Sumeet Sood, Delhi V. ITO, New Delhi

ITA 5060/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6512 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 26-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BEDOBINA CHAUDHURI
• Keywords: Salary income; Wrong claim
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER ITA NO.5060/DEL/2016 ASSESSMENT YEAR : 2009-10 SUMEET SOOD, C/O KAPIL GOEL, ADV., F 26/124, SECTOR 7, ROHINI, DELHI. VS. ITO, WARD- 46(1), NEW DELHI. PAN : AICPS 9872 L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KAPIL GOEL, ADV. RESPONDENT BY : MS. BEDOBINA CHAUDHURI, SR.DR DATE OF HEARING : 01-03-2017 DATE OF PRONOUNCEMENT : 09-03-2017 O R D E R PER S.V. MEHROTRA, A.M : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 30.11.2015 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-12, NEW DELHI, U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (I N SHORT THE ACT), RELATING TO ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE HAS FILED THIS APPEAL WHICH IS BELA TED BY APPROXIMATELY 238 DAYS. IN THE CONDONATION PETITION, DULY SUPPOR TED BY AFFIDAVIT, THE ASSESSEE HAS STATED AS UNDER :- I. THAT MY PROFESSIONAL WORK RELATED TO INCOME TAX WAS HANDLED BY LATE SH. DEVENDRA CHORDIA, WHO UNFORTUNATELY EXPIRED ON 24/06/2016. 2 ITA NO.5060/DEL/2016 II. THAT I HAD ENGAGED LATE SH. DEVENDRA CHORDIA TO REPRESENT BEFORE CIT (APPEALS)-12, NEW DELHI IN APPEAL NO. 123/15-16/123 0/12-13 FOR A.Y. 2009-10 IN RESPECT OF MATTER PERTAINING TO IMPOSITI ON OF PENALTY U/S 271(1)(C) OF INCOME TAX ACT. III. THAT WHEN HEARINGS WERE CALLED FOR HON'BLE CIT (APPEALS) - 12, MY COUNSEL SH. DEVENDRA CHORDIA, WHO WAS SUPPOSED TO A TTEND, GOT EXPIRED, WHICH LED TO REPRESENTATIONS BY ONE SH. SUNIL KUMAR AS STATED IN THE ORDER DATED 30.11.2015 ISSUED BY CIT (APPEALS) - 12 . IV. THAT ON THE ABSENCE OF SH. DEVENDRA CHORDIA, TH ERE WAS NO PROFESSIONAL ADVICE AVAILABLE TO ME FOR FILING APPEAL BEFORE ITA T POST SUBSEQUENT OF ORDER OF WORTHY CIT (APPEALS) - 12. ON THE BASIS OF ADVICE JUST RECEIVED FROM SH. KAPIL GOEL, ADVOCATE, THE APPEAL BEFORE IT AT IS PREFERRED. V. THAT THE DELAY OF 238 DAYS FOR THE PERIOD RANGIN G FROM 3.12.2015 (DATE OF RECEIVING OF ORDER) TO TILL DATE IS PURELY AN IN AD VERTENT AND UNINTENTIONAL DUE TO THE BONAFIDE REASONS BEYOND MY CONTROLS. VI. THAT I HAVE NO PRACTICAL AND WORKING KNOWLEDGE OF TAX LAWS AND I WAS TOTALLY DEPENDENT ON ADVICE OF MY COUNSEL LATE SH. DEVENDRA CHORDIA, WHO IS UNFORTUNATELY NO MORE. 3. AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE, I AM OF THE CONSIDERED OPINION THAT THE ASSESSEE WAS PREVENTED BY REASONAB LE CAUSE FROM FILING THE APPEAL IN TIME AND, THEREFORE, I CONDONE THE DELAY IN FILING THE APPEAL. 