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Income Tax Appellate Tribunal, “E” Bench, Mumbai
O R D E R Per B.R. Baskaran, AM :-
The appeal filed by the assessee is directed against the order dated 23.12.2008 passed by learned CIT(A)-XXIX, Mumbai confirming the penalty of Rs. 13.33 lakhs levied by the Assessing Officer u/s. 271(1)(c) of the Act.
Learned counsel appearing for the assessee submitted that the assessee had declared rental income derived from letting of the properties as business income. However, the Assessing Officer assessed the same under the head “income from house property” and he also assessed a portion of rental income under the head “income from other sources”. While completing the assessment the Assessing Officer had included deemed income from vacant (unlet) property also and disallowed interest expenditure claimed by the assessee. The above said adjustments resulted in assessing a total income of Rs. 26.31 lakhs as against loss of Rs. 9.96 lakhs declared by the assessee in its return. In the appellate proceedings learned CIT(A) allowed interest expenditure and the Tribunal deleted the deemed income relating to vacant (unlet) property.
2 Sindoori Traders Private Limited Learned AR invited our attention to a working sheet furnished by him and submitted that, after giving effect to the orders of both the appellate authorities, difference between the returned income and assessed income has narrowed down to Rs. 70,704/-. Learned counsel further submitted that the assessee had furnished all particulars relating to the rental income. Learned Counsel submitted that the assessee has not concealed any particulars of income or furnished any inaccurate particulars of income. The total income has gone up only due to change in head of income and due to disallowance/addition. Learned Counsel placed reliance on the decision of Hon'ble Supreme Court rendered in the case of Reliance Petro Products Pvt. Ltd., (322 ITR 158) and submitted that making of a claim, which is sustainable in law, does not amount to furnishing of inaccurate particulars of income. Accordingly he prayed for cancellation of penalty levied by the Assessing Officer.
Learned Departmental Representative, on the contrary, supported the order passed by learned CIT(A).
We have heard the rival contentions and perused the record. We noticed that the Assessing Officer has levied penalty for furnishing inaccurate particulars of income. It is not the case of the Assessing Officer that the assessee has concealed any particulars of income. The total income assessed by the AO has gone up mainly due to the change effected in respect of head of income for assessing rental income and due to disallowance of interest expenditure. We noticed that the disallowance of interest expenditure claimed by the assessee and addition of deemed rental income from un-let portion of the property has since been set aside in the appellate forum. Hence there is a difference of Rs. 70,704/- only between the returned income and assessed income and the said difference has arisen due to change in head of income. The assessee may not be right in declaring rental income under the head income from business, but Hon'ble Supreme Court has held in the case of Reliance Petro Products Pvt. Ltd. (supra) that making a claim, which is not 3 Sindoori Traders Private Limited sustainable in law, would not result in furnishing inaccurate particulars of income. Accordingly we are of the view that there is merit in the contention of the assessee. Accordingly we set aside the order of learned CIT(A) and direct the Assessing Officer to delete the impugned penalty levied u/s. 271(1)(c) of the Act.
In the result, appeal filed by the assessee is allowed.
Order has been pronounced in the Open Court on 18.5.2016.