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Income Tax Appellate Tribunal, JAIPUR BENCHES,”A” JAIPUR
Before: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 1427/JP/2018
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 1427/JP/2018 fu/kZkj.k o"kZ@Assessment Year : 2012-13 cuke Shri Vivek Jain The DCIT, Vs. 3, C-49, Sunaresh Priyadarshani Marg, Circle-7, Tilak Nagar, Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ACNPJ 3952 H vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Rohan Sogani (C.A.) jktLo dh vksj ls@ Revenue by : Anuradha (JCIT) lquokbZ dh rkjh[k@ Date of Hearing : 06/03/2019 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 02/04/2019 vkns'k@ ORDER PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 08.10.2018 of the ld. CIT(A), Jaipur arising from the penalty order passed U/s 271(1)(c) of the I.T. Act for the assessment year 2012-13. The assessee has raised the following grounds:- “1. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the penalty amounting to Rs. Shri Vivek Jain vs. DCIT 1,15,353/- u/s 271(1)(c) of the Income Tax Act, 1961. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said penalty of Rs. 1,15,323/-.
2. In the facts and circumstances of the case and in law the ld. AO has erred in imposing penalty u/s 271(1)(c) without specifically pointing out whether the penalty was proposed on concealment of particulars of income or for furnishing inaccurate particulars of income. The action of the ld. AO is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the penalty imposed u/s 271(1)(c).
3. The assessee craves his right to add, amend or alter any of the grounds on or before the hearing.”
2. At the time hearing, the learned counsel for the assessee has stated at bar that the assessee does not press ground no. 2 and the same may be dismissed as not pressed. The ld. DR has raised no objection if ground no. 2 of the assessee’s appeal is dismissed as not pressed. Accordingly the ground no. 2 of the assessee’s appeal is dismissed being not pressed.
3. Ground no. 1 regarding levy of penalty U/s 271(1)(c) of the I.T.
Act which was confirmed by the assessee to the extent of Rs. 1,15,353/-. The assessee is an individual and filed his return of income on 03.10.2012 declaring total income of Rs. 50,63,680/-. Subsequently the income was revised on 25.02.2014 to Rs. 63,01,350/-. The Assessing Officer while completed the assessment disallowed the claim 2 Shri Vivek Jain vs. DCIT of deduction U/s 54F of the I. T. Act of Rs. 30,00,000/- on the ground that the assessee has purchased a residential property in the name of his wife Smt. Nikita Jain. The AO has also disallowed the claim of interest to the extent of Rs. 3,73,310/- on the ground that ¾ of the property is self occupied and ¼ is rented. Thus while completed the assessment U/s 143(3) of the Act the AO has made disallowance of Rs. 33,73,310/-. The penalty proceedings were initiated U/s 271(1)(c) of the Act in respect of these two additions/disallowances made by the AO and the penalty of Rs. 10,42,353/- was levied at 100% of tax to be evaded vide order dated 28.02.2017 passed U/s 271(1)(c) of the IT Act.
On appeal, the ld. CIT(A) has deleted the penalty levied in respect of disallowance deduction U/s 54F of the Act as the said claim was allowed in the quantum appeal by the ld. CIT(A) however, the ld. CIT(A) has confirmed the penalty to the extent of Rs. 1,15,353/- against the disallowance of interest U/s 24(b) of the IT Act of Rs. 3,73,310/-.
Before us, the ld. AR of the assessee has submitted that the assessee has taken loan for acquisition of the house property in question which was self occupied as well as let out partly. The assessee has offered rental income to tax after claiming of deduction U/s 24(b) of the Act of the entire interest on the housing loan however, the Shri Vivek Jain vs. DCIT Assessing Officer has made disallowance of Rs. 3,73,310/- by considering the fact that ¾ of the house property is self occupied and ¼ let out therefore, a proportionate disallowance was made by the AO.
The ld. AR has submitted that when the claim of the assessee is not found to be bogus but it is bonafide claim of interest expenditure on the house loan then restricting the claim of the interest to Rs. 3,24,436/- and balance Rs. 3,73,310/- was disallowed would not amount to furnishing of inaccurate particulars of income or concealment of particulars of income. The assessee has made the claim of actual interest but as per the provisions of the Act the claim of the assessee was partly allowed in terms of the provisions of Section 24(b) of the Act and the balance amount was disallowed due to the reasons that the maximum allowable claim in respect of self occupied is Rs. 1,50,000/- and a proportionate amount of interest for ¼ share of the let out portion is Rs. 1,74,436/- whereas the assessee claimed the entire interest expenditure of Rs. 6,97,746/-. The ld. AR has thus contended that even otherwise it is bona-fide and inadvertent mistake when all the relevant particulars were duly disclosed in the return of income. In support of his contention, he has relied upon the decision of Hon’ble Supreme Court in case of CIT vs. Reliance petroproducts (P.) Ltd. Shri Vivek Jain vs. DCIT 322 ITR 158 as well as the decision in case of Price Waterhouse Coopers (P.) Ltd. vs. CIT 348 ITR 306. The ld. AR has pleaded that the penalty confirmed by the ld. CIT(A) may be deleted.