4. BRIEF FACTS OF THE CASE ARE THAT THE RETURN DECL ARING INCOME AT RS.13,37,548/- WAS FILED BY ASSESSEE. THE ASSESSEE HAD DECLARED INCOME FROM SALARY, HOUSE PROPERTY AND INCOME FROM OTHER S OURCES. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CLAIMED DEDUC TION ON ACCOUNT OF HOUSE RENT ALLOWANCE (HRA) OF RS.8,68,404/- U/S 10(13A) O F THE ACT. THE ASSESSING OFFICER HAS OBSERVED AS UNDER :- ASSESSEE WAS ASKED TO FURNISH THE NECESSARY DETAIL S REGARDING THE PAYMENT OF 3 ITA NO.5060/DEL/2016 HOUSE RENT LIKE COPY OF THE RENT AGREEMENT, COPY OF THE RENT RECEIPT AND CONFIRMATION FROM THE LANDLORD AS TO RECEIPT OF THE HOUSE RENT. THE AR OF THE ASSESSEE COULD NOT FURNISH ANY OF THE DOCUMENTARY E VIDENCE IN SUPPORT OF CLAIM OF DEDUCTION ON ACCOUNT OF HRA AMOUNTING TO RS. 8,68,4 04/-. ON FURTHER INVESTIGATION AND ENQUIRY IT WAS FOUND THAT ASSESSE E HAS NOT INCURRED ANY EXPENDITURE ON ACCOUNT OF HRA. THE AR OF THE ASSESS EE SHRI M.L. AGGARWAL, CHARTERED ACCOUNTANT, FURNISH A REVISED COMPUTATION OF INCOME ALONG WITH THE LETTER DATED 08.11.2011 WHEREIN HE ADDED THE AMOUNT OF RS. 8,68,404/- TO RETURNED INCOME OF ASSESSEE. AS THE ASSESSEE HAS DE LIBERATELY FURNISHED THE WRONG AND INCORRECT PARTICULARS OF HIS INCOME REGAR DING CLAIM OF DEDUCTIONS ON ACCOUNT OF HRA HENCE PENALTY PROCEEDINGS U/S 271 (1 )(C) OF THE I.T. ACT, ARE ALSO INITIATED ON THIS POINT. THUS, ASSESSING OFFICER DENIED THE ASSESSEES CLAIM BECAUSE ASSESSEE HAD NOT ACTUALLY PAID THE RENT. 5. THE ASSESSING OFFICER FURTHER NOTICED THAT ASSES SEE HAD BEEN CREDITED WITH INTEREST OF RS.75,690/- ON FDR BUT THE INCOME WAS NOT DECLARED IN THE RETURN OF INCOME. HE, THEREFORE, MADE ADDITION OF RS.75,690/-. 6. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDI NGS FOR FURNISHING INACCURATE/ INCORRECT PARTICULARS OF HIS INCOME. L D. CIT(A) DISMISSED THE ASSESSEES APPEAL. BEING AGGRIEVED, THE ASSESSEE I S IN APPEAL BEFORE THE TRIBUNAL AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL :- INVALID PENALTY U/S 271(1)(C) OF RS. 3,20,895/- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD CIT-A - 12 NEW DELHI ERRED IN CONFIRMING PENALTY AMOUNTING TO RS 3,20,895/- U/S 271(1)(C) WITHOUT APPRECIATING THAT LD AO HAS MISER ABLY FAILED TO PINPOINT THE EXACT HEAD/LIMB IN WHICH SUBJECT PENALTY IS LEV IED FOR WANT OF WHICH PRESENT PENALTY BECOMES INVALID; 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD CIT-A - 12 NEW DELHI ERRED IN CONFIRMING PENALTY AMOUNTING TO RS 3,20,895/- U/S 4 ITA NO.5060/DEL/2016 271(1)(C) WITHOUT APPRECIATING THAT LD AO HAS ISSUE D VAGUE AND MECHANICAL NOTICE U/S 274 WHICH MAKES PRESENT PENALTY INVALID; 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD CIT-A - 12 NEW DELHI ERRED IN CONFIRMING PENALTY AMOUNTING TO RS 3,20,895/- U/S 271(1)(C) WITHOUT APPRECIATING THAT LD AO HAS NOT M ENTIONED EXACT LIMB IN WHICH PENALTY IS LEVIED IN IMPUGNED PENALTY ORDER; 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD CIT-A - 12 NEW DELHI ERRED IN CONFIRMING PENALTY AMOUNTING TO RS 3,20,895/- U/S 271(1)(C) WITHOUT APPRECIATING THE REPLY DATED 15/0 5/2012 BUT ALSO VALID EXPLANATION WAS TENDERED BEFORE LD AO THAT INADVERT ENTLY SAID CLAIM WAS MADE AND WAS PROMPTLY REVISED VOLUNTARILY DURING AS SESSMENT BY FILING OF REVISED COMPUTATION; 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD CIT-A - 12 NEW DELHI ERRED IN CONFIRMING PENALTY AMOUNTING TO RS 3,20,895/- U/S 271(1)(C) WHERE PRESENT CASE IS COVERED BY APEX COU RT VERDICT IN PWC CASE 348 ITR 206 & SURESH CHAND MITTAL 259 ITR 19 ; PRAYER/RELIEF CLAIMED 1. TO DELETE THE PENALTY LEVIED OF RS 3,20,895/-; 2. ANY OTHER RELIEF AS DEEMED FIT IN CIRCUMSTANCES OF THE CASE . 7. LD. COUNSEL REFERRED TO PAGE 33 OF APPEAL SET, W HEREIN, NOTICE DATED 30.11.2011 U/S 274 R.W.S. 271 IS CONTAINED AND POIN TED OUT THAT THE ASSESSING OFFICER HAS NOT SPECIFIED AS TO UNDER WHI CH LIMB OF SECTION 271(1)(C), THE PENALTY WAS LEVIED. LD. COUNSEL REF ERRED TO PAGE 28 OF APPEAL SET, WHEREIN, SHOW-CAUSE NOTICE DATED 02.05.2012 IS CONTAINED, WHEREIN, ALSO NOTHING HAD BEEN MENTIONED. FURTHER IN THE PE NALTY ORDER ALSO, IN THE PENULTIMATE PARA, THE ASSESSING OFFICER HAS, INTER-ALIA, OBSERVED AS UNDER :- LOOKING TO THE DEFAULT OF THE ASSESSEE A PENALTY O F RS.3,20,895/- WHICH IS MINIMUM LEVY-ABLE PENALTY IS BEING IMPOSED U/S 271( 1)(C) OF THE IT ACT FOR CONCEALING PARTICULARS OF INCOME AND FILING INACCUR ATE PARTICULARS OF INCOME. 5 ITA NO.5060/DEL/2016 8. LD. COUNSEL REFERRED TO THE DECISION OF ITAT, DE LHI BENCHES IN THE CASE OF M/S MINDMILL SOFTWARE LIMITED VS. ITO VIDE ITA NO.242/DEL/2016 ORDER DATED 10.02.2017. HE FURTHER REFERRED TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF PR. COMMISSIONER OF INCOME TAX VS. SHRI NEERAJ JINDAL AND OTHERS VIDE ITA NO.463/2016 & OTH ERS, ORDER DATED 09.02.2017, WHEREIN, THE HONBLE HIGH COURT HAS HEL D AS UNDER :- THUS, AS THE LAW STANDS, THE WORD CONCEAL IN SEC TION 271(1)(C), WOULD REQUIRE THE A.O. TO PROVE THAT SPECIFICALLY THERE WAS SOME CONDUCT ON PART OF THE ASSESSEE WHICH WOULD SHOW THAT THE ASSESSEE CONSCIOUSLY INTE NDED TO HIDE HIS INCOME. 9. ON MERITS OF THE ADDITION MADE, LD. COUNSEL REFE RRED TO PAGES 26 AND 27 OF APPEAL SET, WHEREIN, THE ASSESSEES REPLY BEF ORE THE ASSESSING OFFICER IN RESPONSE TO NOTICE U/S 271(1)(C) IS CONTAINED, W HEREIN, IT IS, INTER-ALIA, STATED AS UNDER :- 3. THE ASSESSEE WHILE FILING HIS RETURN CLAIMED HR A AMOUNTING TO RS.8,68,404/- AS PER FORM NO.16 ISSUED BY HIS EMPLO YER. EXEMPTION PART OF HRA WAS CALCULATED ON THE BASIS OF RENT PAYABLE TO HIS MOTHER SUSHILA SOOD FOR USING HER HOUSE D-54, ANAND NIKETAN, NEW DELHI. 4. IN THE QUESTIONNAIRE DT. 11.10.2011 ISSUED ALONG WITH NOTICE U/S 142(1) OF THE INCOME-TAX ACT, 1961 IT WAS ASKED IN PARA NO.10 , THE WORKING & DOCUMENTS IN SUPPORT OF ALL DEDUCTIONS AND EXEMPTIONS CLAIMED AN D IN PARA NO.12 COMPUTATION OF HRA ALONGWITH PROOFS WITH RESPECT TO RENT PAID A ND RENT AGREEMENT. 5. WHILE PREPARING THE REPLY OF THE QUESTIONNAIRE I T CAME TO KNOW THAT RENT TO MOTHER WAS NOT ACTUALLY PAID BY THE ASSESSEE. T HE ASSESSEE IMMEDIATELY REVISED HIS RETURN WITHDRAWING HRA CLAIM RS.8,68,40 4/- BEFORE DETECTING THE MISTAKE BY THE ASSESSING OFFICER. THE LEARNED ASSE SSING OFFICER INITIATED THE PROCEEDING U/S 271(1)(C) OF THE ABOVE ADDITION. 6 ITA NO.5060/DEL/2016 6. WHILE REVISING THE RETURN THE ASSESSEE WAS ALSO ADVISED BY HIS TAX CONSULTANTS THAT INTEREST ON FDR RS.75,690/- HAS BE EN LEFT TO BE ADDED IN THE TOTAL INCOME. THE ASSESSEE WAS OF VIEW THAT AS HE IS FIL ING RETURN ON CASH BASIS, THE FDR BUT AT THE ADVISE OF HIS TAX CONSULTANT THE ASS ESSEE ALSO ADDED IN HIS COMPUTATION INTEREST ON FDR AND ALSO CLAIMED TDS TH EREON WHICH WERE NOT PREVIOUSLY CLAIMED. THE LEARNED ASSESSING OFFICER ALSO INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME-TAX ON THE ABOVE INTEREST INCOME. 10. LD. COUNSEL SUBMITTED THAT THE ASSESSEE SUO MOTU REVISED ITS RETURN AND OFFERED INCOME ON DETECTION OF MISTAKE. 11. LD. DR REFERRED TO THE ASSESSMENT ORDER AND POI NTED OUT THAT THE PENALTY HAD BEEN INITIATED ON ACCOUNT OF INACCURATE PARTICULARS BEING FURNISHED BY ASSESSEE. HE FURTHER REFERRED TO THE PENALTY ORDER, WHEREIN, ALSO THE ASSESSING OFFICER HELD THAT THE ASSESSEE H AD FURNISHED INACCURATE PARTICULARS OF INCOME FOR WHICH PENALTY HAD BEEN LE VIED. 12. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE RECORD OF THE CASE. AS FAR AS LD. COUNSELS PLEA R EGARDING NOTICE U/S 274 BEING VAGUE IS CONCERNED, I AM NOT INCLINED TO ACCE PT THE SAME FOR THE SIMPLE REASON THAT NOTICE U/S 274 CANNOT BE READ DE -HORS THE ASSESSMENT ORDER. FROM READING OF THE ASSESSMENT ORDER, IF IT IS EVIDENT THAT UNDER WHICH PARTICULAR LIMB OF SECTION 271(1)(C), THE PEN ALTY HAS BEEN INITIATED THEN MERELY BECAUSE IN THE NOTICE U/S 274 THE ASSES SING OFFICER DOES NOT SPECIFY THE SPECIFIC LIMB OF SECTION 271(1)(C), IT CANNOT BE CONCLUDED THAT 7 ITA NO.5060/DEL/2016 THE ASSESSING OFFICER FAILED TO PINPOINT THE ACTUAL LIMB IN WHICH SAID PENALTY WAS LEVIED. IN THE ASSESSMENT ORDER, THE A SSESSING OFFICER HAD CLEARLY CONCLUDED, AFTER CONFIRMATION OF EACH OF TH E TWO ADDITIONS THAT ASSESSEE HAD FURNISHED INACCURATE/ INCORRECT PARTIC ULARS OF HIS INCOME. THEREFORE, MERELY BECAUSE IN THE PENULTIMATE PARA, HE OBSERVED THAT ASSESSEE HAS CONCEALED/ FURNISHED INACCURATE PARTIC ULARS OF INCOME, CANNOT BE THE BASIS FOR HOLDING THAT THE ASSESSING OFFICER WRONGLY AND MECHANICALLY INITIATED THE PENALTY. 