Sh. N.G. Roa, New Delhi V. DCIT, New Delhi

ITA 3985/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4221 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 07-04-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 29-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Assessee Lawyers: N K RUSTAGI
• Keywords: Difference of opinion; Assessment record

Judgement Text

ITA NO.3985/DEL./2009 (A.Y. : 2004-05) 1 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `F : NEW DELHI) BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.3985/DEL./2009 (ASSESSMENT YEAR : 2004-05) N.G. ROA, VS. DCIT, CIRCLE 47(1), 26/22, OLD RAJINDER NAGAR, NEW DELHI. NEW DELHI-110 060. (PAN/GIR NO.ACCPR5722Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI N.K. RUSTAGI, AR REVENUE BY : SHRI H.K. LAL, SR.DR ORDER PER A.D. JAIN: JM THE ASSESSEES APPEAL FOR AY 2004-05 IS AGAINST TH E ORDER OF THE CIT(A) SUSTAINING PENALTY OF RS.75933 LEVIED U/S 271(1)(C) OF THE I.T . ACT. 2. THE FACTS ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.2079924/-. THE AO NOTICED THAT THE ASSESSEE HAD CLAIMED EXEMPTION U/S 10(13A) OF THE I.T. ACT, AMOUNTING TO RS.460200/-, FOR TWO RESIDENTIAL ACCOMMODATIONS. THE ASSESSEE HAD TAKEN BOTH THE PROPERTIES ON A RENT OF RS.25,000/- P.M. EACH AND HAD CLAIMED EXEMPTION FOR BOTH THE PROPERTIES. THE AO DISALLOW ED THE EXEMPTION CLAIMED IN RESPECT OF ONE PROPERTY AMOUNTING TO RS.230100/-. 3. IN THE PENALTY PROCEEDINGS, THE AO HELD THAT IN THE ASSESSMENT PROCEEDINGS, THE AO HAD MADE OUT A CLEAR CASE THAT EXEMPTION U/S 10( 13A) OF THE ACT CAN BE ALLOWED IN RESPECT OF ONLY ONE PROPERTY; AND THAT AS SUCH, THE ASSESSEE HAD COMMITTED THE DEFAULT OF CONCEALING THE PARTICULARS OF HIS INCOME AS WELL AS OF FILING INACCURATE PARTICULARS THEREOF. ACCORDINGLY, PENALTY OF RS.75,933/- WAS LEVIED. ITA NO.3985/DEL./2009 (A.Y. : 2004-05) 2 4. BY VIRTUE OF THE IMPUGNED ORDER, HOLDING THAT TH E ASSESSEE HAD CLAIMED AN EXEMPTION WHICH WAS NOT ADMISSIBLE UNDER THE ACT, T HE CIT(A) CONFIRMED THE PENALTY. THIS HAS BROUGHT THE ASSESSEE IN FURTHER APPEAL BEF ORE US. 5. CHALLENGING THE IMPUGNED ORDER, THE LD.AR OF THE ASSESSEE HAS CONTENDED THAT THE AUTHORITIES BELOW HAVE NOT TAKEN INTO CONSIDERATION THE FACT THAT IT REMAINS UNDISPUTED THAT THE ASSESSEE HAD IN FACT TAKEN TWO ACCOMMODATI ONS ON RENT; THAT IT IS ALSO NOT THE CASE OF THE AUTHORITIES THAT THE ASSESSEE HAD NOT DISCLO SED THE DETAILS WITH REGARD THERETO; THAT IT IS ONLY THAT IN THE OPINION OF THE AUTHORITIES B ELOW, THE ASSESSEE HAD CLAIMED AN EXEMPTION WHICH IS NOT AVAILABLE TO HIM; THAT IT IS WELL SETTLED THAT NO CONCEALMENT PENALTY CAN BE LEVIED ON MERELY DISBELIEVING THE EX PLANATION OFFERED BY THE ASSESSEE; THAT OTHERWISE TOO, IN CIT VS. JUSTICE S.C. MITTAL TC 32 R 593(P&H), IT HAS BEEN HELD THAT LAW DOES NOT PROHIBIT THE ACCOMMODATION AND THAT RA THER, THE MAIN CONSIDERATION IS PAYMENT. THE LD.AR OF THE ASSESSEE HAS PLACED RELI ANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETR O PRODUCTS PVT. LTD., 322 ITR 158 (SC). 6. ON THE OTHER HAND, LD.DR HAS STRONGLY SUPPORTED THE IMPUGNED ORDER. IT HAS BEEN SUBMITTED THAT THE PENALTY WAS RIGHTLY LEVIED AND H AS RIGHTLY BEEN CONFIRMED BY THE CIT(A), SINCE THE ASSESSEE UNDISPUTEDLY MADE A CLAI M OF EXEMPTION REGARDING TWO PROPERTIES, WHICH IS NOT PERMISSIBLE UNDER THE LAW, AND THAT THEREFORE, OBVIOUSLY THE ASSESSEE WAS GUILTY OF HAVING CONCEALED THE PARTICU LARS OF HIS INCOME AND OF FURNISHING INACCURATE PARTICULARS THEREOF. 7. WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. THE FACTUM OF THE ASSESSEE HAVING TAKEN TWO RESIDENTIAL ACCOMMODATIONS ON RENT IS NOT DISPUTED. THE ONLY ISSUE IS AS TO WHETHER BY CLAIM ING EXEMPTION WITH REGARD THERETO, THE ASSESSEE HAS RENDERED HIMSELF LIABLE TO LEVY OF CON CEALMENT PENALTY. 8. SECTION 10(13A) OF THE I.T. ACT, UNDER WHICH, TH E EXEMPTION WAS CLAIMED READS AS FOLLOWS: ITA NO.3985/DEL./2009 (A.Y. : 2004-05) 3 10 IN COMPUTING THE TOTAL INCOME OF THE PREVIOUS Y EAR OF ANY PERSON, ANY INCOME FALLING WITHIN ANY OF THE FOLLOWING CLAUSES SHALL NOT BE INCLUDED (13A) ANY SPECIAL ALLOWANCE SPECIFICALLY GRANTED T O AN ASSESSEE BY HIS EMPLOYER TO MEET THE EXPENDITURE ACTUALLY INCURRED ON PAYMENT OF RENT (BY WHATEVER NAME CALLED) IN RESPECT OF RESIDENTIAL ACC OMMODATION OCCUPIED BY THE ASSESSEE, TO SUCH EXTENT AS MAY BE PRESCRIBE D HAVING REGARD TO THE AREA OR PLACE IN WHICH SUCH ACCOMMODATION IS SITUAT E AND OTHER RELEVANT CONSIDERATIONS THE EXTENT ENVISAGED IN SECTION 10(13A) HAS BEE N PRESCRIBED UNDER RULE 2A OF THE I.T. RULES, WHICH TALKS OF THE QUANT UM OF EXEMPTION AVAILABLE. 8. AS PER CIT VS. JUSTICE S.C. MITTAL (SUPRA), IT IS THE PAYMENT WHICH IS THE MAIN CONSIDERATION. LAW DOES NOT PROHIBIT THE EXTENT OF ACCOMMODATION. THIS DECISION WAS CITED BY THE ASSESSEE BEFORE THE AO IN THE PENALTY PROCEEDINGS. THE AO, HOWEVER, DISTINGUISHED IT SAME, OBSERVING THAT IN THE ASSESS EES CASE, THE ASSESSMENT ORDER WAS NOT APPEALED AGAINST, SHOWING THAT THE ASSESSEE WAS CON VINCED ABOUT THE ADDITION. THIS DISTINCTION, IN OUR CONSIDERED OPINION, IS NOT PROP ER APROPOS, THE PENALTY IN QUESTION. THE FACT OF THE MATTER IS THAT CIT VS. JUSTICE S.C. MI TTAL (SUPRA) HOLDS THAT THE EXTENT OF THE ACCOMMODATION IS NOT PROHIBITED BY THE LAW AND IT I S THE PAYMENT WHICH IS THE MAIN CONSIDERATION. THIS IS ALSO EVIDENT FROM RULE 2 OF THE I.T. RULES, WHICH PRESCRIBES THE QUANTUM OF EXEMPTION AVAILABLE. NO DECISION CONTRA RY TO THE DECISION IN CIT VS. S.C. MITTAL (SUPRA) HAS BEEN CITED. 