On the other hand, ld. DR has submitted that the assessee has made an excessive claim of interest which is not permissible as per the provisions of Act. Since, the residential house was occupied to the extent ¾ and was let out the remaining portion i.e. ¼ part of the house. The deduction on account of interest U/s 24(b) of the Act in respect of self occupied house is allowable only to the extent of Rs. 1,50,000/- and ¼ of the total interest of housing loan against the rental income. This is not debatable issue therefore, it is a clear case of furnishing inaccurate particulars of income by the assessee when an excessive claim was made for deduction of interest expenditure. He has relied upon the orders of the authorities below.
We have considered the rival submissions as well as relevant material on record. The assessee had purchased a residential flat situated at C-49, Priyadarshani Marg, Tilak Nagar, Jaipur by utilising the housing the loan taken from HDFC Bank. During the previous year the relevant to the assessment year under consideration the assessee paid interest of Rs. 6,97,746/- to HDFC Bank. In the return of income, the Shri Vivek Jain vs. DCIT assessee has claimed entire interest paid of Rs. 6,97,746/- U/s 24(b) of the Act. However, the AO noted that ¾ of the said flat was self occupied by the assessee for his residential purpose and ¼ was rented @ Rs. 5000/- P.M. The AO has calculated allowable interest deduction U/s 24(b) of the Act which is Rs. 1,50,000/- in respect of self occupied portion and ¼ share of the total interest paid comes to Rs. 1,74,436/-.
Accordingly, the AO computed the allowable deduction of interest of Rs. 3,24,436/- and the balance Rs. 3,73,310/- was disallowed. The AO levied the penalty U/s 271(1)(c) of the Act in respect of the said disallowance of claim of deduction on account of interest. There is no dispute that the assessee has paid interest of Rs. 6,97,746/- on housing loan and claim the same U/s 24(b) of the Act. Thus, the necessary particulars regarding the income and the claim of deduction U/s 24(b) of the Act were disclosed by the assessee in the return of income.
However, the AO found that the amount of interest allowable U/s 24(b) of the Act is only Rs. 3,24,436/- as against the total interest payment of Rs. 6,97,746/-. Once, the assessee has disclosed particulars of income as well as the claim on account of interest payment of housing loan in the return of income then, the said claim of interest was not fully allowable under the provisions of Section 24(b) of the Act on account of Shri Vivek Jain vs. DCIT part of the residential house was self occupied by the assessee would not amount to furnishing of inaccurate particulars of income or concealment of particulars of income. The payment of the interest of Rs. 6,97,746/- of the house loan is not in dispute therefore, if the said claim is not fully allowable under the provisions of the Act would not ipso facto led to the conclusion that the assessee furnished inaccurate particulars of income. It is only re-computation of deduction of interest expenditure as per the provisions of Section 24(b) of the Act in light of the fact that the assessee had self occupied part of the residential house and thereby the claim of the assessee was partly allowed and partly disallowed. Accordingly, in the facts and circumstances of the case, once the primary fact as disclosed by the assessee are not found to be incorrect then the claim of deduction on account of interest may be partly not allowable U/s 24(b) of the Act would not attract the penalty provisions of Section 271(1)(c) of the Act. The explanation of the assessee is also reasonable though it may not be acceptable as per the limitation provided U/s 24(b) of the Act. Accordingly, we delete the penalty of levy U/s 271(1)(c) of the Act on account of disallowance of interest U/s 24(b) of the Act. Shri Vivek Jain vs. DCIT In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 02/04/2019
Sd/- Sd/- ¼fot; iky jko½ ¼foØe flag ;kno½ (Vikram Singh Yadav) (Vijay Pal Rao) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 02/04/2019. *Santosh. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Shri Vivek Jain, Jaipur. 2. izR;FkhZ@ The Respondent- DCIT, Circle-7, Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File {ITA No. 1427/JP/2018} vkns'kkuqlkj@ By order,
सहायक पंजीकार@Aेेज. त्महपेजतंत