Sh. Prince Sharma, Chandigarh V. ACIT, C-5(1), Chandigarh

ITA 65/CHANDI/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0686 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 23-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GE E TINDERMANN
• Section: 271(1)(c); 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B, CHANDIGARH , !'# $' % & , '( BEFORE: SHRI SANJAY GARG, JM & SMT.ANNAPURNA GUPTA, AM ./ ITA NO.65/CHD/2018 / ASSESSMENT YEAR : 2013-14 SH.PRINCE SHARMA, PLOT NO.6, TRANSPORT AREA, SECTOR 26, CHANDIGARH THE A.C.I.T., CIRCLE 5(1), CHANDIGARH. ./PAN NO: BEZPS9617H /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI ANIL BATRA, ADV. ! / REVENUE BY : MS/ GEETINDER MANN, SR.DR '# $ /DATE OF HEARING : 13.11.2018 %&'(# /DATE OF PRONOUNCEMENT: . 26.11.2018 ') /ORDER PER ANNAPURNA GUPTA, AM : THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, CHANDIGARH (IN SHORT CIT(A) DATED 29.1 1.2017 PASSED U/S 250 (6) OF THE INCOME TAX ACT, 1961 (IN SHORT REFERRED TO AS ACT), CONFIRMING THE LEVY OF PENAL TY U/S 271(1)(C) OF THE ACT. 2. AT THE OUTSET IT WAS POINTED OUT TO US FROM THE ORDER OF THE AUTHORITIES BELOW THAT THE PENALTY WAS LEVIED O N ACCOUNT OF THE FOLLOWING ADDITIONS MADE: 1) ADDITION ON ACCOUNT OF NOTIONAL RENT U/S 23(1) OF THE ACT = RS.1,93,200/- ITA NO.65/CHD/2018 A.Y.2013-14 2 2) ADDITION ON ACCOUNT OF UN- DISCLOSED INTEREST = RS.23,168/- 3. TAKING US THROUGH THE ASSESSMENT ORDER PASSED IN THE PRESENT CASE U/S 143(3) OF THE ACT, THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT THE ADDITION MADE ON ACCO UNT OF NOTIONAL RENT WAS ON ACCOUNT OF THE FACT THAT THE A SSESSEE HAD SHOWN HIMSELF TO BE THE OWNER OF FOUR PROPERTIE S, OUT OF WHICH ONE WAS SHOWN AS SELF OCCUPIED AND ONE WAS SH OWN AS HOUSE UNDER CONSTRUCTION. THE OTHER TWO, THE ASSESS EE HAD CLAIMED AS BEING OCCUPIED BY HIS MOTHER AS HER RESI DENCE AND THE OTHER WAS BEING USED BY HIS STAFF FOR RESID ENCE. IT WAS POINTED OUT FROM THE ASSESSMENT ORDER THAT THIS EXPLANATION OF THE ASSESSEE WAS DISBELIEVED SINCE T HE ASSESSEE HAD STATED BEFORE THE A.O. THAT IN THE IMP UGNED FINANCIAL YEAR THE ASSESSEE WAS RESIDING ALONGWITH HIS MOTHER AND WIFE. THE A.O., THEREFORE, TREATED ONLY ONE HOUSE AS SELF OCCUPIED AND COMPUTED THE ANNUAL VALUE OF T HE OTHER TWO HOUSES, AS PER SECTION 23(1) OF THE ACT, AT RS. 1,93,200/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. V IS--VIS THE INTEREST INCOME EARNED, THE LD. COUNSEL FOR ASS ESSEE POINTED OUT THAT DURING ASSESSMENT PROCEEDINGS THE A.O. FOUND FROM HIS OWN INTERNAL SYSTEM THAT THE ASSESSE E HAD NOT ACKNOWLEDGED THE INTEREST INCOME EARNED FROM HD FC BANK AMOUNTING TO RS.23,168/-,ON WHICH TDS HAD ALS O BEEN DEDUCTED. THE ADDITION OF THE SAME