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Income Tax Appellate Tribunal, HYDERABAD BENCH ‘B, HYDERABAD
Before: SHRI V. DURGA RAO & SHRI D.S. SUNDER SINGH
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH ‘B', HYDERABAD BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ITA No. 970/Hyd/2018 Assessment Years: 2008-09 Apsara Bhavanasai, vs. Income-tax Officer, Hyderabad. Ward – 6(3), Hyderabad. PAN – AHVPB 3872H Appellant Respondent Assessee by: Shri A.V. Raghuram Revenue by: Shri Nilanjan Dey Date of hearing: 14/10/2019 Date of pronouncement: 18/10/2019 O R D E R PER V. DURGA RAO, J.M.: This appeal filed by the assessee is directed against the order of CIT(A) – 1, Hyderabad, dated, 26/03/2018 for AY 2008-09, whereby he confirmed the penalty levied u/s 271(1)(c) of the Act.
Briefly the facts of the case are that assessee, an individual, filed her return of income for the AY 2008-09 on 26/03/2009 admitting total income of Rs. 24,325/-, which was processed u/s 143(1) prima-facie accepting the returned income. Subsequently, the case was selected for scrutiny under CASS and after hearing the case, the assessment was completed by assessing the total income at Rs. 1,12,02,476/- by disallowing exemption claimed u/s 54 of the IT Act.
2.1 In the assessment order, an amount of Rs. 1,12,02,475/- was added to the returned income on account of disallowance
2 I.T.A. No. 970/Hyd/18 Apsara Bhavanasai, Hyd. of exemption claimed u/s 54, which represents the amount of income sought to be evaded by reason of the wrong claim of deduction by furnishing inaccurate particulars of her income in the return originally filed. The AO observed that the assessee had offered house property income from two residential units i.e. property at 204, Meenakshi Royal Court, Road No. 11, Banjara Hills, Hyderabad and property at 301, My Home Navadeep, Madhapur, Hyderabad. Further, it was observed that by the time of transfer of property, the assessee was having more than one residential house and the condition to allow the exemption u/s 54F was clarified in the Act and hence, the assessee was not eligible to claim exemption u/s 54F of the Act. Further, the AO observed that the assessee having the knowledge of having two residential houses from which rental income was offered for the year under consideration, hence, the assessee had evidently claimed the deduction which is legally not tenable. 2.2 In view of the above observations, the AO opined that the assessee has made an incorrect claim of deduction resulting in furnishing inaccurate particulars of income by not brought forwarding the correct income for the AY 2008-09 and thereby the case of the assessee attracts penalty provisions u/s 271(1)(c) of the Act. Accordingly, the AO worked out the penalty u/s 271(1)(c) of Rs. 25,38,481/- on the concealed income, on which, sought to be evaded the tax.
Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A), who confirmed the penalty levied by the AO u/s 271(1)(c) of the Act. 4. Aggrieved by the order of CIT(A), the assessee is in appeal before us raising the following grounds of appeal:
“1. On the facts and in the circumstances of the case, the order of the ld. Commissioner of Income Tax
3 I.T.A. No. 970/Hyd/18 Apsara Bhavanasai, Hyd. (Appeals)-l, Guntur, dismissing the appeal filed by the Appellant is erroneous, illegal and unsustainable in law. 2. The Commissioner (Appeals) erred in sustaining the penalty of Rs.26,00,000/- levied by the Assessing Officer. 3. The Commissioner (Appeals) failed to appreciate that the Appellant made a claim under section 54 F of the Act under bona fide impression that the joint-ownership in respect of the second house will not be considered as independent ownership. 4. The Commissioner (Appeals) failed to appreciate that the Appellant has not furnished inaccurate particulars while making claim under section 54 F of the Act, and at any rate the Commissioner (Appeals) himself has ruled out the concealment in the matter. The Commissioner (Appeals) ought to have appreciated that the Appellant had made a legal claim under section 54F of the Act which did not find favour with the Assessing Officer. 5. The Commissioner (Appeals) ought to have appreciated that the issue on which the penalty is levied is highly debatable in as much as he ought to have appreciated that the Commissioner (Appeals) in quantum proceedings has granted relief to the Appellant and the Hon'ble High Court has admitted the appeal filed by the Appellant against the order of Hon'ble ITAT, and therefore the penalty should not have been levied. 6. The Commissioner (Appeals) erred in not following the principles laid down in the judgement of Hon'ble Supreme Court in the case of Vegetable Products Pvt. Ltd., (88 ITR 192) while rejecting the contention of the Appellant that admission of her quantum appeal by the Hon'ble High Court, itself indicate the debatable nature of the issue involved and on which penalty could not have been levied/ sustained. 7. On the facts and in the circumstances of the case, the Commissioner (Appeals) having extracted the provisions of section 275 of the Act dealing with limitation for levying penalty ought to have appreciated that the penalty order passed by the Assessing Officer is barred by limitation as the same was passed beyond one year from the end of the financial year in which the order of the Commissioner (Appeals) in quantum proceedings was received.
4 I.T.A. No. 970/Hyd/18 Apsara Bhavanasai, Hyd. For these and other grounds that may be urged at the time of hearing, it is prayed that the Hon'ble Tribunal may be pleased to allow the appeal.”
Before us, ld. Counsel for the assessee submitted that the assessee has disclosed all material facts and, hence, there is no issue of concealment on her part. Further, he submitted that the assessee has made a wrong claim u/s 54F, due to ignorance of law, which cannot be said to the concealment of particulars of income and, hence, penalty proceedings cannot be attracted in assessee’s case.
The ld. DR, on the other hand, relied on the orders of revenue authorities.
Considered the rival submissions and perused the material on record. A glance of provision of section 271(1)(c) would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The instant case was not the case of concealment of the income, but, the case of wrong claim. The revenue argued that submitting an incorrect claim in law would amount to giving inaccurate particulars of such income. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing of inaccurate particulars. In the case of CIT vs Reliance Petroproducts Pvt Ltd [2010] 322 ITR 158, the Hon’ble Supreme Court has held as under: “Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that, by itself, would not attract the penalty under section 271(1)(c). If the contention of the revenue was accepted, then in case of every return where the claim
5 I.T.A. No. 970/Hyd/18 Apsara Bhavanasai, Hyd. made was not accepted by the Assessing Officer for any reason, the assessee would invite penalty under section 271(1)(c).” 7.1 In view of the above discussion, we are of the view that making a wrong claim by the assessee cannot be said to be furnishing of inaccurate particulars of income by the assessee. Therefore, we set aside the order of CIT(A) and direct the AO to delete the penalty of Rs. 26,00,000/- levied u/s 271(1)(c) of the Act.
In the result, appeal of the assessee is allowed. Pronounced in the open court on 18th October, 2019.
Sd/- Sd/- (D.S. SUNDER SINGH) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, dated 18th October, 2019. kv Copy forwarded to: 1. Smt. Apsara Bhavansai, Flat No. 610, 6th Floor, Babukhan Estate, Basheerbagh, Hyderabad – 500 001 2. ITO, Ward – 6(3), IT Towers, AC Guards, Masabtank, Hyderabad – 500 004. 3. CIT(A) - 1, Guntur 4. Pr. CIT – VI, Hyderabad 5. The DR, ITAT, Hyderabad 6. Guard File