MR. JORGE AZEVEDO PEREIRA,BENAULIM vs. DCIT, CIRCLE - 1, MARGAO

The sole grievance of the assessee is against the levy of penalty u/s.271(1)(c) of the Act at Rs.17,29,440/- for the alleged furnishing of inaccurate particulars of income to the tune of Rs.1,08,59,912/-.

Brief facts of the case are that the assessee is an individual and filed the return of income for A.Y. 2016-17 on 29.07.2016 declaring total income at Rs.1,86,55,740/- which

Subsequently in the assessment proceedings, ld. Assessing Officer has initiated the penalty proceedings for furnishing of inaccurate particulars of income followed by issuance of notice u/s.274 of the Act and thereafter proceedings u/s.271(1)(c) of the Act were carried out. It was stated by the assessee that the claim of maintenance and cost of care taker has been mainly made because the properties sold during the year are on the sea beach and requires regular maintenance for the upkeep of such properties and further the assessee made such claim based on certain decisions of Coordinate Benches and that the assessee considered them to be capital expenditure but the Revenue authorities have treated them as Revenue expenditure. It is also submitted that genuineness of the expenditure incurred by the assessee has not been doubted. It is also submitted that cost of barbed wire has been allowed partially by ld.CIT(A) which shows that expenditure have been incurred by the assessee. However,

Now the assessee is in appeal before this Tribunal

The penalty of Rs.17,29,440/- has been levied on the disallowance of Rs.1,08,59,912/- confirmed by ld.CIT(A) and that the assessee has accepted the disallowance and has not filed any further appeal before this Tribunal on the quantum addition. The disallowance of Rs.1,08,59,912/- includes the following :

So far as levy of penalty on the professional fees is concerned, ld. Counsel for the assessee submitted that regular income of the assessee is below the taxable limit and the assessee is not required to file any income tax return and it is only on account of transaction of sale of property that assessee was required to pay the tax on the long term capital gain and for the calculation of correct amount of long term capital gain as well as claim u/s.54EC and 54F of the Act the professional advice was taken. Further with regard to the interiors expenditure at Rs.27.00 lakh, supporting evidences were filed during the Appellate proceedings but ld.CIT(A) declined to accept the same for treating them as additional evidence under Rule 46A only for the reason that documents were not

Ld. Counsel for the assessee made reference to the judgment of Hon’ble Supreme Court in the case of CIT Vs. Reliance Petro Products Pvt. Ltd (2010) 322 ITR 158 (SC) where Hon’ble Court has held that “Making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars of income u/s.271(1)(c) of the Act and mere making of a claim which is not sustainable in law, by itself, will not tantamount to furnishing of inaccurate particulars regarding income of the assessee. Another judgment of Hon’ble Jurisdictional High Court in the case of Ventura Textiles Limited (2010)117 taxmann.com 182 also referred wherein the Hon’ble Court has held that it is evident that assessee had declared the full facts, factual matrix or the facts were before the Assessing Officer while passing the assessment order. It is a separate matter that the claim based on such facts was found to be inadmissible. This is not the same thing as furnishing

On the other hand, ld. DR supported the order of ld.CIT(A).

We have heard the rival submissions and perused the record placed before us. The sole issue for our consideration is whether ld.CIT(A) was justified in confirming the penalty levied by the Assessing Officer at Rs.17,29,440/- for allegedly furnishing inaccurate particulars of income for the disallowance of expenses at Rs.1,08,59,912/-

On due consideration of the submissions made by both the sides and also examining the facts of the instant case, we note that the disallowances of expenses incurred by the assessee on maintenance, care taker, barbed wire, interior advances etc. genuineness of such expenses has not been doubted by the Revenue authorities at any stage.

As regards the disallowance of cost of improvement at Rs.77,54,662/- is concerned, assessee has claimed maintenance cost as capital expenditure because the immovable properties sold are situated on the sea beach and cost incurred for the repair and maintenance of such property

So far as levy of penalty on the disallowance of cost of Barbed wire fencing at Rs.37,500/- is concerned, we note that ld.CIT(A) has sustained the disallowance at 50% and has prima-facie has accepted that Barbed wire fencing is required for the property and assessee has incurred the expense since the addition has been made on estimate basis, in our

As regards the professional fees of Rs.82,500/- is concerned, normally any legal expenses incurred for transfer of immovable property are allowable against the sale consideration. Assessee is not having any other source of income and this year the transaction being of huge magnitude, legal opinion is very much required and assessee has claimed the expenses on professional advice which inter alia includes the income tax return filing fees also. Considering the facts of the case, we find that quantum of expenditure is not in dispute and only it is an incorrect claim that too partially and therefore in our considered view no penalty is leviable on this amount and the same is hereby deleted.

As regards the Caretaker expenses of Rs.2,81,500/- we note that said expenses cannot be claimed by any stretch because neither it is improvement cost not it is incurred for transfer of immovable property, therefore, claiming of such expenditure tantamount to furnishing of inaccurate particulars of income. Thus, penalty is sustained on this amount.

Last in the list is disallowance of expenses incurred for Interior advances of Rs.27.00 lakh. The assessee has been claiming that invoices have been filed in respect of the expenditure. This issue is similar to the Caretaker cost as they purely depends upon person to person and they cannot be qualified for the purpose of claiming the expenditure against sale consideration. Assessee has also not demonstrated that whether any amount has been specifically

To conclude, the penalty levied u/s.271(1)(c) at Rs.12,54,636/- is deleted and the remaining amount of penalty at Rs.4,74,804/- is hereby confirmed. Grounds of appeal raised by the assessee are partly allowed.

In the result, the appeal of the assessee is partly allowed as per terms indicated hereinabove.