WAS MADE TO THE INCOME OF THE ASSESSEE. IT WAS CONTENDED THAT PENALTY PROC EEDINGS WERE ALSO INITIATED ON THE AFORESAID ADDITIONS. THE REAFTER IT WAS POINTED OUT THAT DURING PENALTY PROCEEDINGS THE ITA NO.65/CHD/2018 A.Y.2013-14 3 ASSESSEE CONTENDED THAT NON INCLUSION OF THE SAID I NCOMES WAS AN INADVERTENT MISTAKE AND BONAFIDE AS THE ASSE SSEE HIMSELF HAD PROVIDED THE INFORMATION, BUT THE A.O. REJECTED THE EXPLANATION OF THE ASSESSEE AND LEVIED PENALTY FOR CONCEALING THE SAID INCOMES, AMOUNTING TO RS.20,505 /-.THE SAME, IT WAS POINTED OUT, WAS CONFIRMED BY THE CIT( A). 6. BEFORE US, THE LD. COUNSEL FOR ASSESSEE VEHEMENT LY CONTESTED THE PENALTY LEVIED ON THE SAID TWO COUNTS . LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT THE RENT AL INCOME ADDED TO THE INCOME OF THE ASSESSEE WAS NOTI ONAL INTEREST ONLY AND ADMITTEDLY NO RENTAL INCOME HAD A CTUALLY BEEN EARNED BY THE ASSESSEE. IT WAS CONTENDED THAT ALL PARTICULARS RELATING TO THE PROPERTIES OWNED BY THE ASSESSEE HAD BEEN DISCLOSED AND THE ADDITION BEING ONLY OF N OTIONAL INCOME EARNED, NO PENALTY WAS LEVIABLE ON THE SAME. RELIANCE WAS PLACED ON THE DECISION OF THE I.T.A.T. PUNE BENCH IN THE CASE OF KAMALAKAR MANOHAR HAVAL VS. IT O IN ITA NO NOS.1170 TO 1173/PUNE/2010 DATED 30.12.2011 AND IT WAS POINTED OUT THAT THE I.T.A.T. IN THE SAID DE CISION HAD DELETED LEVY OF PENALTY ON RENT, STATING THAT ALL P ARTICULARS HAVING BEEN DISCLOSED BY THE ASSESSEE RELATING TO T HE PROPERTIES OWNED BY IT AND NO RENT ACTUALLY HAVING BEEN EARNED AND THE ADDITION BEING MERELY OF NOTIONAL RE NT, NO PENALTY U/S 271(1)(C) OF THE ACT WAS LEVIABLE. COPY OF THE ORDER WAS PLACED BEFORE US. FURTHER THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT EVEN OTHERWISE IT HAD CLAIM ED ONE OF THE HOUSES TO BE OCCUPIED BY HIS MOTHER AND OTHER B Y HIS ITA NO.65/CHD/2018 A.Y.2013-14 4 STAFF AND THAT THIS EXPLANATION OF THE ASSESSEE WAS REJECTED FOR WANT OF EVIDENCE BUT WAS NOT FOUND TO BE FALSE BY THE AUTHORITIES BELOW AND, THEREFORE, ALSO NO PENALTY W AS LEVIABLE. IT WAS FURTHER CONTENDED THAT THE ASSESSE E HAD RETURNED AN INCOME OF RS.1.26 CRORES TO TAX, HAVING PAID TAX OF AN AMOUNT OF RS.36 LACS ON THE SAME AND HAD SURR ENDERED THE SAID INCOME ON ACCOUNT OF NOTIONAL RENT AND INT EREST INCOME WHEN IT CAME TO HIS KNOWLEDGE THAT THE SAME INCOME HAD NOT BEEN RETURNED TO TAX AND, THEREFORE, BONAFI DE OF THE ASSESSEE IN THE BACK DROP OF THIS FACT CANNOT BE DO UBTED AND NO PENALTY WAS LEVIABLE ON THE SAME. 7. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF THE LOWER AUTHORITIES STATING THAT THE ASSESSEE HAD FAILED TO GIVE PLAUSIBLE EXPLANATION FOR NOT RETURNING RENTAL INCOME AND INTEREST INCOME AND, THEREFORE, PENALTY HAD BEE N RIGHTLY LEVIED ON THE SAME. 8. