SHRI VIVEK TALWAR, MUMBAI V. ACIT- CC - 46 , MUMBAI

ITA 5003/MUM/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9991 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2004-2005
• Appeal Filed On: 28-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHAMMED RIZWAN
• Keywords: Bonafide belief; Difference of opinion
• Section: 271(1)(c); 143(3); 153A; 274; 13

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL F BENCH MUMB AI BEFORE SHRI PAWAN SINGH JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 5003/MUM/2018 (ASSESSMENT YEAR 2004-05 ) SHR I VIVEK TALWAR 17-B, ILL PALAZZO, RIDGE ROAD, MALABAR HILL, MUMBAI-400006 . PAN: AAAPT3994Q VS. ACIT, CENTRAL CRICLE-46, ROOM NO. 659, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. APPELLANT RESPONDE NT ITA NO. 5004/MUM/2018 (ASSESSMENT YEAR 2005-06 ) SHRI VIVEK TALWAR 17-B, ILL PALAZZO, RIDGE ROAD, MALABAR HILL, MUMBAI-400006 . PAN: AAAPT3994Q VS. ACIT, CENTRAL CRICLE-46, ROOM NO. 659, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. APPELLANT RESPONDE NT APPELLANT BY : SHRI VIMAL PUNMIYA (AR) RESPONDENT BY : SHRI MOHAMMED RIZWAN (DR) DATE OF HEARING : 12.12.2019 DATE OF PRONOUNCEMEN T : 12.12.2019 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER ; 1. THIS TWO APPEAL BY ASSESSEE ARE DIRECTED AGAINST TH E SEPARATE ORDER OF LD. CIT(A)-50, MUMBAI BOTH DATED 01.06.2018 FOR ASSESSM ENT YEAR 2004- 05 & 2005-06. IN BOTH THE APPEALS, THE ASSESSEE HAS RAISED CERTAIN COMMON GROUNDS OF APPEAL. FACTS FOR BOTH THE YEAR A RE ALMOST COMMON TO CERTAIN EXTENT. THEREFORE, BOTH THE APPEALS WERE CLUBBED, HEARD TOGETHER AND ARE DECIDED BY A COMMON ORDER TO AVOID THE CONFLICTING ITA NO. 500 3 & 5004 MUM 2018-SHRI VIVEK TALWAR. 2 DECISION. WITH THE CONSENT OF PARTIES, THE APPEAL F OR A.Y. 2004-05 IS TREATED AS LEAD CASE. IN APPEAL FOR A.Y. 2004-05, T HE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND L AW, THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY LEVIED OF RS.60,781/- U/S 27 1(1)(C) OF THE INCOME TAX ACT, 1961 BY THE LD. ASSESSING OFFICER. 2. THE LD. CIT(A) FAILED TO CONSIDER THAT: A) ASSESSEE HAS NEITHER FURNISHED ANY INACCURATE PA RTICULARS OF INCOME NOR CONCEALED ANY INCOME. B) RENT INCOME OF COURT CHAMBERS PROPERTY WAS FIXED SINCE FROM 1967 AND SAME WAS OFFERED BY ASSESSEE AND ACCEPTED BY THE REVENUE . THEREFORE, SUDDENLY REVALUED FAIR RENT DOES NOT AMOUNT TO CONCEALMENT O R FURNISH INACCURATE PARTICULARS. HENCE PENALTY CANNOT BE LEVIED. C) LEGAL AND PROFESSIONAL FEES AMOUNTING TO RS.65,0 00/- PAID TO AJAY MAIJITHIA FOR REPRESENTING ASSESSEE BEFORE APPELLANT AUTHORIT Y AGAINST ORDER PASSED BY DIRECTORATE