Sh. Manish Malik, Muzaffarnagar V. ITO, Muzaffarnagar

ITA 42/DEL/2014

• Counselvise Citation: 4220114 RSA 2014
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-06-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 03-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL
• Assessee Lawyers: SANJAY KUMAR SINGHAL
• Keywords: Wrong claim; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC NEW DELHI BEFORE SHRI G.C. GUPTA, VICE PRESIDENT ITA NO: 40,41/DEL/2014 AY : - 2005-06,2006-07 SHRI OM SINGH MALIK VS. ITO 503-PATEL NAGAR, NEW MANDI, WARD-1(2), MUZAFFARNAGAR MUZAFFARNAGAR. (PAN ACKPM7964R) (APPELLANT) (RESPONDENT) ITA NO: 42/DEL/2014 AY : - 2005-06 SHRI MANISH MALIK VS. ITO 503-PATEL NAGAR, NEW MANDI, WARD-1(2), MUZAFFARNAGAR MUZAFFARNAGAR. (PAN AJFPM8104P) (APPELLANT) (RESPONDENT) ITA NO: 43/DEL/2014 AY : - 2005-06 SMT. RANBIRI DEVI VS. ITO 503-PATEL NAGAR, NEW MANDI, WARD-2(3), MUZAFFARNAGAR MUZAFFARNAGAR. (PAN AGRPD8570H) (APPELLANT) (RESPONDENT) ITA NO: 44/DEL/2014 AY : - 2005-06 SHRI ASHISH MALIK VS. ITO 503-PATEL NAGAR, NEW MANDI, WARD1(2), MUZAFFARNAGAR MUZAFFARNAGAR. (PAN AIVPM1464F) (APPELLANT) (RESPONDENT) ITA NOS. 40 - 44/DEL/2014 2 APPELLANT BY : SHRI SANJAY KUMAR SINGHAL, ADVOCATE RESPONDENT BY : SHRI K.K. JAISWAL, SR. DR DATE OF HEARING : 01.6.2015 DATE OF PRONOUNCEMENT :3.7.2 015 O R D E R PER G.C. GUPTA, VICE PRESIDENT THESE FIVE APPEALS BY THE ASSESSES FOR THE ASSESSMENT YEAR 2005-06 AND 2006-07 ARE DIRECTED AGAINST THE ORDER OF THE CIT(A ). SINCE IDENTICAL ISSUE IS INVOLVED IN ALL THESE APPEALS, THESE ARE BEING DISPOSED OF W ITH THIS CONSOLIDATED ORDER. 2. THE ONLY ISSUE IN THESE APPEALS PREFERRED BY THE ASSESEES IS WITH REGARD TO VALIDITY OF PENALTY IMPOSED U/S 271(1) OF THE ACT. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PENALTY U/S 271(1) WAS IMPOSED FOR ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST CLAIMED AS DEDUCTION AS INTEREST PAID ON BORROWED CAPITAL FOR THE PURPOSE OF CONSTRUCTION OF HOUSE. HE SUBMIT TED THAT THE AO MADE THE DISALLOWANCE ON THE PLEA THAT THE HOUSE ITSELF WAS NOT COMPLETE DURING THE RELEVANT ASSESSMENT YEARS 2005-06 AND 2006-07 AND THEREFORE NO DEDUCTION ON ACCOUNT OF INTEREST ON BORROWED CAPITAL COULD BE ALLOWED TO TH E ASSESSEE. HE SUBMITTED THAT THE ASSESSMENTS FOR THE ASSESSMENT YEAR 2007-08 WAS FRA MED ON 21.12.2010 IN SCRUTINY ASSESSMENT AND THE AO HIMSELF HELD THAT THE CONSTRU CTION OF THE PROPERTY WAS COMPLETED IN THIS YEAR AND THEREFORE THE DEDUCTION CLAIMED BY THE ASSESSEE FOR THE INTEREST PAID ON THE BORROWED CAPITAL WAS ALLOWABLE AND ACCORDINGLY ALLOWED DEDUCTION OF AMOUNT REPRESENTING 1/5 OF DISALLOWED AMOUNT ON ACCOUNT OF INTEREST PAID ON BORROWED CAPITAL IN EARLIER YEARS. LD. COUN SEL FOR THE ASSESSEE FILED A COPY OF ITA NOS. 40 - 44/DEL/2014 3 THE ASSESSMENT ORDER IN EVIDENCE OF HIS SUBMISSION. LD. DR HAS OPPOSED THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE HAS MADE A WRONG CLAIM OF DEDUCTION OF INTEREST AMOUNT ON BORROWED CAPITAL ALTHOUGH THE HOUSE ITSELF WAS NOT COMPLETE DURING THE RELEVA NT ASSESSMENT YEARS. HE SUBMITTED THAT BY CLAIMING DEDUCTION OF INTEREST ON BORROWED CAPITAL WRONGLY THE ASSESSEE HAS INFLATED EXPENSES TO AVOID INCIDENCE O F TAX AS OBSERVED BY THE CIT(A) WHILE DISMISSING THE APPEAL OF THE ASSESSEE ON THIS GROUND. HE REFERRED THE RELEVANT PORTION OF THE ASSESSMENT ORDER AS WELL AS THE APPE LLATE ORDER PASSED BY THE CIT(A) IN SUPPORT OF THE CASE OF THE REVENUE. HE RELIED ON THE ORDER OF THE AO AND CIT(A). 3. I HAVE CONSIDERED THE RIVAL SUBMISSIONS A ND HAVE PERUSED THE ORDER OF THE AO AND THE CIT(A). I FIND THAT THE ASSESSES HAVE DI SCLOSED ALL MATERIAL FACTS RELEVANT FOR THEIR ASSESSMENTS AT THE TIME OF ORIGINAL ASSES SMENT BEFORE THE AO ITSELF. IT IS A CASE OF HONEST DIFFERENCE OF OPINION BETWEEN THE AS SESSEE AND THE REVENUE REGARDING THE CORRECT ASSESSMENT YEAR OF DEDUCTION ON ACCOUNT OF INTEREST ACCRUED ON BORROWED CAPITAL. I FIND THAT THE AO HIMSELF HAS ALLOWED THE DEDUCTION ON ACCOUNT OF INTEREST ON BORROWINGS FROM THE BANK IN THE ASSESSMENT FRAMED IN SCRUTINY ASSESSMENT FOR THE ASSESSMENT YEAR 2007-08 AND HAS ALLOWED 1/5 OF SUCH INTEREST ACCRUED IN THE EARLIER YEARS ON ACCOUNT OF INTEREST PAID ON BORROWED CAPITAL. THE ASSESSEE HAS RAISED THE LOAN FROM THE BANK AND THE GENUINENESS OF THE INTEREST ACCRUED ON SUCH BORROWINGS IS NOT IN DISPUTE. THE A O HAS RIGHTLY ALLOWED THE DEDUCTION ON ACCOUNT OF INTEREST ON BORROWED AMOUNT IN THE SUBSEQUENT ASSESSMENT YEAR 2007-08 WHEN THE CONSTRUCTION OF THE PROPERTY IN QUESTION WAS COMPLETED. MERELY BECAUSE THE DEDUCTION OF INTEREST ON BORROWE D CAPITAL WAS ALLOWABLE AS PER LAW IN A DIFFERENT ASSESSMENT YEAR, AS ADMITTED BY THE AO, AND THE ASSESSEE HAS ITA NOS. 40 - 44/DEL/2014 4 MADE THE CLAIM IN SOME OTHER ASSESSMENT YEAR, IT CO ULD NOT BE SAID THAT THE ASSESSEE IS GUILTY FOR CONCEALMENT OF INCOME OR F OR FILING OF INACCURATE PARTICULARS OF INCOME. IN THIS VIEW OF THE MATTER I HOLD THAT THE PENALTY U/S 271(1)(C) COULD NOT BE SUSTAINED AND IS ACCORDINGLY CANCELLED AND THE GROU NDS OF APPEAL OF THE ASSESSEE ARE ALLOWED IN ALL THE APPEALS BEFORE ME. 4. IN THE RESULT ALL THE APPEALS OF THE ASSE SEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3. 7.2015. SD/- (G.C. GUPTA) VICE PRESIDENT DATED: THE 3.7.2015 *VEENA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER DY. REGISTRAR SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 1.6.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 1.6.2015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY THE SECOND MEMBER ITA NOS. 40 - 44/DEL/2014 5 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 6. DATE OF PRONOUNCEMENT OF ORDER 7. DATE OF FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER