SHRI SALIM A. KHERANI,VAPI vs. THE ACIT, VAPI CIRCLE, VAPI

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT Before Shri C.M.GARG, Judicial Member, and Shri O.P. MEENA, Accountant Member ITA Nc. 2182 / AHD/2015 Assessment Year: 2008-09 Shri Salim A Kherani ADIL Villa, Atul Sopciety, Valsad Road,_Vapi. (Appellant) RA: No. ACRPK11ISL ACIT , Vapi Circle , Vapi T4 Vs; (Respondent Assessee by Shri Manoj T Shah CA Revenue by Shri B. P K. Panda Sr . DR Final Date_of Hearing: 09/01/2018 Date of Order: 23/01/2018 J8" LoRDER Per_Shri C M_Garg_J M: This appeal is filed by the assessee against the order of the learned CIT (Appeals) Valsad, dated 29.06.2015 passed under section 271(1)(cl of the Income Tax Act, 1961 for the assessment year 2008-09 2 In this appeal assessee has raised the following grounds of appeal which reads as under: The Ld. CIT {41) eed in law and on facts in confirming actior: %j Assessing Officer levying penalty of Rs. 21,11,150/ invoking provisions of section 271(1)(c) of tne Kct Ld. CIT (A) ought to have deleted penalty levied ky Ase:sing Officer when appellant HRNZ, Shri Salim A Kherani ITA No.2182/4/2015 neither corcealed income nor furnished inaccurate particulars of income. It be so held now. (ii) The Ld. CIT (A) erred in law and on facts in confirming levying penalty by Assessing Officer on deemed rental ir cozne of house properties. Ld. CIT (A) ought to have delered penalty levied considering the factual matrix t} at the ownership of properties were very much disclcsed in the return of income_ (iii) The Ld. CIT (A) errer in law and on facts in confirming penalty Ieied by Assessing Officer on disallowance %f Jeduetion 1/ s 24 when the appellant discharged initicl onus cast under law by submitting detailed explan atior Ld. CIT (A) ought to have deleted peralty on claim %f deduction rejected by the authorities. (iv) The Ld. CIT {4) erred in law and on facts in confirming penalty levied by Assessing Officer on deemed addition confrmed on sale of property u/ s 50C of the Act La CIT (A) ought to have deleted penalty on addition wrongly sustained on sale of business asse1 no:' elivible to provisions of section 50C of the Act. (v) The Ld. CIT '4) errel in law and on facts in confirming renalty leted by Assessing Officer on clubbing of inccme ' groring the fact that all the family members haung inderendent source of income were independert as essec cn record of the department Ld. CIT (A} ough1 to ha Je deleted penalty_ (vi) The Ld. CI? er ed in law and on facts in confirming pera ty leved not appreciating that claim disallowed 0r adtinn made rejecting explanation of the appellant connct 2)i` subjected to automatic levy of penalty ir abcen e of cogent evidence of concealment 0f inrnt e brought on record by Assessing Officer: Ld CIT (A) ought to have deleted penalty levied by Agsessing Officer in toto_ Shri Salim A Kherani ITA No.2182/4/2015 3 We have heard argument: from both the side and carefully perused the maeriel F iaced on the record of the Tribunal. The Ld. Assessee ; 1epresentative (AR) submitted that the Assessing Officer has 'evied penalty by order dated 26/03/2013 u/s 271{1} 'c) of ] 0 Act, on four counts i.e_ additions on account of itu 01le ron house property, standard deduction u/s 24 of the Incomc Tax Act 1961 (for short the Act), on account of SUFpress sa : and clubbing of income with other family members 'Cje Crr (A uphold the penalty by passing the first appellate order o 29/06/2015 4 The Ld_ Depai trer tal Representative (DR) candidly agreed to the submis:ion: the Ld. AR that ITAT, Ahmadabad B' Bench ofler dated 20/01/2017 has deleted addition of Rs. 49,65,306/ - Or eccount of suppress sale of land and appeal of the reverue challenging the deletion, has been dismissed by Hon ble H gh ourt of Gujarat, order dated 19/09/2017 in ITA No 7n3 & 704 of 2017, hence, penalty on this count does not SuIVive a8 the eddition on which penalty has been levied is not i- existence Thus, penalty on this count i.e. suppress sale deserve: to : A~leted. 5_ The Ld_ AR sub nitte d that the other three additions on which penalty has beer len: :4 ere income from house property, denial of stan -A:d decuction u/s 24 of the Act and clubbing of income an3 ai' Te8e three additions are on deeming provident therefoce; z"alty cannot be levied on the deemed income. The Id. 43 s1 britted that the addition on account of income fron hous rrcperty was made by the Assessing Officer on dee ninlg Frovision and there was no Shri Salim A Kherani ITA No.2182/4/2015 actual income in the nilds 0: a83essee therefore, penalty cannot be levied 0 1 1j2 48-63382. The Ld_ AR further submitted that the assessfe bcr efidely claimed deduction u/s 24 of the Act on the reitnl inc fie from Airtel tower treating the same as rental