OF ENFORCEMENT AND SAME IS CLAIMED BUT NOT ALLOWED AS EXPENDITURE DOES NOT AMOUNT TO INACCURATE PARTICULARS. D) PENALTY PROCEEDINGS ARE SEPARATE THEN ASSESSMENT PROCEEDINGS. PENALTY CANNOT BE LEVIED JUST BECAUSE SOME ADDITION WAS MADE IN AS SESSMENT. E) PENALTY CANNOT BE LEVIED WITHOUT ANY NEW FINDING . F) PENALTY CANNOT BE LEVIED FOR MERE DIFFERENCE IN OPINION ON VALUATION OF FAIR RENT OF HOUSE PROPERTY. 2. THE ASSESSEE VIDE APPLICATION DATED 10.12.2019 RAIS ED THE FOLLOWING ADDITIONAL GROUND OF APPEAL: 4.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO ERRED IN INITIATING THE PENALTY PROCEEDING BY NOT SPECIFYING IN THE NOTICE AS TO THE WHETHER THE PENALTY WAS FOR CONCEALMENT OF INCOME O R FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, THE PE NALTY IMPOSED WAS VOID AB- INITIO. ITA NO. 500 3 & 5004 MUM 2018-SHRI VIVEK TALWAR. 3 3. BRIEF FACTS OF THE CASE AS GATHERED FROM THE ORDERS OF LOWER AUTHORITIES THAT ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 2 004-05 ON 06.08.2004 DECLARING INCOME OF RS. 42.76 LAKHS. A SEARCH WAS C ARRIED OUT IN NITCO GROUP OF COMPANIES ON 03.08.2009. THE ASSESSEE IS A PART OF NITCO GROUP OF COMPANIES. ACCORDINGLY, THE ASSESSEE WAS A LSO COVERED. CONSEQUENT OF SEARCH, NOTICE UNDER SECTION 153A WAS ISSUED TO THE ASSESSEE ON 24.11.2009. IN RESPONSE TO THE NOTICE U NDER SECTION 153A, THE ASSESSEE FILED HIS RETURN OF INCOME ON 08.01.20 10 DECLARING THE SAME INCOME AS DECLARED EARLIER. IN THE COMPUTATION OF I NCOME, THE ASSESSEE HAS SHOWN INCOME FROM HOUSE PROPERTY BEING 50% OWNE R IN A PROPERTY (UNIT), IN COURT CHAMBERS, NEW MARINE LINES AND SHO WN INCOME OF RS. 9,751/- AS RENT FROM THE SAID PROPERTY AND CLAIMED 30% DEDUCTION, ACCORDINGLY, OFFERED RS. 6,826/- AS INCOME FROM HOU SE PROPERTY. HOWEVER, THE ASSESSING OFFICER ESTIMATED THE ANNUAL LETTING VALUE (ALV) OF PROPERTY AT RS. 3.60 LAKHS. THE ASSESSEE B EING 50% OWNER OF THE SAID PROPERTY, ACCORDINGLY, HALF OF THE ALV WAS TREATED AS RS. 1.80 LAKHS AFTER GRANTING 30% DEDUCTION, THE ALV OF THE PROPERTY WAS TREATED AS RS. 1.26 LAKHS. THE ASSESSING OFFICER ALSO DISAL LOWED LEGAL AND PROFESSIONAL FEES PAID TO SHRI AJAY MAJITHIA, ADVOC ATE FOR REPRESENTING THE ASSESSEE BEFORE THE DIRECTORATE OF ENFORCEMENT ON THE GROUND THAT THE SAME IS NOT ALLOWABLE EXPENDITURE. THE ADDITION WAS UNSUCCESSFULLY CONTESTED BEFORE THE LD. CIT(A) AND ON FURTHER APPE AL BEFORE THE ITA NO. 500 3 & 5004 MUM 2018-SHRI VIVEK TALWAR. 