9. IN VIEW OF THE ABOVE, IT IS SEEN THAT THE PENALT Y WAS LEVIED ON A MERE REJECTION OF THE ASSESSEES EXPLANATION, WHICH WAS NOT FOUND TO BE EITHER UNSUBSTANTIATED, OR MALA FIDE. IT WAS IN VIEW OF CIT VS. JUSTICE S.C. MITT AL (SUPRA), THAT THE ASSESSEE HARBORED THE BELIEF THAT HE WAS ENTITLED TO EXEMPTION U/S 10 (13A) WITH REGARD TO BOTH THE RESIDENTIAL ACCOMMODATIONS HELD BY HIM, WHEREAS THE INTERPRETATION OF THE DEPARTMENT IS THAT THE ASSESSEE WAS ENTITLED TO THE EXEMPTION ONL Y QUA-THE ONE RESIDENTIAL ACCOMMODATION AND THAT BY CLAIMING THE UNAVAILABLE EXEMPTION, HE HAS BECOME LIABLE TO LEVY OF CONCEALMENT PENALTY. ITA NO.3985/DEL./2009 (A.Y. : 2004-05) 4 10. IN RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA), IT HAS BEEN HELD BY THE HONBLE SUPREME COURT THAT IN ORDER TO BE COVERED BY SECTI ON 271(1)(C) OF THE ACT, THERE HAS TO BE A CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE; THAT FURTHER, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME; THAT THE MEANING OF THE WORD PARTICULARS USED IN THE SECTION WOULD EMBRAC E THE DETAILS OF THE CLAIM MADE; THAT WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND T O BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCU RATE PARTICULARS; THAT IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTL Y COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED; THAT BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING OF INACCURATE PARTIC ULARS; THAT TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EX ACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS; THAT WHERE THERE IS NO FINDING THAT A NY DETAILS SUPPLIED BY THE ASSESSEE IN HIS RETURN WERE FOUND TO BE INCORRECT, ERRONEOUS OR FAL SE, THERE IS NO QUESTION OF INVITING THE PENALTY U/S 271(1)(C) OF THE ACT; THAT A MERE MAKIN G OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCUR ATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE; AND THAT SUCH A CLAIM MADE IN THE RET URN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 11. IN THE MATTER BEFORE US, IT IS NOT THE CASE OF THE DEPARTMENT, AS OBSERVED EARLIER ALSO, THAT THE ASSESSEE HAD FURNISHED ANY INACCURAT E PARTICULARS ABOUT THE ACCOMMODATIONS TAKEN BY HIM - EVEN NO FACT CONCERNING THE PAYMENT WITH REGARD THERETO IS IN DISPUTE. THE ASSESSEE, THEREFORE, HAD FURNISHED ALL PARTICUL ARS IN HIS RETURN OF INCOME. THERE WAS NO FINDING RECORDED THAT THESE PARTICULARS WERE INA CCURATE. IT IS THE CASE OF A CLAIM OF EXEMPTION MADE BY THE ASSESSEE, WHICH, IN THE EYES OF THE DEPARTMENT IS A CLAIM NOT SUSTAINABLE IN LAW. 12. EVIDENTLY, THEREFORE, RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE C LAIM MADE BY THE ASSESSEE WAS VIEWED DIFFERENTLY BY THE ASSESSEE AND THE DEPARTMENT. IT WAS, AS SUCH, ONLY A CASE OF A DIFFERENCE OF OPINION AND