Income Tax Appellate Tribunal - Mumbai
Vimla Vaswani, Mumbai vs Assessee on 28 January, 2008
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH 'F' MUMBAI
BEFORE SHRI PRAMOD KUMAR &
SMT. P.MADHAVI DEVI, JM &
I.T.A.NO.2608/Mum/2008 - A.Y 2002-03
Mrs. Vimla Vaswani, Vs. Income Tax Officer 12(3),
121, Maker Chambers VI, Mumbai.
Nariman Point,
Mumbai 400 021
PAN NO.AAFPV 7205 F
(Appellant) (Respondent)
Assessee by : Shri Vipul Joshi.
Revenue by : Shri Virendra Ojha.
ORDER
Per P.MADHAVI DEVI, JM:
This appeal of the assessee is directed against CIT(A)'s order dated 28/1/2008.
2. The only grievance of the assessee in this appeal is that the CIT[A] has erred in confirming the penalty levied by the AO u/s.271[1][c] of the Income Tax Act.
3. Brief facts of the case are that the assessee is an individual. She filed her return of income declaring total income of Rs.29,98,956/-. As per the return of income filed, the assessee had income from house property, capital gains and income from other sources. On scrutiny of details filed along with the return, the AO observed that the rental income shown in the income and expenditure account and the TDS certificates filed are not tallying. The assessee's explanation was called 2 for. The assessee submitted that she has offered Rs.26,57,048/- for taxation as rental income from the property viz., Dada Manzil but as per the TDS certificate the rent received is Rs.27,71,520/-. It was submitted that the difference is on account of net amount of income offered for taxation after taking various expenses into account. AO, however, was not convinced with the said explanation and disallowed the claim of expenses and added the difference of Rs.1,14,422/- to the total income of the assessee.
4. On appeal, CIT[A] confirmed the disallowance. Meanwhile, AO initiated penalty proceedings u/s.271[1][c] of the Act observing that the assessee has not filed any explanation for the difference. He therefore levied the minimum penalty u/s.271[1][c] of the Act. Aggrieved, assessee filed an appeal before the CIT[A], who confirmed the order of the AO after considering the decision of the Hon'ble Supreme Court in the case of Dharmendra Textile Processors reported in 212 CTR (SC) 432. Aggrieved, assessee is in second appeal before us.
5. The ld. counsel for the assessee while reiterating the submissions made before the authorities below has drawn our attention to the paper book filed by the assessee wherein the assessee's submissions to the ITO with regard to the levy of penalty has been filed. Thus, according to the ld. counsel, the AO's finding that assessee has failed to file any explanation is not correct. He submitted that in her submissions, the assessee has clearly stated that even if the 3 expenditure incurred by the assessee on the property is not allowable deduction u/s.24, it c ould still be considered for deduction while computing the annual value of the property u/s.23 of the Act. He placed reliance upon the decision of the Hon'ble Supreme Court in the case of Rajasthan Spinning and Weaving Mills reported in 2009 Tax- India-Online 63 SC-CX and also decision of 'A" Bench of the ITAT at Pune in the case of Kanbay Software India (P) Ltd. vs. DCIT (2009) 31 SOT 153 [Pune] for the proposition that where the assessee has furnished all the particulars of income, and there is full disclosure of all facts, mere disallowance of the expenditure will not attract levy of penalty u/s.271[1][c] of the Act.
6. The ld. DR, on the other hand, supported the orders of the authorities below.
7. Having heard both the parties and having considered their rival contentions, we find that the assessee has furnished before the AO all the relevant details necessary for the computation of her income. The disallowance is of the expenditure claimed against income from house property. Mere disallowances/additions will not attract penalty u/s.271[1][c] of the Act. The AO had placed reliance upon the decision of the Hon'ble Supreme Court in the case of Dharmendra Textiles for levy of penalty. The Hon'ble Supreme Court in the case of Rajasthan Spinning and Weaving Mills 2009 Tax-India-Online 63 SC-CX has considered its earlier decision in the case of Dharmendra Textile Processors reported in 212 CTR (SC) 432 and has held that penalty is 4 not to be levied automatically in every case of non-payment or short payment of tax but the conditions expressly mentioned in the section for its application should be satisfied. The decision of the Hon'ble Supreme Court in the case of Dharmendra Textile Processors [cited supra] has also been considered by the ITAT at Pune in the case of Kanbay Software India (P) Ltd. [cited supra] for holding that penalty is not to be levied automatically. We find that the assessee has offered the explanation for the difference and the AO has not found it to be false or incorrect. In view of the same, we hold that the penalty is not leviable in this case and accordingly allow the assessee's ground of appeal.
8. In the result, assessee's appeal is allowed.
Order pronounced on this 29th day of January, 2010.
Sd/- Sd/-
(PRAMOD KUMAR) (P.MADHAVI DEVI)
Accountant Member Judicial Member
Mumbai: 29th January, 2010.
P/-*
5
Copy to-
1) Appellant
2) Respondent
3) CITA Mumbai.
4) CIT City Mumbai
5) DR Bench Mumbai
True Copy By Order
Dy/Asst.Registrar,ITAT MUMBAI.
p
Sr.No. Particulars Date Initials
1 Draft dictated on 19-1-10 P
2 Draft placed before author 20-1-10 P
3 Draft proposed & placed before the
second Member
4 Draft discussed/approved by second
Member
5 Approved draft comes to Sr.PS/PS
6 Order kept for pronouncement
7 File sent to Bench Clerk
8 Date on which file goes to the Head
Clerk
9 Date of dispatch of order