SHRI PRAVEEN MANOHAR GHODKHANDE,,NAGPUR vs. ITO, WARD- 1(2),, NAGPUR

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCHES : NAGPUR (THROUGH VIRTUAL HEARING) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER ITA.No.124/Nag./2017 Assessment Year 2008-2009 Shri Praveen Manohar The Income Tax Officer, Ghodkhande, 117, Shivaji vs., Ward – 1 (2), Room Nagar, Nagpur – 440 010 No.506, 5th Floor, MELC PAN AEMPG3595A Building, Seminary Hills, Nagpur – 440 006. (Appellant) (Respondent) -None- For Assessee : For Revenue : Shri G.J. Ninawe Date of Hearing : 14.11.2022 Date of Pronouncement : 16.11.2022 ORDER PER SATBEER SINGH GODARA, J.M. This assessee’s appeal for A.Y. 2008-09, arises against the CIT(A)-1, Nagpur’s order dated 08.12.2016, passed in Case No.CIT(A)-1/104/2011-12, in proceedings under section 271(1)(c) of the Income Tax Act, 1961 [“In short Act”].

2 ITA.No.124/Nag./2017 Sh Praveen Manohar Ghodkhande, Nagpur. 271(1)(c) penalty of Rs.1.35 lakhs imposed by the Assessing Officer in his order dated 16.06.2011 as upheld in the CIT(A) order as follows :

“4.0. Appellant’s submissions along with penalty order have been considered carefully. Assessment order as well as records have also been perused. As per his return, the appellant has claimed exemption u/s 54 for the entire amount of Rs.6,37,216/- by stating that another house property situated at Plot No. 43, Mouza Bhamti has been purchased on 15/12/2008 from one Shri Pradeep Meshram. This contention of the appellant has not been found correct by the AO. As per information received from Nagpur Improvement Trust, who has informed by letter dt. 23/12/2010, the property under question is an open plot which has been regularised in the name of Shri Pradeep Meshram. Also in regularisation letter built up area has been shown as Nil. These findings of the AO have also been reinforced as per local enquiry made for this new property. In fact, the appellant himself has than chosen then to surrender the claimed exempted amount and bring to tax LTCG of Rs.6,37,216/-. Similar is the case with interest income of Rs.50,807/- which has not been included in the return filed by the appellant and surrendered by the appellant when specifically being asked for by the AO.

3 ITA.No.124/Nag./2017 Sh Praveen Manohar Ghodkhande, Nagpur.

4.1. From the perusal of the entire material on records, it is seen that the appellant has violated prescribed conditions for making the claim of exemption u/s 54 in his return filed on 29/09/2012 for the assessment year under consideration to which he was not entitled to in the first place. There is a basic and fundamental difference between a debatable claim, as claimed by the appellant, and an inadmissible or false claim. In the case of first kind of claim there can be two opinion as to whether or not the assessee could made such a claim on the basis of certain facts of that particular year. Provisions of the Act do not disentitle any assessee to make such claim. But, in the second type of inadmissible and false claim, there is an emphatic bar in the Act and the assessee is not entitled to claim such expenditure/ deduction/rebate or exemption. Absence of a valid basis for making any claim of deduction, resulting in low tax or no tax is like going against the letter and spirit of the law.

4.2. Further, the bonafide belief of an assessee in making a claim has limited role for deciding the issue of penalty be imposed u/s 271(1)(c). Facts of the case decide whether such a belief could be treated as bonafide or not. In other words, it can safely be held that if an assessee, disregarding all the relevant facts and circumstances, interprets a section that suits its interest then such interpretation cannot be held as bonafide belief. In the garb of the bonafide claim, an assessee cannot escape

4 ITA.No.124/Nag./2017 Sh Praveen Manohar Ghodkhande, Nagpur. levy of penalty. Secondly, just because something is mentioned in the return of income does not prove that the claim made in it is justified and allowable. Filing of return does not tie down the hands of an Assessing Officer. A final decision depends upon the truthfulness of the particulars of income filed by the assessee. Therefore, phrase ‘particulars of income’ appearing in section 271 (1)(c) has to be interpreted as facts leading to correct computation of income. So, it can safely be said that whenever any material fact is not filed or if filed but is inaccurate, penalty has to be imposed.

4.3. In the appellant’s case claim for deduction has been made but the explanation furnished by it for making such a claim has not been found to be correct and bonafide. Similarly, no explanation been given for non- inclusion of interest income in his return. Thus, Explanation 1 to section 271(1)(c) would come into play and the appellant is found liable for penalty for furnishing inaccurate particulars of his income. The factual information given by him has not been found to be correct with regard to purchase of another house property within prescribed period.

4.4. After perusal of entire material on records, AO is found justified in imposing penalty at minimum rate of tax

5 ITA.No.124/Nag./2017 Sh Praveen Manohar Ghodkhande, Nagpur. sought to be evaded. Penalty of Rs.1,35,000/- is, hereby, confirmed.”

6 ITA.No.124/Nag./2017 Sh Praveen Manohar Ghodkhande, Nagpur. thereof. Be that as it may, we conclude that the impugned penalty of Rs.1.35 lakhs is not sustainable and, therefore, the same is deleted.

Assistant Registrar, ITAT, Pune Benches, Pune.