NOT ONLY THAT, THE OPINIO N HELD BY THE ASSESSEE WAS PROMPTED BY THE DECISION IN CIT VS. JUSTICE S.C. MITTAL (SUPR A). NO CONCEALMENT PENALTY IS, IN SUCH A SITUATION, ATTRACTED. ITA NO.3985/DEL./2009 (A.Y. : 2004-05) 5 13. THE BEST CASE OF THE DEPARTMENT AGAINST THE ASS ESSEE COULD BE THAT THE CLAIM MADE BY HIM, WHICH WAS, EVEN AS SUCH INADMISSIBLE IN LAW , WAS MADE MALA FIDE. THIS, HOWEVER, HAS NOWHERE BEEN MADE OUT. OTHERWISE TOO, AS DELIBERATED UPON, HEREINABOVE, IN VIEW OF THE DECISION CIT VS. JUSTICE S.C. MIT TAL (SUPRA), THE ASSESSEE HAD REASON ENOUGH TO ENTERTAIN THE BELIEF THAT HE WAS ENTITLED TO THE EXEMPTION CLAIMED. 14. BEFORE PARTING, MAY WE ALSO MENTION THAT THE OB JECTION OF THE ASSESSEE WITH REGARD TO NO SATISFACTION FOR INITIATION OF PENALTY PROCEE DINGS HAVING BEEN RECORDED BY THE AO DOES NOT WEIGH WITH US. IT IS THE CATEGORICAL FIND ING OF THE CIT(A) IN THE ORDER UNDER APPEAL THAT ON EXAMINATION OF THE ASSESSMENT RECORD SHE FOUND THAT THE AO HAD INDEED RECORDED HIS SATISFACTION FOR INITIATING THE PENALT Y PROCEEDINGS; THAT SUCH SATISFACTION STOOD RECORDED IN THE BODY OF THE ASSESSMENT ORDER; AND THAT THE A.O. HAD ALSO MADE A NOTING IN THE ORDER SHEET THAT NOTICE U/S 271(10(C) BE ISSUED.. THE ASSESSEE HAS NOT SHOWN OTHERWISE. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THE A.O. TO HAVE INITIATED THE PENALTY PROCEEDINGS THUS; THE PENALTY PROCEEDINGS U/S 271( 10(C) IS INITIATED FOR CONCEALING TRUE PARTICULARS OF INCOME. THE DRIFT OF THE ORDER ALS O EVINCES DISCERNMENT OF THE AOS SATISFACTION IN THIS REGARD. THERE WAS, THEREFORE, DUE AND AMPLE SATISFACTION RECORDED IN THE ASSESSMENT ORDER FOR INITIATING THE PENALTY PRO CEEDINGS. THE ASSESSEE SEEKS TO FIND FAULT WITH THE LATTER OBSERVATION OF THE CIT(A), I. E., REGARDING THE AOS ORDER-SHEET NOTING. THE ARGUMENT RAISED IS, THAT ORDER-SHEET N OTINGS ARE NOT A PART OF THE ASSESSMENT ORDER. THIS ARGUMENT IS OTIOSE IN VIEW OF THE FACT THAT, AS OBSERVED, SATISFACTION TO INITIATE PENALTY PROCEEDINGS DOES STAND RECORDED IN THE ASSE SSMENT ORDER. THIS ARGUMENT IS, HENCE, REJECTED. 15. THUS, LOOKED AT FROM ANY ANGLE, THE PENALTY LEV IED IS UNSUSTAINABLE IN THE EYE OF LAW. FOR THE REASONS DISCUSSED HEREIN-BEFORE, WE D O NOT AGREE WITH THE REASONING ADOPTED BY THE CIT(A) FOR SUSTAINING THE PENALTY LEVIED. A CCORDINGLY, THE ORDER UNDER APPEAL IS QUASHED. RESULTANTLY, PENALTY LEVIED IS HEREBY CAN CELLED. ITA NO.3985/DEL./2009 (A.Y. : 2004-05) 6 16. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED . 17. ORDER PRONOUNCED IN OPEN COURT ON THE DATE OF H EARING ON 07.04.2010. (R.C. SHARMA) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 7.4. 2010. SKB COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXX, NEW DELHI 5.CIT(ITAT), NEW DELHI. AR/ITAT