4 TRIBUNAL, THE MATTER WAS RESTORED BACK TO THE FILE OF ASSESSING OFFICER, ON THE CONTENTION OF ASSESSEE THAT WHERE THE PROPER TY IS CONTROLLED BY RENT CONTROL ACT, THE ASSESSING OFFICER HAS NOT OPT ION THAN TO ACCEPT THE ACTUAL RENT RECEIVED OR MUNICIPAL RATEABLE VALUE, W HICHEVER IS HIGHER UNDER THE PROVISIONS OF SECTION 23(1)(A). IN CASE P ROPERTY IS CONTROLLED BY RENT CONTROL ACT, THEN THE ASSESSING OFFICER IS FRE E TO DETERMINE ALV AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE TO SUB MIT THE POSSIBLE RATEABLE VALUE/MARKET RENT AS IS ONE OF THE CONTENT ION THAN VALUE ADOPTED BY THE ASSESSING OFFICER WAS HIGH. THE ISSUE OF LEG AL EXPENSES WAS ALSO RESTORED, IF THE SAME WAS INCURRED FOR THE PURPOSE OF BUSINESS OF ASSESSEE THEN ALLOWABLE UNDER SECTION 37(1). HOWEVER, THE A SSESSING OFFICER IN DENOVO PROCEEDINGS AGAIN UPHELD BOTH THE ADDITIONS BY TAKI NG VIEW THAT ASSESSEE FAILED TO FURNISH NECESSARY EVIDENCE AND S UBMISSION. NO FURTHER APPEAL WAS FILED BY ASSESSEE BEFORE THE LD. CIT(A), THE ASSESSING OFFICER LEVIED THE PENALTY UNDER SECTION 271(1)(C) ON BOTH THE ADDITIONS/DISALLOWANCE WAS AGAIN SUSTAINED IN ASSES SMENT ORDER DATED 28.12.2011. THE ASSESSING OFFICER INITIATED THE PEN ALTY UNDER SECTION 271(1)(C) AND ACCORDINGLY LEVIED A PENALTY OF 100% OF TAX SOUGHT TO BE EVADED ON SUCH DISALLOWANCES. THE ASSESSING OFFICER WORKED OUT THE PENALTY OF RS. 60,781/- IN ITS ORDER DATED 30.03.20 14. ON FURTHER APPEAL BEFORE THE LD. CIT(A), THE ACTION OF ASSESSING OFFI CER IN LEVYING THE ITA NO. 500 3 & 5004 MUM 2018-SHRI VIVEK TALWAR. 5 PENALTY WAS AFFIRMED. THUS, FURTHER AGGRIEVED BY TH E ORDER OF LD. CIT(A), THE ASSESSEE HAS FIELD THIS APPEAL BEFORE THE TRIBU NAL. 4. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (D R) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE L D. AR OF THE ASSESSEE SUBMITS THAT THOUGH THE ASSESSEE HAS RAISED ADDITIO NAL GROUND OF APPEAL FOR NOT SPECIFYING THE SPECIFIC CHARGE IN THE NOTIC E UNDER SECTION 274 R.W.S. 271(1)(C), HOWEVER, HE IS NOT PRESSING THE S AME. 5. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT ASS ESSEE IS 50% OWNER OF A UNIT/PROPERTY SITUATED AT COURT CHAMBER, NEW MARI NE LINES, WHICH WAS RENTED OUT SINCE 1967, THE RENT WAS FIXED AS PE R AGREED TERM AT THE TIME OF LETTING. THE ASSESSEE RECEIVED A RENT OF RS . 9,751/- FOR THE SAID PROPERTY AND AFTER CLAIMING STANDARD DEDUCTION, INC OME OF RS. 6,825/- WAS OFFERED. THE SAME INCOME AS INCOME FROM HOUSE P ROPERTY, WAS BEING ACCEPTED BY REVENUE FROM LAST MORE THAN 25 YE ARS. THE MUNICIPAL VALUE OF THE PROPERTY IS ALSO AT RS. 9,600/-, THE L D. AR OF THE ASSESSEE SUBMITS THAT THE COPY OF ASSESSMENT ORDER ABOUT THE RATEABLE VALUE ASSESSED BY ASSESSOR AND COLLECTOR OF MUMBAI MUNICI PAL CORPORATION IS PLACED ON RECORD, WHEREIN THE RATEABLE VALUE OF THE PROPERTY IS RS. 5,920/- AND MONTHLY RENTAL VALUE IS SHOWN AT RS. 80 0/-, THE COPY OF ORDER OF ASSESSOR AND COLLECTOR OF MUMBAI MUNICIPAL CORPO RATION IS PLACED ON RECORD AS PER PAGE NO. 31 TO 35 OF PAPER BOOK. T HE ASSESSEE IS OFFERED ITA NO. 500 3 & 5004 MUM 2018-SHRI VIVEK TALWAR. 