Case Law Details
Shri Pradipta Kumar Das Vs ACIT (ITAT Chennai)
Assessee was diagnosed with Cancer in December, 2017 and the ld. CIT(A) passed the order on 20.03.2018, which is subsequent to the diagnosis of the illness, needless to mention that treatment of cancer is very painful and it is not possible to focus on other issues when he was under the treatment and therefore in our opinion, there is a reasonable cause for not fling the appeal within the due period and therefore we are of the considered opinion that it is a fit case to condone the delay and accordingly we condone the delay and admit the appeal for adjudication.
No Penalty for Mere Disallowance of HRA Claim based on Consent of Appellant to Addition
perusal of the order passed u/s.271(1) (c) of the Act would suggest that penalty was levied for filing inaccurate particulars of income. But the fact remain that perusal of the assessment order would suggest that assessee had not filed any details whatsoever in support of claim of HRA. As regards to other addition of Rs. 45,951/-, order, it is clearly stated that assessee himself had agreed for the addition and therefore it cannot be said that the appellant had filed inaccurate particulars of income resulting an addition to the returned income. Therefore the very basis of levy of penalty has no legs to stand. Further, it is settled law that mere disallowance of claim does not entitle levy of penalty as held by the Hon’ble Supreme Court in the case of CIT vs. Reliance Petro Products Ltd, 322 ITR 158. Furthermore the employer had not disputed the claim for exemption of HRA. Therefore in the light of the above findings, it is not a fit case for levy of penalty. Accordingly, we direct the Assessing Officer to delete the penalty of T2,17,821/- made u/s.271(1) ( c) of the Act
FULL TEXT OF THE ITAT JUDGEMENT
This is an appeal filed by the Assessee directed against the order of the Commissioner of Income Tax (Appeals)-5, Chennai (‘CIT(A)’ for short) dated 20.03.2018 for the Assessment Year (AY) 2013-2014.
2. The Assessee raised the following grounds of appeal:
“1. The Learned Commissioner has erred in passing an order deciding the appeal against the penalty levied under Section 271 (1) (c) of the Income Tax Act, 1961 dated 23.09.2016, when in fact, the appeal filed against the order passed under Section 143 (3) of the Act, dated 31.03 .2016 is pending before the CIT (A).
2. The Learned Commissioner has failed to appreciate that the penalty levied ought not to have been confirmed insofar as the addition of Housing Rent Allowance made vide order dated 31.03.2016 has been challenged before the CIT (A) and the addition has not been confirmed by the CIT (A).
3. The Learned Commissioner has failed to recognize that the Appellant has deposited a sum of Rs. Rs. 32,673/- on 18.06.2016, complying with the interim orders passed by the CIT (A). Therefore, while the appeal is pending in relation to the addition of Housing Rent Allowance, the CIT (A) ought not to have passed a final order against the appeal preferred on the penalty levied under Section 271 (1) (c).
4. The Learned Commissioner has erred in upholding the penalty of Rs. 2,17,821/- under Section 271 (1) (c) insofar as the conditions stipulated under the provision are not attracted in the present case as there is neither any concealment o f income nor has the Appellant furnished inaccurate particulars o f his income.
5. Furthermore, it is respectfully submitted that, in any event, making an incorrect claim does not per se amount to concealment of particulars under the Income Tax Act, 1961. The judgment of the HonZble Supreme Court in the case o f Commissioner of Income-tax v. Reliance Petroproducts Pvt. Ltd [(2010) 322 ITR 158 (SC)J may be seen in this regard.
6. The Learned Commissioner has failed to consider the decision of the HonZble Supreme Court in the case o f Commissioner of Income-tax v. Reliance PetroproductsPvt. Ltd. [(2010) 322 ITR 158 (SC)J. In that case, theHonZble Supreme Court affirmed a decision of the HonZbleGujarat High Court, wherein it was held that, in order to expose an assessee, the case had to be strictly covered by the provision. Further, it is submitted once again, that a mere incorrect claim does not tantamount to furnishing inaccurate particulars. In the above case, it was also held that merely by making a claim, which is not sustainable in law, the same will not amount to furnishing inaccurate particulars. The Appellant therefore states that the aforementioned decision of the Supreme Court is squarely applicable to the present case and the penalty proceedings are liable to be dismissed.
7.The Learned Commissioner has otherwise caused grave injustice to the Appellant by denying an opportunity to the Appellant for explaining the claim for exemption of Housing Rent Allowance under Section 10 of the Income Tax Act, 1961, by providing the necessary documents’’.
3. The brief facts of the case are as under:
The appellant is an individual, deriving income under the head ‘’income from salaries’’. The return of income for the AY 2013-14 was filed on 27.07.2014 disclosing total income of G21,77,500/-. Against the said return of income, the assessment was completed by the Assistant Commissioner of Income Tax, Non Corporate Circle-17(1), Chennai vide order dated 31.03.2016 passed u/s. 143(3) of the Income Tax Act, 1961 (for short ‘the Act’) declaring total income of G26,38,801/-. While doing so, the Assessing Officer disallowed the claim of exemption of HRA u/s.10(13A) of the Act of G4,15,350/- as assessee had failed to produce the evidence in support of the claim. The Assessing Officer also disallowed the claim on account of depreciation, bank charges, repairs etc., of G45,951/-. The said assessment order attained finality as the assessee had chosen not to file appeal before the CIT(A). However, the Assessing Officer issued show cause notice calling upon the assessee to explain why an order imposing penalty u/s.271 (1) (c) of the Act should not be made for furnishing inaccurate particulars of income resulting in disallowances of claim of exemption u/s.10(13A) of the Act for G4,15,350/- and disallowance of bank charges and repairs of G45,951/. It appears that assessee had not filed any explanation to the show cause notice and therefore the Assessing Officer proceeded with levy of penalty of G2,17,821/- u/s.271(1) ( c) of the Act.
4. Being aggrieved by levy of penalty, the appellant filed an appeal before the ld. CIT(A) contending that mere disallowance of claim does not amount to furnishing inaccurate particulars of income. Ld. CIT(A) after considering the written submissions, grounds of appeal and statement of facts confirmed the action of the Assessing Officer, accordingly dismissed the appeal of the assessee.
5. Being aggrieved by the order of the CIT(A), the appellant is in appeal before us in the present appeal. The appeal has been filed with a delay of Two Hundred and Twenty Nine days. Assessee has filed an affidavit praying for condoning of delay on the ground that he was undergoing treatment for cancer in Apollo Hospital, Vanagaram, till December, 2018. It is submitted that owing to his ill health, the appeal could not be filed within the prescribed time. In support of his contention, he also filed copy of discharge summary. It is further submitted that the delay in filing the appeal was neither willful nor wanton one, if the delay is not condoned it would cause severe hardship to the petitioner.
6. On the other hand, ld. Sr. Departmental Representative opposed condonation of delay.
7. We heard the rival submissions and perused the material on record. From the perusal of the condonation petition, it would suggest that the assessee was diagnosed with Cancer in December, 2017 and the ld. CIT(A) passed the order on 20.03.2018, which is subsequent to the diagnosis of the illness, needless to mention that treatment of cancer is very painful and it is not possible to focus on other issues when he was under the treatment and therefore in our opinion, there is a reasonable cause for not fling the appeal within the due period and therefore we are of the considered opinion that it is a fit case to condone the delay and accordingly we condone the delay and admit the appeal for adjudication.
8. As regards to the merits of the case, perusal of the order passed u/s.271(1) (c) of the Act would suggest that penalty was levied for filing inaccurate particulars of income. But the fact remain that perusal of the assessment order would suggest that assessee had not filed any details whatsoever in support of claim of HRA. As regards to other addition of Rs. 45,951/-, order, it is clearly stated that assessee himself had agreed for the addition and therefore it cannot be said that the appellant had filed inaccurate particulars of income resulting an addition to the returned income. Therefore the very basis of levy of penalty has no legs to stand. Further, it is settled law that mere disallowance of claim does not entitle levy of penalty as held by the Hon’ble Supreme Court in the case of CIT vs. Reliance Petro Products Ltd, 322 ITR 158. Furthermore the employer had not disputed the claim for exemption of HRA. Therefore in the light of the above findings, it is not a fit case for levy of penalty. Accordingly, we direct the Assessing Officer to delete the penalty of T2,17,821/- made u/s.271(1) ( c) of the Act
9. In the result, the appeal of the assessee is allowed.
Order pronounced on 25th day of June, 2019, at Chennai.