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE ORDERS OF AUTHORITIES BELOW AND ALSO GONE THROUGH T HE CASE LAWS REFERRED TO US. WE ARE IN AGREEMENT WITH THE C ONTENTION OF THE LD. COUNSEL FOR ASSESSEE THAT IT IS NOT A FI T CASE FOR LEVY OF PENALTY U/S 271(1) ,ON ACCOUNT OF CONCEALING/FURNISHING INACCURATE PARTICULARS OF INC OME. ADMITTEDLY THE ASSESSEE HAD DISCLOSED ALL PARTICULA RS OF PROPERTIES OWNED BY IT. ALSO IT IS NOT THAT THE ASS ESSEE WAS FOUND TO HAVE CONCEALED RENT ACTUALLY EARNED FROM T HE SAID PROPERTIES. ON THE CONTRARY THE ADDITION HAS BEEN M ADE OF NOTIONAL RENT AS PER THE PROVISIONS OF SECTION 23(1 ) OF THE ITA NO.65/CHD/2018 A.Y.2013-14 5 ACT. IN SUCH CIRCUMSTANCES, WE HOLD, THE ASSESSEE C ANNOT BE CHARGED WITH HAVING CONCEALED ANY PARTICULARS OF IN COME SO AS TO ATTRACT LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE RELIANCE PLACED BY THE LD.COUNSEL FOR THE ASSESSEE ON THE DECISION OF THE PUNE BENCH OF THE ITAT IN THE CASE OF KAMALAKAR MANOHAR HAVAL (SUPRA) IS APT WHEREIN THE ITAT DELETED IDENTICAL PENALTY LEVIED HOLDING THAT THE A DDITION MADE ON ACCOUNT OF RENT WAS ONLY AN ESTIMATE AND A NOTIONAL INCOME ONLY AND THE ASSESSEE HAVING DISCLOSED ALL PARTICULARS RELATING TO THE PROPERTIES OWNED BY HIM AND HAVING NOT ACTUALLY EARNED ANY INCOME THEREFORE ,HE CANNOT BE HELD TO HAVE CONCEALED ANY PARTICULARS OF INCOME SO AS TO ATTRACT LEVY OF PENALTY U/S 271(1) OF THE ACT. MOR EOVER, ADMITTEDLY THE ASSESSEE HAD RETURNED INCOME OF RS.1 .26 CRORES AND HAD PAID TAX & INTEREST AMOUNTING TO RS. 36 LACS ON THE SAME. IN THE BACKDROP OF THESE FACTS, WE AGR EE WITH THE LD.COUNSEL FOR THE ASSESSEE, THAT THE NON DISCL OSURE OF NOTIONAL RENT AND BANK INTEREST AMOUNTING IN ALL TO A MEAGRE SUM OF RS.66,368/-(RS.43,200/-+RS.23,168/-),WAS AN INADVERTENT MISTAKE AND BY NO COUNT THE BONAFIDES O F THE ASSESSEE COULD BE DOUBTED, MORE PARTICULARLY WHEN T HE ASSESSEE SURRENDERED THE SAME ON BEING CONFRONTED D URING ASSESSMENT PROCEEDINGS. 9. IN VIEW OF THE ABOVE, WE HOLD THAT THE ASSESSEE COULD NOT BE CHARGED WITH HAVING CONCEALED/FURNISHED ANY INACCURATE PARTICULARS OF INCOME RELATING TO NOTION AL RENT AND BANK INTEREST ,AND THEREFORE NO PENALTY U/S 271 (1) WAS ITA NO.65/CHD/2018 A.Y.2013-14 6 LEVIABLE. THE PENALTY SO LEVIED OF RS.20,505/- IS D IRECTED TO BE DELETED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- # $' % & (SANJAY GARG ) (ANNAPURNA GUPTA) / JUDICIAL MEMBER '( / ACCOUNTANT MEMBER *# /DATED:26 TH NOVEMBER, 2018 * ' * &) *+,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. - $ / CIT 4. - $ ( )/ THE CIT(A) 5. +./ 0 , #0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35' / GUARD FILE &) $ / BY ORDER, 6 ! / ASSISTANT REGISTRAR