6 THE SAME RENTAL INCOME UNDER BONAFIDE BELIEF AND IS BEING ACCEPTED BY THE REVENUE FROM THE LAST 25 YEARS. THE ASSESSING O FFICER ESTIMATED THE ALV OF PROPERTY AT RS. 3.6 LAKHS AND AFTER DETERMIN ING 50% SHARE OF THE ASSESSEE AND ALLOWING 30% DEDUCTION MADE ADDITION O F RS. 1,26,000/-. ON SUCH ADDITION ON NOTIONAL INCOME, THERE IS NO JU STIFICATION ON LEVYING THE PENALTY. THE ASSESSEE HAS SHOWN INCOME FROM HOU SE PROPERTY IN THE RETURN OF INCOME. THE ASSESSEE HAS NO INTENTION TO CONCEAL THE NOTIONAL FAIR RENTAL VALUE AND ACCORDINGLY, NO PENALTY IS LE VIABLE. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF SHRI SURESH SHIVLAL BHASIN VS. ACIT IN ITA NO. 1705 & 17 07/MUM/2017, KAMALAKAR MANOHAR HAVAL VS. ITO IN ITA NO. 1170-117 3/PN/2010 AND KADAR KHAN VS. ACIT IN ITA NO. 494/MUM/2012. 6. IN OTHER ALTERNATIVE SUBMISSION, THE LD. AR OF THE ASSESSEE SUBMITS THAT MERE MAKING A CLAIM, WHICH IS NOT SUSTAINABLE IN LA W BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCO ME, THE ASSESSEE HAS DISCLOSED ALL THE FACTS WHICH IS NOT IN DISPUTE THA T THE ACTUAL RENT HAS BEEN OFFERED BY ASSESSEE FOR TAXING. IT IS A LEGAL CLAIM OF THE ASSESSEE. MERE DISALLOWANCE ON LEGAL CLAIM CANNOT BE A GROUND FOR LEVY OF PENALTY, WHEN ALL FACTS WERE EXPLAINED. THERE IS NO QUESTION OF L EVY OF PENALTY. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESS EE RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN CIT VS. RELIAN CE PETRO PRODUCTS (P.) LTD. (322/230 CTR 320 ITR 158 (SC). ITA NO. 500 3 & 5004 MUM 2018-SHRI VIVEK TALWAR. 7 7. IN OTHER ALTERNATIVE SUBMISSION, THE LD. AR OF THE ASSESSEE SUBMITS THAT NO PENALTY CAN BE LEVIED FOR MERE DIFFERENCE OF OPI NION. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISIONS OF (I) ITO VS. OASIS SECURITIES LTD. [(2010) 37 SOT 63] (I I) CIT (CENTRAL) VS. SANITARY IMPROVEMENT & TILES MFG. CO. (133 ITR 334) (III) CIT VS. PREM DAS (NO.1) 248 ITR 234 2001 (P&H) (IV) ACIT VS . FIRMENICH AROMATICS (INDIA) PVT. LTD. ((TA NO. 4654/MUM/2009) (V) SARNATH INFRASTRUCTURE (P) LTD. VS. ACIT [(2009) 120 TTJ (L UC) 216] & (VI) CIT VS. CAPLIN POINT LABORATORIES LTD. (MAD) 293 ITR 52 4 MADRAS. 