13. IN REGARD TO LD. COUNSELS SUBMISSION WITH REFE RENCE TO PENULTIMATE PARA OF PENALTY ORDER, REPRODUCED EARLIER, IT IS TO BE NOTED THAT AT PAGE 3, WHILE CONCLUDING THE IMPOSITION OF PENALTY, THE ASS ESSING OFFICER HAS OBSERVED AS UNDER :- IN VIEW OF THE ABOVE FACTS & CIRCUMSTANCES OF THE CASE I HOLD THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME BY CLAIM ING WRONG DEDUCTION OF HRA AND NON DISCLOSURE OF INTEREST INCOME OF FDRS. HEN CE ASSESSEE IS LIABLE TO BE IMPOSED WITH PENALTY U/S 271(1)(C) OF THE INCOME TA X ACT WHICH IS COMPUTED. 14. THEREFORE, IT CANNOT BE SAID THAT THE PENALTY P ROCEEDINGS INITIATED BY THE ASSESSING OFFICER WERE BAD IN LAW FOR WANT OF P INPOINTING THE EXACT LIMB IN WHICH SUBJECT PENALTY WAS INITIATED. 8 ITA NO.5060/DEL/2016 15. NOW, COMING TO THE MERITS OF THE ADDITION, I FI ND THAT AS FAR AS DEDUCTION FOR HRA WAS CLAIMED BY ASSESSEE, THE SAME WAS DENIED ONLY FOR THE REASON THAT ACTUAL PAYMENT HAD NOT BEEN MADE BY ASSESSEE. IT IS NOT DISPUTED THAT THE ASSESSEE WAS RESIDING IN THE HOUS E OF HIS MOTHER TO WHOM THE RENT WAS PAYABLE. THEREFORE, AT BEST, IT CAN B E SAID TO BE A WRONG CLAIM IN VIEW OF EXPLANATION B TO SECTION 10(13A) BUT THA T DOES NOT IMPLY THAT THE ASSESSEE FURNISHED ANY INACCURATE PARTICULARS OF IT S INCOME. THE AMOUNT WAS PAYABLE TO MOTHER AND NOT TO ANY OUTSIDER. THI S GOES TO SHOW ASSESSEES BONA-FIDE. I, THEREFORE, DO NOT FIND ANY REASON TO SADDLE THE ASSESSEE WITH PENALTY ON ACCOUNT OF CLAIM OF DEDUCT ION OF HRA MADE IN THE ORIGINAL RETURN, IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPORDUCTS PVT. LTD., ( 2010) 322 ITR 158 (SC), WHEREIN, IT HAS BEEN HELD AS UNDER :- .....IN ORDER TO EXPOSE THE ASSESSEE TO THE PENALT Y UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CA NNOT TENTAMOUNT TO FURNISHING INACCURATE PARTICULARS. 16. AS FAR AS ASSESSEES NON-DISCLOSURE OF INTEREST ON FDR IS CONCERNED, THE ASSESSEES EXPLANATION WAS, AS REPRODUCED EARLI ER, THAT THE ASSESSEE WAS OF THE VIEW THAT HE WAS FILING RETURN ON CASH BASIS . IT IS PERTINENT TO MENTION 9 ITA NO.5060/DEL/2016 THAT THE ASSESSEE HAD NOT CLAIMED THE TDS ON INTERE ST OF FDR IN ITS ORIGINAL RETURN OF INCOME BECAUSE HE HAD NOT INCLUDED THE IN TEREST ON FDR. THIS SHOWS ASSESSEES BONA-FIDE INADVERTENT MISTAKE OF N OT INCLUDING INTEREST IN HIS INCOME. HAD THE ASSESSEE CLAIMED TDS BUT NOT R ETURNED THE INTEREST INCOME DIFFERENT CONSEQUENCES COULD FOLLOW. UNDER SUCH CIRCUMSTANCES, THE ASSESSEE EXPLANATION CANNOT BE SAID TO BE BONA-FIDE . IN THE RESULT, THE PENALTY LEVIED IS DIRECTED TO BE DELETED. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 09 TH DAY OF MARCH, 2017. SD/- (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED : 09-03-2017. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI