SUJATA HEMLAL BAKHRE, MUMBAI V. ITO WD 8(3)(1), MUMBAI

ITA 4611/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8568 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: E
• Next Hearing Date: 07-11-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 13-06-2013
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Assessee Lawyers: SANJAY B VORA
• Keywords: Salary income; Proportionate interest; Wrong claim; Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E , MUMBAI BEFORE SHRI D K ARUNAKARA RAO , ACCOUNTANT MEMBER AND SHRI CN PRASAD , JUDICIAL MEMBER ITA NO. 4611 /MUM/201 3 : (A.Y : 20 10 - 11 ) SHRI S UJATA HEMLAL BAKHRE FLAT NO.302, PRANGAN BLDG. MALVIYA ROAD VILE PARLE (E) MUMBAI 400 0 57 PAN : AA DPP9408J ( / APPELLANT) VS. ITO WD 8 ( 3 )( 1 ) R.NO.201, 2 ND FLOOR AAYAKAR BHAVAN MK ROAD NEW MARINE LINES MUMBAI 400 020 ( / RESPONDENT) / A PPELLANT BY : SHRI SANJAY B VORA REVENUE BY : SHRI AKHILENDRA YADAV / DATE OF HEARING : 07 /1 1 /201 6 DATE OF PRONOUNCEMENT : 03/02/2017 / O R D E R PER C.N.PRASAD (J.M.) : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (APPEALS) - 18, MUMBAI DATED 22.05.2013 FOR THE ASSESSMENT YEAR 2010 - 11 IN SUSTAINING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE, AN INDIVIDUAL DERIVING INCOME FROM SALARY, RENTAL INCOME AND INTEREST INCOME FILED RETURN ON 11.10.2010 DECLARING INCOME OF RS.5,67,84,540 / - . THE ASSESSMENT WAS 2 SHRI S UJATA HEMLAL BAKHRE ITA NO. 4611 /MUM/201 3 COMPLETED ON 30.11.2012 U /S 143(3) DETERMINING THE INCOME OF THE ASSESSEE AT RS.5,99,87,180/ - . WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE CLAIMED INTEREST OF RS.36,56,446/ - AND REPAIRS AND MAINTENANCE OF RS.17,60,937 / - AS DEDUCTION U/S 24 UNDER THE HEAD INCOME FROM HOUSE PROPERTY AGAINST THE RENTAL INCOME OF RS.58,69,789/ - EARNED. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH THE DETAILS OF RENT, LOAN, INTEREST PAYMENTS, INVESTMENTS ETC. , AND THE ASSESSEE S UBMITTED THAT AN AGREEMENT WAS ENTERED INTO ON 11.01.2007 FOR PURCHASE OF COMMERCIAL PREMISES I.E. SHOP NO.122 AT PRIME MALL, VILE PARLE WEST, MUMBAI AND SUBSEQUENTLY VIJAYA BANK SANCTIONED A MORTGAGE LOAN OF RS. 1,48,35,000 / - ON 08.03.2007 FOR PURCHASE OF THE SAID PROPERTY. THE ASSESSEE ALSO APPROACHED VIJAYA BANK FOR SECURED LOAN OF RS.4,00,00,000/ - UNDER RENT SCHEME AND BY LETTER DATED 29.03.2007 BANK HAS SANCTIONED LOAN TO THE ASSESSEE . THE ASSESSING OFFICER NOTICED THAT THE INTEREST PAYMENT OF RS.36,5 6,446/ - ON THE LOAN OF RS. 4,00,00,000/ - HAS BEEN CLAIMED AS DEDUCTION UNDER SECTION 24 OF THE ACT. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH THE DETAILS OF UTILIZING OF THE SAID LOAN OF RS.4,00,00,000/ - A ND IN RESPONSE TO THE SA ME, ASSESSEE SUBMITTED THAT THE RESIDENTIAL HOUSE WAS PURCHASE D FOR RS. 82,00,000/ - AND AGRICULTURAL LAND FOR RS.90,00,000/ - AND THE EARLIER MORTGAGE LOAN OF RS.1,48,35,000/ - WAS REPAID. T HE ASSESSING OFFICER CALLED FOR THE EXPLANATION OF THE ASSESSEE AS TO WHY INTEREST PAYMENT CLAIMED AS DEDUCTION AGAINST HOUSE PROPERTY INCOME SHOULD NOT BE DISALLOWED AS THE ENTIRE LOAN OF RS.4,00,00,000/ - WAS NOT UTILI S ED FOR THE PURCHASE OF PROPERTY ON WHICH THE RENTAL INCOME HAS BEEN EARNED. THE ASSESSEE FURNISHED THE WORKING CALCULATING THE PROPORTIONATE INTEREST ON THE LOAN USED FOR PURCHASE OF SHOP AND ARRIVED AT SUCH INTEREST AT 3 SHRI S UJATA HEMLAL BAKHRE ITA NO. 4611 /MUM/201 3 RS. 13,56,084/ - AS ALLOWABLE DEDUCTION AGAINST RENTAL INCOME . THE ASSESSING OFFICER RECOMPUTED THE INCOME FROM HOUSE PROPERTY AND ALLOWED THIS INTEREST OF RS.13,56, 0 84 / - AS DEDUCTION AND BALANCE INTEREST OF RS.23,00,362/ - WAS DISALLOWED. 3. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS IN RESPECT OF THE EXCESS INTEREST CLAIM MADE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IN THE COURSE OF PENALTY PROCEEDINGS AND IN RESPONSE TO SHOW CAUSE NOTICE ISSUED AS TO WHY PENALTY SHOULD NOT BE LEV IED THE ASSESSEE FURNISHED EXPLANATION AS UNDER : DURING THE YEAR, THE INCOME TAX OFFICER HAS DISALLOWED THE INTEREST PAID ON THE LOAN WHICH WAS NOT RELATED TO THE INCOME EARNED BY THE ASSESSEE. WE HAVE TO STATE THAT WE HAVE NOT CONCEALED ANY PARTICULARS OR FURNISHED INACCURATE PARTICULARS. THE INTEREST WAS PAID ON THE LOAN BORROWED FOR THE PURPOSE OF ACQUIRING THE PROPERTY. THE LOAN ACCOUNT OF BANK WAS ALSO FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT HAS BEEN HELD BY VARIOUS JUDGEMENTS T HAT THE PENALTY CANNOT BE IMPOSED ON DISALLOWANCE OF EXPENSES. 4. THE ASSESSING OFFICER, HOWEVER REJECTED THE EXPLANATION OF THE ASSESSEE HOLDING THAT THE INTENTIONS OF THE ASSESSEE IN CLAIMING DEDUCTION FOR INTEREST DOES NOT APP EAR TO BE BONAFI D E AND TH E ASSESSEE HAS INTENTIONALLY NOT COMPLIED WITH THE PROVISIONS OF THE ACT AND FURNISHED INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER HELD THAT OUT OF LOAN OF RS.4,00,00,000/ - , RS.2,51,65,000/ - WAS UTILIZED FOR THE PURPOSE OF MAKING VARIOUS OTHE R INVESTMENTS AND NOT RELATED TO THE ACQUISITION OF THE PROPERTY ON WHICH RENTAL INCOME WAS RECEIVED , BUT INTEREST WAS CLAIMED ONE ENTIRE AMOUNT OF RS.4,00,00,000/ - AGAINST THE 4 SHRI S UJATA HEMLAL BAKHRE ITA NO. 4611 /MUM/201 3 HOUSE PROPERTY INCOME. THE ASSESSING OFFICER ALSO OBSERVED THAT IN THE SCRUTIN Y ASSESSMENTS FOR THE ASSESSMENT YEAR 2007 - 08, 2008 - 09, SUBSTANTIAL INTEREST CLAIMED AGAINST THE HOUSE PROPERTY INCOME WAS DISALLOWED. HE ALSO OBSERVED THAT FOR THE ASSESSMENT YEAR 2009 - 10, THE ASSESSEE HAS REVISED ITS RETURN AND ADMITTED INCOME OF RS.27, 77,899/ - AS AGAINST INCOME OF RS.4,76,538/ - ADMITTED IN THE ORIGINAL RETURN. THE ASSESSING OFFICER OBSERVED THAT FOR THE ASSESSMENT YEAR 2010 - 11 NO REVISED RETURN HAS BEEN FILED AND THIS SHOWS THAT THE ASSESSEE HAS BEEN IN THE HABIT OF CLAIMING EXCESSIVE INTEREST EXPENSE AGAINST HOUSE PROPERTY INCOME. THUS, HE CONCLUDED THAT ASSESSEE HAS DELIBERATELY FILED INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT AND LEVIED MAXIMUM PENALTY OF RS.15,20,616 / - AT 300% OF THE INCOME SOUGHT TO BE EVADED. THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT (APPEALS) AND THE LD CIT (APPEALS) BY ORDER DATED 22.05.2013 SUSTAINED THE PENALTY AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD. COUNSEL FOR TH E ASSESSEE SUBMITS THAT THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS FILED REVISED COMPUTATION AND RECOMPUTED THE INTEREST ALLOWABLE AGAINST RENTAL INCOME. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT IT IS ONLY A MISTAKE IN THE CLAIM FOR DEDUCTI ON OF INTEREST AND THIS MISTAKE WAS ALSO HAPPENED TO BE MADE EVEN IN EARLIER YEARS ALSO . HE SUBMITS THAT THERE IS NO CONCEALMENT OF INCOME OR FURNIS HING OF INACCURATE PARTICULARS AND THE ASSESSEE HAS MADE FULL DISCLOSURE OF PARTICULARS. HE PLACES RELIANCE ON THE FOLLOWING DECISIONS AND SUBMITS THAT MERE MAKING OF CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS. 5 SHRI S UJATA HEMLAL BAKHRE ITA NO. 4611 /MUM/201 3 (I) RELIANCE PETRO PRODUCTS322 ITR 158 (SC) (II) AMRUTA ORGANNICS (P) LTD. VS. DCIT (ITA NO.1121/PN/2011 DATED 23.03.2013) 6. THE LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW IN LEVYING THE PENALTY. THE LD. DR SUBMITS THAT THIS IS A FIT CASE FOR LEVY OF PENALTY AS THE ASSESSEE INTENTIONALLY MADE A FALSE CLAIM IN COMPUTING THE INCOME FROM HOUSE PROPERTY, THEREFORE, HE REQUESTED THAT THE ORDERS OF THE LOWER AUTHORITIES MAY BE SUSTAINED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ON CAREFUL READING OF THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT THE ASSESSEE HAS DELIBERATELY FILED INACCURATE PARTICULARS IN RESPECT OF THE CLAIM MADE TOWARDS INTEREST DEDUCTION WHILE COMPUTING INCOME FROM HOUSE PROPERTY. IT IS APPARENT FROM THE FACTS THAT ENTIRE LOAN AMOUNT WAS NOT UTILIZED FOR P URCHASE OF THE PROPERTY ON WHICH RENTAL INCOME WAS EARNED. SIMILAR DEDUCTIONS WERE MADE IN THE ASSESSMENT YEARS 2007 - 08, 2008 - 09 AND 2009 - 10. IT IS NOT IN DISPUTE THAT THE ASSESSEE HERSELF FILED REVISED RETURN FOR THE ASSESSMENT YEAR 2009 - 10. THIS SHOWS THAT THE ASSESSEE ALL ALONG KNOWS THAT THE ENTIRE INTEREST CLAIMED AGAINST RENTAL INCOME IS NOT ALLOWABLE. HOWEVER, FOR THE 2010 - 11, NO SUCH REVISED RETURN WAS FILED. THE INTENTIONS OF THE ASSESSEE IN CLAIMING ENTIRE INTEREST AS DEDUCTION FROM HOUSE PROP ERTY INCOME DOES NOT APPEA R TO BE BONAFIDE. THE CASE LAW RELIED ON BY THE ASSESSEE HAVE NO APPLICATION TO THE FACTS OF THE PRESENT CASE. 6 SHRI S UJATA HEMLAL BAKHRE ITA NO. 4611 /MUM/201 3 8. THE SUBMISSIONS OF THE ASSESSEE HAVE BEEN ELABORATELY CONSIDERED BY THE LD. CIT (APPEALS) AND HELD THAT THE ASSES SEE H AS DELIBERATELY AND INTENTIONALLY MADE A FALSE CLAIM OF EXCESS INTEREST AGAINST HOUSE PROPERTY INCOME TO DEFRAUD THE REVENUE OBSERVING AS UNDER : 1 .3. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT, ORDER OF THE A .O . AND FACTS OF THE CASE CAREF ULLY, IT IS NOTICED THAT IN THE ASSESSMENT ORDER, THE A .O . HAS MADE DISALLOWANCE OF EXCESS INTEREST CLAIMED AGAINST HOUSE PROPERTY OF RS. 23,00,362/ - . THE ASSESSEE HAS TAKEN LOAN OF RS. 4 CRORES, OUT OF WHICH 2,51,65,000/ - WAS UTILIZED FOR THE PURPOSE OF O THER INVESTMENTS NOT RELATING TO ACQUIRING OF THE HOUSE PROPERTY. BUT IN THE RETURN OF INCOME, THE ASSESSEE HAS CLAIMED INTEREST ON THE ENTIRE AMOUNT OF RS. 4 C R ORES AGAINST THE HOUSE PROPERTY INCOME. EVEN IN THE EARLIER YEARS IN AY. 2007 - 08 & 2008 - 09, TH E ASSESSEE HAS MADE A FALSE CLAIM OF INTEREST AGAINS.T THE HOUSE PROPERTY INCOME. THE RETURN FOR AY. 2009 - 10 WAS REVISED BY THE ASSESSEE. AFTER RECTIFYING THIS MISTAKE IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS REPEATED THE SAME FALSE CLAIM OF INTER EST ON THE TOTAL AMOUNT OF RS. 4 CRORES AGAINST THE HOUSE PROPERTY INCOME. THE AO. HAS MADE A DISALLOWANCE OF EXCESS INTEREST CLAIMED AT RS. 23,00,362/ - AND INITIATED PENALTY PROCEEDINGS U/S 271 (1 )(C). THE ASSESSEE HAS NOT FILED APPEAL AGAINST THIS DISAL LOWANCE, THUS, THE AO. HAS ISSUED NOTICE U/S 271 (1 )(C) AND ASKED T H E ASSESSEE TO EXPLAIN AS TO WHY PENALTY MAY NOT BE LEVIED. IN RESPONSE TO THIS, THE AR HAS SUBMITTED ITS REPLY TO THE AO. AFTER CONSIDERING THE SAME, THE AO HAS HELD THAT THE ASSESSEE HAS DELIBERATELY FILED INACCURATE PARTICULARS OF INCOME BY MAKING EXCESS CLAIM WHICH IS NOT ALLOWABLE AS PER THE PROVISIONS OF SEC. 271 (1 )(C). THUS, PENA L TY @ 300% WAS LEVIED AMOUNTING TO RS. 15,20,616/ - . ON THE OTHER HAND, THE AR OF THE APPELLANT HAS SUB M ITTED THAT IN THE AY. 2008 - 09, THE INTEREST WAS DISALLOWED BY THE AO. WHILE PASSING ASSESSMENT ORDER U / S 143(3). IN AY. 2009 - 10, THE REVISED RETURN WAS FILED FOR ACCURATE CLAIM OF INTEREST RELATING TO HOUSE PROPERTY. IN THE A.Y. 2010 - 11, THE ASSESSEE COUL D NOT REVISE THE RETURN DUE TO A LAPSE ON HER PART AS IT HAD ESCAPED HER ATTENTION. DURING THE 7 SHRI S UJATA HEMLAL BAKHRE ITA NO. 4611 /MUM/201 3 ASSESSMENT PROCEEDINGS, REVISED CALCULATION WAS SUBMITTED BEFORE THE AO. TO STRENGTHEN ITS VIEW, THE AR HAS RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN TH E CASE OF RELIANCE PETROPRODUCTS (SUPRA). FROM THE PERUSAL OF THE SUBMISSIONS AND FACTS OF THE CASE, IT IS UNDISPUTED ISSUE THAT THE ASSESSEE HAS TAKEN LOAN OF RS. 4 CRORES, OUT OF WHICH RS. 2,54,65,000/ - WAS UTILIZED FOR THE PURPOSE OF OTHER I N VESTMENTS NOT RELATED TO ACQUIRING OF THE HOUSE PROPERTY. IN VIEW OF THIS FACT, THE ASSESSEE WAS REQUIRED TO CLAIM INTEREST ONLY ON THE BALANCE AMOUNT AGAINST THE INCOME FROM HOUSE PROPERTY. BUT THE ASSESSEE HAS MADE A FALSE CLAI M TO DEFRAUD THE REVENUE BY CLAIMING THE INTEREST ON RS. 4 CRORES AGAINST INCOME FROM HOUSE PROPERTY. IN THIS WAY, THE ASSESSEE HAS CLAIMED EXCESS INTEREST OF RS. 23,00,362/ - . WHEN CONFRONTED BY THE A . O. DURING THE ASSESSMENT PROCEEDINGS, THE AR HAS ADMITTED THAT IT HAS MADE A FALSE CLAIM AN D SUBMITTED A CORRECT CALCULATION BEFORE THE AO. THE A.O. HAS MADE DISALLOWANCE AND INITIATED PENALTY U / S 271 (1 )(C). IN THE PENALTY PROCEEDINGS, THE A . O . HAS GIVEN OPPORTUNITY AND AFTER CONSIDERING THE REPLY OF THE APPELLANT HAS HELD THAT THE ASSESSEE HA D DELIBERATELY FILED INACCURATE PARTICULARS OF INCOME TO DEFRAUD THE REVENUE. THE RELIANCE PLACED BY THE AR ON THE DECISION OF CIT VS. RELIANCE PETROPRODUCTS IS NOT HELPFUL TO THE ASSESSEE BECAUSE THE FACTS OF THE PRESENT CASE ARE ENTIRELY DIFFERENT AND DI STINGUISHABLE. IN THAT CASE, BEFORE THE HON'BLE SUPREME COURT, THE ASSESSEE HAD MADE CLAIM FOR DEDUCTION U / S 36(1 )(III) FOR INTEREST PAID ON LOAN TAKEN FOR PURCHASE OF SHARES. IN THAT CASE, THE CLAIM MADE WAS DEBATABLE AND TWO V IEWS WERE POSSIBLE, THEREFORE, THE HON'BLE SUPREME C OURT HAS HELD THAT A MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT FURNISHING OF INACCURATE PARTICULARS RELATING THE INCOME OF THE ASSESSEE. BUT IN THE PRESENT CASE, T HE ASSESSEE IS AWARE THAT HE HAS TAKEN A LOAN OF RS. 4 CRORES OUT OF WHICH RS. 2,51,65,000/ - WERE UTILIZED FOR OTHER INVESTMENTS NOT RELATED TO ACQUIRING OF HOUSE PROPERTY, THEREFORE, THE ASSESSEE WAS LIABLE TO CLAIM INTEREST AGAINST THE HOUSE PROPERTY INC OME ONLY THE BALANCE LOAN AND NOT ON THE WHOLE AMOUNT OF RS. 4 CR O RES. BUT THE ASSESSEE HAS CLAIMED THAT IT WAS ONLY A MISTAKE, BUT MISTAKE CAN OCCUR ONLY ONCE OR TWICE. IN THIS CASE, THE ASSESSEE ITSELF ADMITTED THE FALSE CLAIM ON ACCOUNT OF EXCESS 8 SHRI S UJATA HEMLAL BAKHRE ITA NO. 4611 /MUM/201 3 INTERE ST IN AY. 2007 - 08, 2008 - 09 & 2009 - 10. THE ASSESSEE IS TRYING TO DEFRAUD THE REVENUE BY SUBMITTING INACCURATE PARTICULARS IN ALL THE YEARS. WHEN CONFRONTED, IT HAS REVISED ITS RETURN OF INCOME. BUT IN THE PRESENT CASE, THE ASSESSEE HAS NOT REVISED ITS RETUR N OF INCOME EVEN WHEN IT WAS CONFRONTED BY THE AO THUS, IT IS A CLEAR CUT CASE OF CONCEALMENT OF INCOME BY INTEN TIO NALLY AND DELIBERATELY FILING INACCURATE PARTICULARS OF INCOME. 9 . ON A CAREFUL READING OF THE OBSERVATIONS AND FINDINGS OF THE LD. CIT (APPEALS), WE AGREE WITH THE VIEW OF THE LOWER AUTHORITIES THAT THE ASSESSEE HAD DELIBERATELY AND INTENTIONALLY MADE A FALSE CLAIM OF EXCESS INTEREST AGAINST THE HOUSE PROPERTY INCOME. H OWEVER, AT THE SAME TIME, WE ARE OF THE CONSIDERED VIEW THAT THIS IS NOT A FI T CASE FOR LEVY OF 300% PENALTY. T HEREFORE, WE DIRECT THE ASSESSING OFFICER TO LEVY MINIMUM PENALTY I.E. 100% OF THE INCOME SOUGHT TO BE EVADED AND COMPUTE THE PENALTY ACCORDINGLY . 10 . IN THE RESULT, APPEAL OF THE A SSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 3 RD DAY OF FEBRUARY 2017 . SD/ - SD/ - D K ARUNAKARA RAO C.N.PRASAD / / ACCOUNTANT MEMBER JUDICIAL MEMBER / MUMBAI; / DATED 03 / 02 / 2017 LR, SPS 9 SHRI S UJATA HEMLAL BAKHRE ITA NO. 4611 /MUM/201 3 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, (ASSTT. REGISTRAR) , / ITAT, MUM 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. // TRUE COPY / /