8. IN OTHER ALTERNATIVE SUBMISSION, THE LD. AR OF THE ASSESSEE SUBMITS THAT IF INCOME ASSESSED ON ESTIMATION BASIS, NO PENALTY CAN BE LEVIED. THE LD. AR OF THE ASSESSEE SUBMITS THAT THERE IS NO IOTA OF EVIDENCE ON RECORD TO SHOW THAT THERE IS ANY POSITIVE CONCEALMENT, SINCE ADDITION IS BASED ON ESTIMATION BASIS, WHICH ITSELF WOULD NOT LEAD TO CO NCLUSION THAT ASSESSEE EITHER CONCEALED THE PROPERTY OF INCOME OR FURNISHE D INACCURATE PARTICULARS. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF HARIGOPAL SINGH VS. CIT [2002 258 ITR 85], CIT VS. S.RAHMAT KHAN BIRBALKHAN BADRUDDIN [1999 240 IT R 778] AND CIT VS. SMT. MEENAKSHI KUTTY [(2002) 258 ITR 494]. 9. THE LD. AR OF THE ASSESSEE ON THE DISALLOWANCE OF P ROFESSIONAL FEES OF RS. 65,000/- SUBMITS THAT LEGAL FEES OF RS. 65,000/ - WAS PAID TO SHRI AJAY MAJITHAI, ADVOCATE, FOR REPRESENTING THE ASSESSEE B EFORE THE ENFORCEMENT ITA NO. 500 3 & 5004 MUM 2018-SHRI VIVEK TALWAR. 8 DIRECTORATE. THE FEE WAS PAID THROUGH CHEQUE. BEFOR E THE ASSESSING OFFICER, THE ASSESSEE EXPLAINED THE PURPOSE FOR PAY MENT OF FEES TO ADVOCATE. IN SUPPORT OF HIS CONTENTION, THE ASSESSE E RELIED UPON THE DECISION OF CIT VS. DHANRAJGIRI RAJA NARSINGHRAIJI (91 ITR 544) & MODI SUGAR MILLS LTD. VS. CIT (90 ITR 201). THE ASSESSING OFFICER WITHOUT DISCUSSING THE FACTS OF THOSE CASE HELD THAT FACTS ARE IDENTICAL AND DISALLOWED THE ENTIRE EXPENSES IN RESTORATION PROCE EDING, THE ASSESSMENT ORDER WAS PASSED IN A HURRIEDLY MANNER. THE ASSESSI NG OFFICER DISALLOWED THE ENTIRE/EXPENSES. NO FAIR AND PROPERT Y OPPORTUNITY WAS GIVEN TO THE ASSESSEE AND BOTH THE ADDITION WAS UPH ELD WITHOUT VERIFICATION OF FACTS. THE LD. AR OF THE ASSESSEE S UBMITS THAT THE ASSESSEE HAS NOT CHALLENGED THE ADDITION BEFORE THE FIRST AP PELLATE AUTHORITY (FAA) DUE TO SMALLNESS OF AMOUNT AND TO AVOID THE C OST OF PROTECTED LITIGATION. THE ASSESSING OFFICER DISALLOWED THE EX PENSES WITHOUT VERIFICATION OF FACT. ON SUCH DISALLOWANCES, NO PEN ALTY IS LEVIABLE. 10. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE RELIE D UPON THE ORDER OF ASSESSING OFFICER. THE LD. DR FOR THE REVENUE SUBMI TS THAT DESPITE GRANTING OPPORTUNITY BY HONBLE ITAT, THE ASSESSEE FAILED TO APPEAR BEFORE THE ASSESSING OFFICER TO SUBSTANTIATE THE EX PENDITURE ON LEGAL EXPENSES AS WELL AS TO SUBSTANTIATE HIS CONTENTION ON ALV OF THE PROPERTY. THE ASSESSEE HAS NOT FILED ANY FURTHER AP PEAL AND ACCEPTED BOTH THE ADDITIONS. ITA NO. 500 3 & 5004 MUM 2018-SHRI VIVEK TALWAR. 9 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PAR TIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE FACTS ARE NOT IN DISPUTE THAT THE ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF I NCOME FROM HOUSE PROPERTY BY DETERMINING THE NOTIONAL ALV OF HOUSE P ROPERTY. FURTHER, THERE IS NO DISPUTE THAT THE ASSESSEE CLAIMED LEGAL EXPENSES OF RS. 65,000/-, WHICH WAS DISALLOWED. ON BOTH THE ISSUE, THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL, WHICH WERE RESTORED TO THE FILE OF ASSESSING OFFICER VIDE ORDER DATED 04.09.2010 IN ITA NO. 6250 -6251/MUM/2008. THE ASSESSING OFFICER AGAIN AFFIRMED BOTH THE ADDIT IONS BY HOLDING THAT ASSESSEE HAS NOT FILED ANY DETAILS AND FAILED TO DI SCHARGE HIS ONUS IN ASSESSMENT ORDER PASSED UNDER SECTION 153A R.W.S. 1 43(3) R.W.S. 254 DATED 28.12.2011. AS PER THE FACTS AVAILABLE ON REC ORD IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 254 DATED 28.12.2011 THAT NEITHER THE ASSESSEE APPEARED BEFORE THE ASSESSING OFFICER NOR THE ASSESSING OFFICER EXAMINED THE FACT AS PER DIRECTIO N OF TRIBUNAL. THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER BY TA KING VIEW THAT ASSESSEE FAILED TO APPEAR ON THE DATE OF HEARING AN D THAT ASSESSEE HAS SHOWN UTTER DISREGARD TO THE DIRECTION OF TRIBUNAL. 12. THEREAFTER, THE ASSESSING OFFICER INITIATED THE PEN ALTY PROCEEDING. NOTICE UNDER SECTION 271(1)(C) R.W.S. 274 WAS ISSUED ON 10 .10.2013. THE ASSESSEE FILED HIS REPLY DATED 30.10.2013. ON ISSUE NO. 1 I.E. ADDING NOTIONAL ALV, THE ASSESSEE STATED THAT VALUATION OF ALV IS AN ESTIMATED ITA NO. 500 3 & 5004 MUM 2018-SHRI VIVEK TALWAR. 10 FIGURE WHICH IS VARY FROM PERSON TO PERSON, THEREFO RE, CANNOT BE TERMED AS A CONCEALMENT OF INCOME. IT IS JUST A DIFFERENCE OF OPINION. ON THE ISSUE OF DISALLOWANCE OF LEGAL EXPENSES, THE ASSESS EE STATED THAT THE DIFFERENCE OF OPINION CANNOT BE A GROUND FOR LEVY O F PENALTY, THE ASSESSEE FURTHER STATED THAT EXPENSES WERE INCURRED WHOLLY A ND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE EXPENSES WERE INCURRED FOR REPRESENTING THE ASSESSEE BEFORE ENFORCEMENT DIRECTORATE FOR ALLEGED CONTRAVENTION ON PROVISION OF SECTION 9(1)(C) OF THE ACT AND ULTIMAT ELY THE APPELLATE TRIBUNAL OF ENFORCEMENT GRANTED 50% WAIVER OF PRE-D EPOSITED. 13. THE REPLY FIELD BY ASSESSEE WAS NOT ACCEPTED BY ASS ESSING OFFICER BY TAKING VIEW THAT EXPLANATION (1) TO SECTION 271(C) AUTOMATICALLY COME INTO OPERATION IN RESPECT OF ANY FACT MATERIAL TO T HE COMPUTATION OF TOTAL INCOME, WHEN THERE IS FAILURE TO OFFER ANY EXPLANAT ION OR AN EXPLANATION OFFERED IS FOUND TO BE FALSE, OR NOT SUBSTANTIATED. THE ASSESSING OFFICER, ACCORDINGLY, LEVIED THE PENALTY @ 100% OF THE TAX S OUGHT TO BE EVADED AND WORKED OUT THE PENALTY OF RS. 60,780/- IN ITS O RDER DATED 30.03.2014. 