PRAVINCHANDRA DWARKADAS DALAL,MUMBAI vs. ITO 14(2)(2), MUMBAI

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ITA 1130/MUM/2014Status: DisposedITAT Mumbai18 November 2016AY 2007-083 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since there was a full disclosure of facts and the assessee did not receive the full interest income due to premature closure, levying penalty under Section 271(1)(c) was not justified. The penalty was deleted.

What were the facts?

The assessee offered interest income lower than what was reflected in the TDS certificate, claiming the difference was due to premature closure penalties. The AO added the difference and levied penalty under Section 271(1)(c), which was confirmed by the CIT(A).

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when the assessee offers lower income due to premature closure of deposits and fully discloses the facts.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” Bench, Mumbai

Before: Shri B.R. Baskaran (AM) & Shri Pawan Singh (JM)

For Appellant: Shri B. Parekh
For Respondent: Shri C.W. Angolkar
Hearing: 3.11.2016Pronounced: 18.11.2016

O R D E R Per B.R. Baskaran (AM) :-

The assessee has filed this appeal challenging the order dated 03-01-2014 passed by Ld CIT(A) confirming the penalty of Rs.46,167/- levied by the AO for assessment year 2007-08 u/s 271(1)(c) of the Act.

2.

The facts relating to the issue are set out in brief. The AO noticed from the TDS certificate filed by the assessee that the TDS was deducted on the interest of Rs.5,39,164/-, whereas the assessee has offered a sum of Rs.3,88,288/- in his return of income. The assessee claimed credit for TDS as per TDS certificate. Hence the AO added the difference and the said addition was confirmed by the Ld CIT(A). Subsequently the AO also levied penalty u/s 271(1)(c) of the Act and the same was also confirmed by Ld CIT(A). Aggrieved, the assessee has filed this appeal before us.

2 Pravinchandra Dwarkads Dalal

3.

The Ld A.R submitted that the assessee has made premature closure of fixed deposits held in the bank and hence the bank has levied penalty by reducing the interest. Accordingly it was explained that the assessee did not receive difference interest of Rs.1,50,876/- and hence he did not offer the same as income. He submitted that the explanation of the assessee was not acceptable to the tax authorities. He submitted that the explanation of the assessee has not been found to be false. He further submitted that the penalty levied in the assessee’s spouse case on identical reasoning has been deleted by the co-ordinate bench in the case of Jyoti Pravindchandra Dalal Vs. ITO (ITA No.1129/Mum/2014 dated 09-02-2016.

4.

On the contrary the Ld D.R strongly supported the orders passed by ld CIT(A).

5.

We have heard rival contentions and perused the record. On identical set of facts, the co-ordinate bench has taken following view in the assessee’s spouse case, referred supra:- “.......We found that there was full disclosure of facts with regard to actual amount received by the assessee. Merely because the assessee has claimed full amount of TDS as per the Certificate given by the bank does not amount to furnishing any wrong information. Assessee was actually in receipt of lower amount of interest income because of premature encashment of FDs. Accordingly we do not find any merit for the penalty of Rs.14,151/- imposed by the AO. Accordingly we direct the AO to delete the penalty.”

Consistent with the view taken in the above said case, we also hold that there is no case for levying penalty u/s 271(1)(c) of the Act in the facts and circumstances of the case. Accordingly we set aside the order passed by Ld CIT(A) and direct the AO to delete the impugned penalty.

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6.

In the result, the appeal filed by the assessee is allowed.

Order has been pronounced in the Court on 18.11.2016

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