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Facts
The assessee, Chandigarh Administration, is an artificial juridical person established to provide housing. During assessment, certain expenditures, including Income Tax expenditure and maintenance expenditure, were disallowed. This led to a penalty being levied under Section 271(1)(c) of the Income Tax Act, which was confirmed by the CIT(A).
Held
The Tribunal held that the Income Tax expenditure of Rs.3.32 Lacs was related to the perquisite value of concessional accommodation provided to employees and was deposited by the assessee, thus not warranting penalty. The disallowance of maintenance expenditure was found to be due to technical breaches rather than lack of genuineness. Therefore, penalty was not leviable.
Key Issues
Whether penalty under Section 271(1)(c) is leviable when disallowances are due to technical breaches or bona fide beliefs, rather than concealment of income or furnishing inaccurate particulars.
Sections Cited
271(1)(c), 143(3)
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Income Tax Appellate Tribunal, “A” BENCH, CHANDIGARH
Before: HON’BLE SHRI LALIET KUMAR, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aggrieved by confirmation of certain penalty u/s 271(1)(c) for Rs.24.92 Lacs, the assessee is in further appeal before us. The impugned penalty has been levied by Ld. AO vide order dated 31-03- 2019 which has been confirmed by learned Commissioner of Income Tax (Appeals), National Faceless Appeals Centre [CIT(A)] vide order dated 19-03-2024. The Ld. AR advanced arguments and cited various case laws favoring the case of the assessee. The Ld. Sr. DR also advanced arguments in support of levy of penalty. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under.
The assessee is assessed as Artificial Juridical person. The assessee is Chandigarh Administration undertaking established in the year 1976 by extending the Haryana Housing Board Act, 1971 to the Union Territory of Chandigarh. The primary object of the assessee is to provide reasonably priced, good quality housing to poor people. An assessment was framed on assessee u/s 143(3) wherein Ld. AO disallowed certain expenditure viz. interest expenses, Income Tax expenditure, maintenance expenditure and loss on sale of fixed assets. Consequently, impugned penalty was initiated against the assessee. During first appeal, the assessee challenged disallowance of Income Tax expenditure and maintenance charges which was partly allowed and disallowance of Rs.80.66 Lacs was confirmed. Considering the same, Ld. AO levied penalty of Rs.24.92 Lacs. The Ld. CIT(A) confirmed the same on the ground that the assessee concealed the particulars of its income and the assessee failed to file any cogent explanation thereof. Aggrieved, the assessee is in further appeal before us.
Upon perusal of assessee’s submissions, it could be seen that Income Tax expenditure of Rs.3.32 Lacs represent income tax on perk value on account of concessional accommodation provided by the assessee to its employees. The assessee has provided residential houses to some of its employees on a nominal rent. The income tax on the differential value of this perquisite is deposited by the assessee.
It is clear that this expenditure in not in the nature of Income Tax on the income of the assessee and therefore, no penalty could be imposed against the same on account of its disallowance since the same is claimed under a bona-fide belief.
The maintenance expenditure is on account of maintenance of old complexes / colonies as developed by the assessee for which the possession was already been given by the assessee to the allottees. The said expenditure was claimed by the assessee. However, a part of the expenditure has been disallowed on the ground that the same was related to earlier period. A part of the expenditure was rectified by the assessee which was not accepted. On these facts, it could be seen that the expenditure was not disallowed on the ground of genuineness but the disallowance was more on technical breaches. In such a case, the ratio of decision of Hon’ble Apex Court in the case of Reliance Petroproducts Pvt. Ltd. (189 Taxman 322) would apply wherein it was held that mere non-acceptance of a claim would not automatically lead to imposition of penalty on the assessee. Therefore, we delete the impugned penalty and allow the appeal of the assessee.