Sh. Rajinder Arora, New Delhi V. ITO, New Delhi

ITA 4557/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8200 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 03-02-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 03-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BANITA DEV NAOREON
• Keywords: TDS
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F: NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SHRI I.P. BANSAL, JUDICIAL MEMBER ITA NO.4557/DEL/2009 ASSESSMENT YEAR : 2005-06 SHRI RAJINDER ARORA, C-1/22, MODEL TOWN, DELHI 110 009. PAN : AAEPA 8272A VS. ITO, WARD 20(3), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SMT. BANITA DEV NAOREON, SR. DR ORDER PER : I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST THE ORDER OF THE CIT (A) DATED 28 TH AUGUST, 2009 FOR ASSESSMENT YEAR 2005-06. GROUNDS OF APPEAL READ AS UNDER:- 1. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN AN IMPO SITION OF PENALTY U/S 271(1)(C) OF INCOME TAX ACT, 1961. 2. THAT KEEPING IN VIEW THE BUILDER BUYER AGREEME NT THE APPELLANT HAS RIGHTLY TREATED IT AS RENTAL INCOME, THUS, IN THESE CIRCUMSTANCES THE MAXIMUM JUSTIFICATION COULD HAVE ENDED BY CHARGING THE INCOME TAX, AN IMPOSITION OF PENALTY W AS NOT JUSTIFIED. 3. THAT THE APPELLANT CRAVES HIS RIGHT TO AMEND, D ELETE OR ADD ANY GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEAR ING. ITA NO.4557/DEL/2009 2 2. THE ASSESSEE HAS PURCHASED A FLAT FROM DEVELOPER . ONE OF THE CLAUSES OF THE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH THE BUILDER WAS AS UNDER:- IN THE EVENT OF THE DEVELOPER UNABLE TO FINALIZE T HE LEASE AGREEMENT, IT SHALL PAY THE MINIMUM RENT OF RS.30/- PER SQ. FT. TO THE ALLOTTEE AS MINIMUM GUARANTEED RENT FOR THE FIRST 3 6 MONTHS OR TILL THE DATE OF THE SAID FLAT IS PUT TO LEASE WHICHEVER IS EARLIER. 3. IN PURSUANCE OF THAT CLAUSE, THE ASSESSEE RECEIV ED A SUM OF RS.3,31,860/- WHICH WAS DECLARED BY THE ASSESSEE AS RENTAL INCOME OUT OF WHICH DEDUCTION OF RS.99,668/- WAS CLAIMED AS INTEREST PAID ON ACCOUNT OF HOUSE LOAN. THE AO FOUND THAT THE ASSESSEE DID NOT GET POSSESSION AS T HE CONSTRUCTION WITH REGARD TO THE RELEVANT PROPERTY WAS COMPLETED BY 28 TH FEBRUARY, 2005 AND, THUS, THE ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION OF INT EREST OUT OF THE SAID INCOME. IT IS THE CASE OF AO THAT THE AMOUNT RECEIVED BY THE A SSESSEE COULD NOT BE CLAIMED AS HOUSE PROPERTY INCOME AND, THUS, WRONG DEDUCTION OF RS.99,668/- WAS CLAIMED BY THE ASSESSEE U/S 24 OF THE IT ACT, 1961. THE CLAIM OF THE ASSESSEE WAS DISALLOWED AND ON DISALLOWANCE OF SUCH CLAIM TH E PRESENT PENALTY OF RS.30,466/- BEING 100% OF TAX SOUGHT TO BE EVADED H AS BEEN LEVIED. THE CLAIM OF THE ASSESSEE THAT IT IS A DEBATABLE ISSUE HAS BE EN REJECTED BY THE AO AND THE FINDINGS OF THE AO HAVE BEEN CONFIRMED BY CIT (A). THE ASSESSEE IS AGGRIEVED WITH SUCH FINDINGS OF CIT (A) ACCORDING TO WHICH IT HAS BEEN HELD THAT THE AO WAS JUSTIFIED IN LEVYING THE PENALTY. 4. NOTICE OF HEARING WAS SENT TO THE ASSESSEE. HOWE VER, ON THE FIXED DATE OF HEARING NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. AS IT IS A SMALL MATTER WE PROCEEDED TO DECIDE THIS APPEAL EX PARTE QUA THE AS SESSEE AFTER HEARING LD. DR. 5. LD. DR, AFTER NARRATING THE FACTS, RELYING ON T HE ORDER OF AO AND CIT (A) PLEADED THAT IT IS A FIT CASE WHERE THE CIT (A) HAS RIGHTLY HELD THAT THE PENALTY WAS LEVIABLE. THUS, SHE PLEADED THAT ORDER OF THE CIT (A) SHOULD BE CONFIRMED. ITA NO.4557/DEL/2009 3 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF LD. DR AND HAVE CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON OU R RECORD. IT HAS BEEN THE CLAIM OF THE ASSESSEE THAT ACCORDING TO THE AGREEMENT WIT H THE DEVELOPER HE RECEIVED THE SAID AMOUNT AS A RENT, THEREFORE, THE RECEIPT W AS SHOWN AS HOUSE PROPERTY INCOME. AS AGAINST THAT THE CLAIM OF THE REVENUE I S THAT THE CONSTRUCTION OF PROPERTY WAS NOT COMPLETED FOR THE PERIOD FOR WHICH THE INCOME WAS SHOWN. THE ASSESSEE DID NOT GET THE POSSESSION, THEREFORE, SUC H INCOME COULD NOT BE ASSESSED AS HOUSE PROPERTY INCOME. THE SECOND CONT ENTION OF THE REVENUE IS THAT IN THE TDS CERTIFICATE, THE SAID AMOUNT PAID T O THE ASSESSEE WAS ALSO TREATED AS INTEREST OTHER THAN SECURITY. THEREFORE, THE SA ID AMOUNT RECEIVED BY THE ASSESSEE DOES NOT HAVE THE CHARACTER OF HOUSE PROPE RTY INCOME, THEREFORE, THE ASSESSEE WAS NOT ENTITLED TO GET DEDUCTION OF INTER EST AS CLAIMED BY HIM U/S 24 OF THE ACT. 7. IF THE ABOVE CLAUSE OF AGREEMENT WITH THE DEVELO PER IS PERUSED, THEN, IT WILL BE CLEAR THAT WHAT THE ASSESSEE WAS RECEIVING FROM THE DEVELOPER WAS IN THE SHAPE OF RENT, MAY BE DUE TO FAILURE ON THE PART OF THE DEVELOPER TO GIVE THE POSSESSION TO THE ASSESSEE UPTO A SPECIFIED DATE. THEREFORE, IT CAN BE SAID THAT WHETHER SUCH RECEIPT COULD BE DECLARED AS HOUSE PRO PERTY INCOME IS A DEBATABLE ISSUE WHICH HAS TO BE ESTABLISHED BY BRINGING MORE FACTS ON RECORD. APPARENTLY, IT DOES NOT APPEAR THAT THE ASSESSEE CLAIMED A FALS E DEDUCTION WITH A VIEW TO EVADE TAX AS IN THE CLAUSE OF THE AGREEMENT ITSELF IT HAS BEEN SHOWN THAT THE SAID AMOUNT WILL BE PAYABLE AS MINIMUM GUARANTEED R ENT. THUS, WE SEE JUSTIFICATION IN THE CASE OF THE ASSESSEE THAT ACCO RDING TO HIS VIEW THE SAID AMOUNT WAS ASSESSABLE AS INCOME FROM HOUSE PROPERTY . TAX DEDUCTION CERTIFICATE CANNOT BE TAKEN TO BE A RELEVANT EVIDEN CE TO COME TO THE CONCLUSION THAT WHETHER SUCH AMOUNT SHOULD BE TREATED AS INCOM E FROM OTHER SOURCES OR AS INCOME FROM HOUSE PROPERTY PARTICULARLY IN VIEW OF THE AFOREMENTIONED CLAUSE CONTAINED IN THE AGREEMENT. THUS, THERE BEING A DE BATE, IT CANNOT BE HELD THAT IT WAS A JUSTIFIED CASE OF LEVY OF PENALTY. ALL THE F ACTS WERE PLACED BY THE ASSESSEE ON RECORD AND EXPLANATION WAS GIVEN WHICH HAS NOT B EEN ESTABLISHED TO BE FALSE ITA NO.4557/DEL/2009 4 OR IT IS NOT AN EXPLANATION WHICH THE ASSESSEE COUL D NOT PROVE TO BE BONA FIDE. THEREFORE, WE SEE NO JUSTIFICATION FOR LEVY OF PENA LTY IN THE PRESENT CASE. WE, THEREFORE, REVERSE THE ORDER OF THE CIT (A) AND ALL OW THE APPEAL OF THE ASSESSEE BY HOLDING THAT NO PENALTY WAS LEVIABLE IN THE PRES ENT CASE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 05.02.201 0. SD/- SD/- [G.E. VEERABHADRAPPA] [I.P. BANSAL] VICE PRESIDENT JUDICIAL MEMBER DATED, 05.02.2010. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES