SHRI SAMPATLAL B. SHAH,AHMEDABAD vs. THE INCOME TAX OFFICER, WARD-2(2)(5), AHMEDABAD

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ITA 460/AHD/2017Status: DisposedITAT Ahmedabad25 March 2019AY 2012-133 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that penalty cannot be imposed solely on the basis of disallowance of a claim when the assessee has furnished all details and there is no concealment or inaccurate particulars per se. The appeal was allowed.

What were the facts?

The assessee claimed interest expenses which were disallowed by the AO. The AO initiated penalty proceedings under Section 271(1)(c) for concealment of income or furnishing inaccurate particulars. The CIT(A) confirmed the penalty.

What were the issues?

Whether penalty under Section 271(1)(c) can be levied on disallowance of a claim when the assessee has provided all particulars and there is no concealment of income.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 57

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR

आयकर अपील�य अ�धकरण, अहमदाबाद �यायपीठ ‘SMC’ अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR

आयकर अपील सं./I.T.A. No. 460/Ahd/2017 (�नधा�रण वष� / Assessment Year : 2012-13)

Shri Sampatlal B. Shah The ITO बनाम/ 2/A, Ambalal Park, Jawahar Ward- 2 (2)(5), Pratyaksh Vs. Chowk, Sabarmati, Kar Bhavan, Ambawadi, Ahmedabad - 380005 Ahmedabad �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : ACSPS6030N .. (अपीलाथ� /Appellant) (��यथ� / Respondent)

अपीलाथ� ओर से/Appellant by : Shri S. N. Divatia, A.R. ��यथ� क� ओर से / Respondent Shri Sumeet Kumar Verma, Sr. by : D.R. सुनवाई क� तार�ख / Date of 24/01/2019 Hearing घोषणा क� तार�ख /Date of 25/03/2019 Pronouncement

ORDER PER MAHAVIR PRASAD, JM:

This appeal has been preferred by the assessee against the levy of penalty of Rs.1,63,100/- under s.271(1)(c) of the Income Tax Act, 1961 (‘the Act’) by the learned Commissioner of Income Tax (Appeals)-10, Ahmedabad [ in short ‘CIT(A)’], appeal No. CIT(A)-10/ITO Ward – 2(2)(5)/327/15-16 dated 08.12.2016 arising from the penalty order dated 28.09.2015 and following grounds have been taken by the assessee:

ITA No. 460/Ahd/2017 [Shri Sampatlal B. Shah vs. ITO] AY 2012-13 - 2 -

“1.1 The order passed u/s.250 on 8-12-2016 for A.Y.2012-13 by CIT(A)-10, Abad upholding the penalty of Rs.163100/- levied u/s 271(1)(c) by AO is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT (A) has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned penalty. 2.1 The Ld. CIT (A) has grievously erred in law and on facts in confirming the penalty of Rs. 163100/- levied u/s 271(1)(c) by AO. 2.2 That in the facts and circumstances of the case as well as in law, the Ld.CIT(A) ought not to have upheld the penalty of Rs.163100/- levied u/s271(1)(c) byAO 3.1 The Ld. CIT (A) has grievously erred in law and on facts in holding that there was concealment of income by claiming inadmissible deduction u/s 57. The Ld. CIT(A) has failed to appreciate that the AO had failed to levy definite charge of concealment or furnishing inaccurate particulars of income so that entire order levying penalty was illegal & unlawful.”

2.

Facts of the case are that the appellant had claimed interest expenses of Rs.7,39,450/- against the income from other sources. The appellant supported his claim on the ground that the loan was taken to acquire land and it was later on sold in the next year and short term capital gain of Rs.19,21,506/- was declared. The AO concluded that the deduction was not admissible under s.57 of the Act and it could not be justified in view of major income being salary. Hence, the claim was disallowed. The assessee/appellant did not prefer any appeal in order to avoid costly and long litigation. In the meanwhile, AO initiated proceedings under s.271(1)(c) of the Act in respect of said disallowance of interest expenses. The contention of the appellant was that he had not concealed any income nor furnished any inaccurate particulars, hence penalty cannot be imposed. But CIT(A) was not convinced with the plea of the appellant and confirmed the penalty order of the AO.

ITA No. 460/Ahd/2017 [Shri Sampatlal B. Shah vs. ITO] AY 2012-13 - 3 -

3.

Now, by way of second appeal, the appellant is before us. The question is to be decided by us in a case where the assessee has furnished all the details and some of the claims which were not allowed or sustained by the Revenue Authorities whether on such disallowance penalty can be imposed or not. There are several judgments of the Hon’ble Supreme Court and High Courts which state where the assessee has furnished particulars which not found to be inaccurate per se and nothing has been concealed from the Revenue Authorities and on the basis of such disallowance of claim, penalty cannot be levied. Therefore, we are of the firm opinion that in such case where the assessee made certain claim, which was disallowed by the Revenue Authorities, on such disallowance, penalty cannot be imposed.

4.

In the result, appeal filed by the assessee is allowed.

This Order pronounced in Open Court on 25/03/2019

Sd/- Sd/- (PRADIP KUMAR KEDIA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad: Dated 25/03/2019 True Copy S.K.SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,

उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।

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