PARAKH KOTHI LIMITED,KOLKATA vs. ITO, WARD - 9(3), KOLKATA, KOLKATA

Briefly stated facts of the case as observed by the Ld. CIT(A) are that the assessee has claimed electricity expenses as a deduction u/s. 57 of the Act. These electricity expenses pertain to the common area of the building which has been rented out by the assessee. The statutory deduction, in this regard has already been availed by the assessee. The electricity expenses to certain extent have been reimbursed by the tenants. The electricity expenses pertaining to the common area is part of the maintenance expenses which has already been allowed as deduction to the assessee. According to Ld. CIT(A), the assessee has deliberately claimed the electricity expenses under the head “other sources”. This according to him is patently incorrect as per law. So according to Ld. CIT(A), by claiming the electricity expenses as deductible expenses u/s. 57 of the Act, the assessee has furnished inaccurate particulars of income. Accordingly penalty proceeding u/s. 271(1)(c) of the Act was initiated for furnishing inaccurate particulars of income and thereafter penalty levied at Rs.2,82,208/-. Aggrieved the assessee is before us.

We have heard rival submissions and gone through the facts and circumstances of the case. We note that though the Tribunal has dismissed the quantum appeal preferred by the Parakh Kothi Limited, AY- 2013-14 assessee, it is noted that for AY 2003-04 the assessee had raised similar claim of electricity expenses which though was disallowed by the AO, the Ld. CIT(A) taking into consideration the fact of the case of the assessee was pleased to allow the same and it is noted that from AY 2003-04 onwards, the assessee had been consistently claiming the same expenses under the same head which was accepted by the department. We note that the facts permeating in AY 2003-04 has been consistently followed by the assessee till this year and since the very same claim of the assessee under the same head was allowed by the department, even though in this AY 2013-14 the stand of the department to disallow the assessee’s claim in the quantum appeal has been upheld by the Tribunal, the penalty levied by the Ld. CIT(A) for furnishing of inaccurate particulars of income cannot be sustained since there was reasonable cause for the assessee to claim the expenses under the head “Other sources”. Because as per the principle of consistency the assessee was claiming the same expenses under the head “Other income” and allowed from AY 2003-04 (after the Ld. CIT(A) has allowed it). So, we find that there is reasonable cause for the assessee making the claim and in any event, therefore, cannot be a ground for imposing penalty u/s. 271(1)(c) of the Act. So, the appeal of the assessee is allowed and the penalty is directed to be deleted.

In the result, appeal of assessee is allowed. Order is pronounced in the open court on 6th February, 2020.