DCIT, GHAZIABAD vs. SH. ANAND PRAKASH, GHAZIABAD

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ITA 230/DEL/2016Status: DisposedITAT Delhi14 September 2018AY 2008-094 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that since the additions on which penalty was levied were deleted in the quantum proceedings, the penalty on those additions cannot stand. The revenue's appeal was dismissed on the grounds of monetary limit for appeals.

What were the facts?

The Assessing Officer levied penalty under Section 271(1)(c) on additions made to the assessee's income, including unverifiable expenses, LTGC on property sale, and LTCG on land sale. The CIT(Appeals) deleted most additions, and the Tribunal also deleted most additions in quantum appeals.

What were the issues?

Whether penalty under Section 271(1)(c) can be levied when the additions forming the basis of penalty are deleted in quantum appeal. Whether the revenue's appeal is maintainable based on the monetary limit prescribed by CBDT circular.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 50C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “D”: NEW DELHI

Before: SHRI G.D. AGRAWAL, HON’BLE & SHRI AMIT SHUKLA

For Appellant: Shri Akhilesh Kumar, Advocate, Shri Arun Kumar Agarwal, Advocate
For Respondent: Shri Amit Jain. Sr. DR
Hearing: 20/06/2018

The aforesaid cross appeals have been filed by the assessee as well as by the revenue against the impugned order dated 12.10.2015, passed by the Ld. CIT(Appeals) Ghaziabad, in relation to the penalty proceedings u/s. 271(1)(c) for the assessment year 2008-09. At the outset, Ld. Counsel for the assessee submitted that as against the returned income of Rs. 35,61,470/-, assessment u/s 143(3) was completed at an income of Rs. 60,78,488/- after making various additions aggregating to Rs. 25,17,018/- AO had levied the penalty on account of following three additions :- i) Addition on account of unverifiable expenses – Rs. 1 lac; ii) Addition on account of LTGC on sale of Raj Nagar property - Rs. 13,35,769/-; and iii) Addition on account of long term capital gain on sale of land at Mussoorie - Rs. 10,63,000/-.

2.

Ld. Counsel informed that, AO has levied the penalty of Rs. 19,52,446/- @200% of the tax on the total additions including the enhancement made by the Ld. CIT(A). Ld. CIT(A) has deleted the addition on most of the additions except for addition of Rs. 10,58,434/- on account of index cost of interest @ 100%; and the penalty on account of Rs. 10,63,000/- made u/s 50C which was not contested in appeal in quantum proceedings has been deleted by him. The Tribunal in the quantum appeal, vide order dated 20.11.2017 had deleted all the additions except for the amount of Rs. 10,63,000/- which was not contested by the assessee. Thus, in so far assessee’s appeal is concerned penalty has no legs to stand as the quantum has been deleted and revenue’s appeal is only on addition of Rs. 10,63,000/-

3.

In the assessee’s appeal, we find that the assessee has challenged the levy of penalty on account of addition of Rs. 10,58,434/- which was made on account of disallowance of indexed cost of interest paid on the housing loan, whereas the revenue is in appeal against deletion of penalty made on account of addition made u/s 50C. In so far as the levy of penalty on account of claim of interest to Rs.10,58,434/-, it stands deleted by the Tribunal which reads as under :- “After considering the settled position of law about the allowance of interest on loan taken for the purchase of house property as part of cost more so when assessee has also not taken any other advantage of said interest and incurrence of interest expenditure is not under doubt, claim of interest of Rs. 10,58,434/- is fully allowable against the sale consideration and ground 5 and 6 allowed.”

4.

Thus, when in the quantum proceedings the addition of Rs. 10,58,434/- has been deleted, then there is no question of levy of penalty on such an addition and accordingly, the penalty levied on account of Rs. 10,58,434/- is directed to be deleted and resultantly assessee’s appeal is treated a allowed.

5.

In so far as deletion of penalty on account of Rs. 10,63,000/- made by invoking section 50C, as contested by the department in revenue’s appeal, at the outset we find that the penalty on amount of Rs.10,63,000/- admittedly is much below the tax effect as prescribed in Circular No.3/2018 dated 10.07.2018, whereby the monetary limit for filing of appeal by the department has been increased to sum of Rs. 20 lakhs. Since CBDT circular is applicable on the pending appeals also, therefore, the appeal of the department is dismissed as not maintainable. Thus, appeal of the revenue is dismissed.

6.

In the result assessee’s appeal is allowed and revenue’s appeal is dismissed.

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