ircorr : fror ouse property but on hyper technical the Assessng (fficer Ceated the same as income from other sources ard c sequently; deduction u/s 24 of the Act was denied to the 23m3e2 The Ld_ AR submitted that as per the ratio of the decis< " ~on"ble Supreme Court in the case of Reliance Pet-o Procunts Pvt. Ltd, 322 ITR 158 (Supreme Court) the penaty calrot be levied merely because the claim of assesse : Ia? rct o cented or not found to be acceptable by the authoriti?s belcw &nd hence, penalty cannot be levied on the assessee 6 Regarding penalty 0n accs12t of clubbing of income the Ld. AR submitted that there i8 30 question of genuine income actually belonging to trie: various ir dependent assessee who are having their own sources " icome being admitted to be income of the assessi€ Ther: 12 groes misunderstanding and no such acceptance_ "Tl_e actic . of the LAO is without any basis or materials whatsoever ar ( is contrary to the record. All the family members &re i ieper: 4 nt assessee on the record of the Department who 376 "0 i2g; the properties and are partners or have their independent sources of income like franchises, property rert CetU gain and other sources of their own and are regulerk f5 heir returns and paying due taxes as can be seen {om t 10 copies of statements and 7r44ie, Shri Salim A Kherani ITA No.2182/4/2015 acknowledgement sulzitted & ing the course of assessment proceedings 7 The Ld_ AR further slbrarjcd that the Assessing Officer clubbed the incom: tk: [erily members is neither supported by any hasis %r evide ce but is quite contrary to the facts as stated above All the tnily embers have paid their taxes on their own ircor? earcd end enjoyed by them as per returns, which cannot ke ignoed on whims and surmises. Therefore, the penalty u/s 271/Wic) of the Act is not required and it is requested t drcrped 1 ` penalty proceedings for the same On being asked by the } ench regarding the issue the Ld_ AR submitted that te Il4 ` in order dated 20/01/2017 has confirmed the additic htz 1 0 ding that the property were belonging to the asse3see but n ?orne from those properties was shown in the names ) farni y rembers. 8 Replying to the ahovi, the id. DR placing reliance on the decision of Hon ble High Ccurt 2 Delhi in the case of CIT Vs Zoom Communication fvt; i 191 Taxmann 179 (Delhi) 43 submitted that if 83s334e mak 8 2 claim which not only incorrect in law but elso (Ily w ; ct basis and explanation of assessee for making Sch cltz $ is not found to be bonafide then penalty has to bie Ievied Prter placing reliance on the another decision of Ho::" # 7. Jourt of Delhi in the case of CIT Vs HCIL Klindee Arsso] 7!037 taxmann com 347(Del) submitted that mereli hecat:& # assessee complied with statutory procedurel ~zqlire=:A: of filing as required for claiming deductior , it couldrst - :absolved of his liabilities to pay penalty u/s 27 (lxc (; :PF Act, if Act or attempt in Shri Salim A Kherani TA No.2182/4/2015 claiming such deduction vas rct ocnafide. Finally the Ld_ DR submitted that penalty J1 al trre? counts may kindly be upheld. 9 On careful ccng dera icr 0 'Gbove rival submissions first of all we may point out that the ACdition of Rs. 3,35,800 /- was made by the Assess 11g Officer 011 estimation basis and no actual income in the anasol s3ensee has been accrued to the assessee and as3ef9e6 36 10" made any claim which could be said as false and non hcnafide therefore penalty u/ s 271(1)(c) of the Act carno: be: le ied on the assessee neither by alleging furnishing 0f inacurs , particulars of income nor by alleging concealment of parti 1 ar? of income Therefore , penalty on this court is not < ] tainable and wC direct the Assessing Officer to < :.ere :h: -Ee 10_ So far as penalty on accourt ~f rejection of deduction U/s 24 of the Act is coticer +12 41, esessing Officer denied the deduction by observir g thiar r` income is not from house property and it is rom the Aitel tower situated on the top/terrace of the property. Ihe 6 observations are based on a hyper technical basi: 2n ] Me 6~0 uable to understand how the assessee car b2 alleged tet it has filed inaccurate particulars of income or na5 %: } eeled particulars of income_ It is not a case of ~a <ne ant < ! cr incorrect claim but it is a situation where tie ~nirr 3 easessee, which was made under bonafide belief that the ir %me from Airtel tower income from house propert ' , ~n% v2(f ~ccepted by the authorities below or not found to 1 0c able by them and in this situation penalty u/9 271011el { Il: Act cannot be levied on Shri Salim A Kherani TA No.2182/4/2015 the assessee as per ratic jf d ecsion of Hon ble Supreme Court in the case cf F'eliell-e Pr Products (Supra) hence, the Assessing Officer is dlirecte 1 > Gclete the penalty on this count.