14. WE HAVE NOTED THAT THE ASSESSING OFFICER WHILE PASS ING THE ASSESSMENT ORDER INITIATED THE PENALTY FOR FURNISHING INACCURA TE PARTICULARS OF INCOME, HOWEVER, WHILE PASSING THE ASSESSMENT ORDER , THE ASSESSING OFFICER LEVIED THE PENALTY BY TAKING VIEW THAT THE ASSESSEE DELIBERATELY CONCEALED THE INCOME AND FILED INACCURATE PARTICULA RS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) R.W. EXPLANATION ( 1) THERETO. ITA NO. 500 3 & 5004 MUM 2018-SHRI VIVEK TALWAR. 11 15. THE COORDINATE BENCH OF TRIBUNAL IN SURESH SHIVLAL BHASIN (SUPRA) ON THE ISSUE OF DISALLOWANCE ON ACCOUNT OF NOTIONAL AL V, WHILE CONSIDERING THE ISSUE OF PENALTY UNDER SECTION 271(1)(C) HELD A S UNDER: 5. WE HAVE HEARD THE LEARNED DR AND PERUSED THE MA TERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD, THE IMPOSIT ION OF PENALTY U/S. 271(1)(C) OF THE ACT IN BOTH THE ASSESSMENT YEARS W ERE MADE ON THE BASIS OF ADDITIONS ON ACCOUNT OF DISALLOWANCE OF INTEREST EX PENDITURE AND NOTIONAL HOUSE PROPERTY INCOME. IN SO FAR AS DISALLOWANCE OF INTEREST EXPENDITURE IS CONCERNED, AS COULD BE SEEN FROM THE SUBMISSIONS MA DE BY THE ASSESSEE BEFORE THE LEARNED CIT(A), THE ASSESSEE HAS AVAILED OF OVE RDRAFT FACILITY FROM DENA BANK AND OUT OF THE FUNDS BORROWED FROM OVERDRAFT A CCOUNT INVESTMENT WAS MADE IN TAXABLE BONDS OF RBI AS WELL AS FIXED DEPOS IT. IT IS FURTHER EVIDENT FROM THE SUBMISSIONS OF THE ASSESSEE; AGAINST THE I NTEREST INCOME EARNED FROM TAXABLE BONDS AND FIXED DEPOSITS, WHICH WAS OFFERED AS INCOME, ASSESSEE HAS SET OFF THE INTEREST EXPENDITURE INCURRED ON ACCOUN T OF FUNDS BORROWED FROM THE OVERDRAFT ACCOUNT. THIS CLAIM OF SET OFF OF INT EREST EXPENDITURE AGAINST INTEREST INCOME HAS BEEN REJECTED BY THE ASSESSING OFFICER IN COURSE OF ASSESSMENT PROCEEDINGS. THUS, AS COULD BE SEEN FROM THE FACTS ON RECORD, UNDER A BONA FIDE BELIEF THAT INTEREST EXPENDITURE INCURRED ON THE OVERDRAFT FACILITY IS ALLOWABLE AGAINST THE INTEREST INCOME E ARNED BY INVESTING THE FUNDS BORROWED FROM THE OVERDRAFT ACCOUNT ASSESSEE HAS CL AIMED THE EXPENDITURE. THIS, IN OUR VIEW, NEITHER LEADS TO FURNISHING OF I NACCURATE PARTICULARS OF INCOME NOR CONCEALMENT OF INCOME. HENCE, ASSESSEES EXPLANATION THAT THE CONDITIONS OF SECTION 271(1)(C) OF THE ACT ARE NOT SATISFIED APPEARS TO BE PLAUSIBLE. THAT BEING THE CASE, NO PENALTY U/S. 271 (1)(C) OF THE ACT CAN BE IMPOSED ON ACCOUNT OF DISALLOWANCE OF INTEREST EXPE NDITURE. AS REGARDS IMPOSITION OF PENALTY ON THE ADDITION MADE ON ACCOU NT OF NOTIONAL HOUSE PROPERTY INCOME, IT GOES WITHOUT SAYING THAT IN REA LITY THE ASSESSEE HAS NOT EARNED ANY INCOME FROM HOUSE PROPERTY. THE ASSESSIN G OFFICER HIMSELF HAS OBSERVED THAT THE ADDITION MADE ON ACCOUNT OF INCOM E FROM HOUSE PROPERTY IS NOTIONAL. IN THAT VIEW OF THE MATTER, PENALTY U/S. 271(1)(C) OF THE ACT CANNOT BE IMPOSED IN RESPECT OF ADDITION MADE ON ACCOUNT OF N OTIONAL INCOME FROM ITA NO. 500 3 & 5004 MUM 2018-SHRI VIVEK TALWAR. 