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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’ NEW DELHI
This appeal is filed by the assessee against the order dated 31/10/2014 passed by CIT(A)-III, New Delhi.
The grounds of appeal are as under:-
1. On the facts and circumstances of the case the Ld. CIT(A) erred in upholding levy of penalty on the appellant by AO u/s 271(1)(c) of Rs 49,294 /- 2. On the facts and circumstances of the case Ld. CIT(A) erred in confirming the act of AO of treating inadvertent bonafide small mistake by appellant as furnishing of inaccurate particulars or concealing particulars of its income. 3. On the facts and circumstances of the case Ld. CIT(A) erred in not appreciating that the error incurred by appellant of not adding a small amount of notional rental income of Rs. 1,59,525/- in the computation of assessable income was not willful and was a bonafide mistake especially when it was first year of such income and more particularly when returned income was of Rs 30,29,710/- and assessed income was Rs. 31,89,235/- for the year under consideration.
4. On the facts and circumstances of the case the CIT(A) erred in upholding AO's act of levy of penalty on appellant on the ground that appellant is capable of availing services of professionals without appreciating that professional services could have only been availed when appellant is seize of the fact that he has earned a notional income.
5. On the facts and circumstances of the case Ld. CIT (A) erred in upholding Ao's act of levying penalty u/s 271(1)(c) in this case when it is search related case and levy of penalty if at all leviable on the amount added would be governed by the provisions of section 271 AAA and not by the provisions of section 271(1)(c).
6. Appellant craves for grant of permission to add, amend, modify, delete or withdraw any ground of appeal
at or any time before the hearing of the appeal.”
3. The assessee e-filed return of income on 29/7/2011 declaring an income of Rs.30,29,710/-. The assessee is an individual having income from salary, house property and other sources. Search and seizure operation u/s 132 of the Income Tax Act, 1961 was carried out in Hazoorilal Group on 11/11/2010. A search warrant u/s 132(1) of the Act was issued and also executed in the name of the assessee. The Assessing Officer observed that the assessee belong to that group. Notice u/s 142(1) of the Act was issued on 15/5/2012 and notice u/s 143(2) was issued on 13/8/2012. A detailed questionnaire issued to the assessee on 11/9/2012 and the case for hearing was fixed on 18/9/2012. Notice u/s 143(2) was again issued on 26/10/2012 and 5/12/2012. The assessment was completed u/s 153C read with Section 143(3) of the Income Tax Act on 13/3/2013 at assessed income of Rs.31,89,235/-. The Assessing Officer made addition of Rs.1,59,525/- by observing that the assessee had purchased a house property on 29/3/2010 for which no ALV was declared. The Assessing Officer held that the value of the property as per statement of affairs was declared at Rs.37,98,226/-. Therefore, the rental value at 6% which was prevalent in the market comes to Rs.2,27,893/-. Hence, the Assessing Officer further held that the net ALV was arrived at Rs.1,59,525/- after deduction u/s 24(A). The penalty proceedings were initiated u/s 271(1) (C) for furnishing inaccurate particulars of income by the Assessing Officer. Notice u/s 271(1)(C) of the Income Tax Act, was issued on 19/3/2013 and 30/8/2013. The assessee filed reply on 19/9/2013 along with some case laws. The assessee submitted before the Assessing Officer that the assessee is not a tax professional under a bonafide belief that the rent received from renting out of property has to be shown income from house property. The assessee was not having any knowledge that even the wrecked property are to be considered as deem to be let out for taxation purpose. The Assessing Officer imposed penalty u/s 271(1)(c) of Rs.49,294/- i.e. 100% of tax sought to be an evaded on concealed income of Rs.1,59,524/-.
4. Aggrieved by the penalty order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
The Ld. AR submitted that the assessee has furnished all the particulars during the Assessment Proceedings. In fact, the assessee disclosed that the property was purchased at the value of Rs.37,98,226/-, the same was incorporated in Assessment Order u/s 143(3) of the Act. The Ld. AR further submits that there is no inaccurate furnishing of particulars as all the documents were furnished. There was no concealment of income on part of the assessee. The Ld. AR relied upon the decision of the Hon'ble Supreme Court in case of CIT Vs. Reliance Petro Products Ltd. (2010) 322 ITR 158 (S.C).
The Ld. DR submitted that the Assessing Officer was right in imposing the penalty. The Ld. DR further submitted that such addition stands confirmed because the assessee has not challenged the addition before appellate authority.
We have heard both the parties and perused the material available on record. It is pertinent to note that under Section 271 (1) (c) of the Income Tax Act, 1961, the Assessing Officer has to satisfy himself/herself regarding concealment of particulars of income or furnishing inaccurate particulars. In the present case, the assessee has given particulars of income regarding the purchase of property. The same was disclosed by the assessee, while filing e- returns. But the assessee was not aware that under which head the said property has to be declared for taxation purpose. This does not amount to concealment or furnishing of inaccurate particulars. The Hon’ble Apex Court in case of Reliance Petro Products Pvt. Ltd. (Supra) held as under: “18. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under Section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars.
It was tried to be suggested that Section 14A of the Act specifically excluded the deductions in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. It was further pointed out that the dividends from the shares did not form the part of the total income. It was, therefore, reiterated before us that the Assessing Officer had correctly reached the conclusion that since the assessee had claimed excessive deductions knowing that they are incorrect; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms; (i) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income.
We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its Return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the Return or not. 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, in our opinion, attract the penalty under Section 271(1)(c). If we accept the contention of the Revenue then in case of every Return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under Section 271(1)(c). That is clearly not the intendment of the Legislature.” Thus, the Apex Court decision in case of Reliance Petro Product (supra) is applicable in assessee’s case. Regarding the other two additions, the assessee explained his genuine mistake and has surrendered the said amount to the Revenue Authorities and offered the same to tax. Therefore, the same cannot be held as act of furnishing inaccurate particulars on part of the assessee. Thus, the order of CIT(A) is set aside and appeal of the assessee is allowed.
In result, the appeal of the assessee is allowed.
Order pronounced in the Open Court on 11th June, 2018.