PRAGNESH JAYANTILAL GANGAR,MUMBAI vs. ASST CIT 17(2), MUMBAI

In this process, the total income came of the assessee came to be increased by the amount of deduction claimed under section 24(b) of the Act. The AO initiated penalty proceedings and levied penalty of Rs.77,234/- for furnishing of inaccurate particulars of income and the same was also confirmed by the ld. CIT(A).

The ld. Counsel appearing for the assessee submitted that the assessee had full control over the property and the Hon’ble Delhi High Court in the case of Smarts (P) Ltd V/s CIT (2008) 166 Taxman 53 (Delhi) has held that ownership of premises is not an essential condition for assessing the income under the head “Income from House Property”. Accordingly, the ld.AR submitted that the view taken by the assessee was supported by the decision of Hon’ble Delhi High Court and hence, the return of income filed by the assessee cannot be considered to be a case of “furnishing of inaccurate particulars of income”. The ld. AR further submitted that the assessee has otherwise disclosed all the details relating to the rental income and it is a case of only change of “Head of Income” under which the rental income was assessable.

On the contrary, the ld.DR submitted that the assessee has not established that he had full control over the property so as to claim that the decision rendered by the Hon’ble Delhi High Court in the case of Smarts (P) Ltd (supra) is applicable to the facts of the instant case. The ld. DR further submitted that the intention of the assessee in declaring the 3 returned income derived from the subletting of a tenanted property is only to avail the standard deduction prescribed u/s 24(b) of the Act. Accordingly, the ld. DR submitted that the assessee has “furnished inaccurate particulars of income” by declaring the rental income received by him under the wrong head.

Having heard the submissions of the parties, we are of the view that the penalty levied u/s 271(1)(c) of the Act is not exigible under the facts and circumstances of the instant case. The view taken by the assessee that rental income received by him from Sub-letting property is assessable under the head “Income from House Property” in a way get supports from the decision rendered by the Hon’ble Delhi High Court in the case of Smarts (P) Ltd (supra). Hence, it cannot be considered to be a case of intentional declaration of rental income under the wrong head. Further, the assessee has furnished all the details relating to the rental income before the AO and has also agreed that the view taken by the AO only to avoid the controversy. Since, the view taken by the assessee finds support from the decision of the Hon’ble Delhi High Court, we do not agree with the view taken by the AO and confirmed by the ld. CIT(A) that it is a case of furnishing of inaccurate particulars of income. Accordingly, we set aside the order of the ld.CIT(A) and direct the AO to delete the impugned penalty .

In the result, the appeal of the assessee is allowed. Pronounced accordingly on 1st Jan,2016. घोषणध खुरे न्मधमधरम भें ददनधंकः 1st Jan, 2016 को की गई । (AMARJIT SINGH) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER भुंफई Mumbai: 1st Jan, 2015. 4 व.नन.स./ SRL , Sr. PS

DR, ITAT, Mumbai concerned गधर्ा पधईर / Guard file. 6. आदेशधनुसधय/ BY ORDER,सहधमक ऩंजीकधय (Asstt.