12 HOUSE PROPERTY. THUS, ON OVER ALL CONSIDERATION OF FACTS AND CIRCUMSTANCES, WE ARE OF THE OPINION THAT IMPOSITION OF PENALTY U/S. 271(1)(C) OF THE ACT, IN THE FACTS OF THE PRESENT APPEALS IS NOT JUSTIFIED. ACCO RDINGLY, WE DELETE THE PENALTY IMPOSED U/S. 271(1)(C) OF THE ACT IN BOTH THE ASSES SMENT YEARS UNDER APPEAL. 16. SO FAR AS DISALLOWANCE ON ACCOUNT OF LEGAL EXPENSES IS CONCERNED, WE HAVE NOTED THAT THE ASSESSING OFFICER DISALLOWED TH E EXPENSES WITHOUT VERIFICATION OF FACT OR MAKING ANY INVESTIGATION. T HE ASSESSEE CLAIMED THAT THE EXPENSE WAS PAID TO ADVOCATE FOR REPRESENT ING THE ASSESSEE BEFORE ENFORCEMENT DIRECTORATE. THIS FACT IS NOT CO NTROVERTED BY ASSESSING OFFICER BY BRINGING ANY ADVERSE MATERIAL ON RECORD. 17. CONSIDERING THE AFORESAID FACTS AND CIRCUMSTANCES O F THE CASE, WE ARE OF THE VIEW THAT THE ADDITION ON ACCOUNT OF NOTIONAL A LV WAS BASED ON ESTIMATION BASIS AND ADDITION ON ACCOUNT OF DISALLO WANCE OF LEGAL EXPENSES WERE MADE WITHOUT VERIFICATION OF FACT AND MAKING ANY INDEPENDENT ENQUIRY/INVESTIGATION. WE ARE CONSCIOUS OF THE FACT THAT PENALTY PROCEEDING ARE SEPARATE AND INDEPENDENT. TH OUGH, NO FURTHER APPEAL AFTER SUSTAINING THE ADDITION IN ASSESSMENT ORDER PASSED UNDER SECTION 153A R.W.S 143(3) R.W.S. 254 DATED 28.12.20 11, IS FILED BY THE ASSESSEE, THIS FACT ITSELF WOULD NOT SUFFICIENT TO SUSTAIN THE PENALTY, AS THE PENALTY PROCEEDING ARE SEPARATE AND INDEPENDENT AND HAS TO STAND ON DIFFERENT FOOTINGS 18. IN OUR VIEW ON SUCH ADDITION/DISALLOWANCE, NO PENAL TY IS LEVIABLE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DEL ETE THE PENALTY ON ITA NO. 500 3 & 5004 MUM 2018-SHRI VIVEK TALWAR. 13 BOTH THE ADDITIONS. THUS, THE GROUNDS OF APPEAL RAI SED BY ASSESSEE ARE ALLOWED. 19. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ITA NO. 5004/MUM/2018 FOR A.Y. 2005-06 20. WE HAVE NOTED THAT IN THE PRESENT CASE, THE ASSESSI NG OFFICER LEVIED THE PENALTY ON MAKING ADDITION ON NOTIONAL ALV OF HOUSE PROPERTY. CONSIDERING THE FACT THAT ON SIMILAR DISALLOWANCE, WE HAVE DELETED THE SIMILAR PENALTY FOR A.Y. 2004-05. THEREFORE, CONSID ERING THE DECISION FOR A.Y. 2004-05, THE PENALTY FOR THE YEAR UNDER CONSID ERATION IS ALSO DELETED WITH SIMILAR DIRECTIONS. 21. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALSO ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/12/2019. SD/- SD/- S. RIFAUR RAHMAN PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 12.12.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR F BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI