2019 (8) TMI 1422 - AT - Income Tax

Penalty levied u/s. 271 (1) (c) - bogus rental income claimed - - assessment framed u/s. 153 A r.w.s 143 (3) - assessee claimed deduction u/s.24(a)(b) @ 30% and also claimed interest on loan and under the head income from house property a loss was declared - as per assessee AO has not specified under which limb of section 271 (1) (c) the penalty has been levied - HELD THAT - The undisputed fact is that the rental income claim by the assessee and the interest on housing loan claimed by the assessee did not find any favour with the appellate authorities. A perusal of the order of the Tribunal clearly establishes that the assessee had claimed the rental income and the interest on housing loan on wrong facts. Therefore, to this extent we do not find any merits in the case of the assessee that the claim was bonafide, though, not allowed by the revenue authorities and, therefore, the penalty levied u/s. 271 (1) (c ) of the Act should be deleted. Penalty notice did not specify under which limb of the section the penalty proceedings have been initiated - This issue was never raised before the first appellate authority and has been raised for the first time before the Tribunal. We agree with the DR that the question whether correct limb has been applied is a question of fact and not a question of law. As decided in SUNDARAM FINANCE SERVICES LTD.) VERSUS THE ASSISTANT COMMISSIONER OF INCOME TAX 2018 (5) TMI 259 - MADRAS HIGH COURT even assuming that there was a defect in the notices, it had caused no prejudice to the assessee, which had understood the purport and import of the notices issued under section 274 read with section 271. In the notices the relevant columns had been marked, more particularly, when the case against the assessee was that they had concealed particulars and had furnished inaccurate particulars of income. The issue was not a question of fact. The assessee had, at no earlier point of time, raised the plea before the authorities that on account of the defect in the notices it was put to prejudice. No merit in the fresh claim of the assessee. Moreover neither the assessee has moved any application for raising any additional ground nor he has been able to bring out any question of law which can be raised before the appellate authority for the first time. - Decided against assessee.

Summary

Issues:
Appeals against confirmation of penalty under section 271(1)(c) of the Income Tax Act by CIT(A) for A.Y. 2008-09 and 2009-10.

Analysis:
The appeals raised a common grievance regarding the penalty imposed by the CIT(A) under section 271(1)(c) of the Income Tax Act. The Assessing Officer disallowed deductions claimed by the assessee for rental income and interest on housing loan, leading to a declared loss. The Tribunal upheld the disallowances, emphasizing that the property was purchased before the loan disbursement, rendering the deductions invalid. The Tribunal found no merit in the assessee's claims and confirmed the CIT(A)'s decision. The penalty notice specifying the relevant section was challenged for the first time before the Tribunal, citing judicial precedents. However, the Tribunal held that the issue was a question of fact, not law, and dismissed the appeals, upholding the penalty imposed.

The penalty proceedings were initiated separately from the quantum proceedings, focusing on the disallowed deductions. The Assessing Officer, unsatisfied with the assessee's explanations, levied a penalty under section 271(1)(c) of the Act. The CIT(A) upheld the penalty, emphasizing that the disallowed deductions were not supported by the property purchase timeline and loan utilization. The Tribunal concurred with the lower authorities, concluding that the assessee's claims were not genuine, leading to the penalty imposition. The challenge regarding the specification of the penalty section in the notice was rejected, citing previous court decisions and lack of merit in the fresh claim raised before the Tribunal. The Tribunal affirmed the CIT(A)'s decision and dismissed the appeals, maintaining the penalty levied under section 271(1)(c) of the Act.

In summary, the Tribunal upheld the penalty imposed under section 271(1)(c) of the Income Tax Act, emphasizing the disallowed deductions for rental income and interest on housing loan lacked merit due to the property purchase timeline. The challenge regarding the specification of the penalty section in the notice was dismissed, and the appeals were ultimately rejected, affirming the penalty levied by the lower authorities. The Tribunal's decision was based on the factual findings and legal precedents cited, leading to the dismissal of the appeals filed by the assessee.