2017 (7) TMI 103 - AT - Income Tax

Penalty levied u/s 271(1)(c) - notional rental income working - Held that - We have seen that he AO worked out the notional rental income during the assessment on the basis of estimated deemed income from house property and added the same in the income of the assessee. The assessee has not filed any appeal against the addition made by AO. The Hon ble Bombay High Court in DIT Vs Administrator of Late Mr. E.F. Dinshaw (2015 (9) TMI 318 - BOMBAY HIGH COURT) held that if the claim made by the assessee in the return of income which was rejected by revenue it would not amount to furnishing of inaccurate particulars or concealment of income. Eligible for Municipal Ratable Value - assessee has NOT offered the notional income on deemed let out property u/s 23(1) of the total investment made - Held that - We modify the order of ld. CIT(A) and direct the AO to assess the rental income of the properties in accordance with the decision of jurisdictional High Court in Tip Top Typography 2014 (8) TMI 356 - BOMBAY HIGH COURT .

Summary

Issues Involved:
1. Deletion of penalty levied under section 271(1)(c) of the Income-tax Act for Assessment Year 2009-10.
2. Eligibility for Municipal Ratable Value for deemed let out properties under section 23(1) for Assessment Year 2010-11.

Issue-wise Detailed Analysis:

1. Deletion of Penalty Levied under Section 271(1)(c) for AY 2009-10:
The Revenue appealed against the deletion of the penalty levied under section 271(1)(c) by the CIT(A). The assessee had filed a return declaring a loss, which was later assessed with an addition of notional rent as income from House Property. The AO initiated a penalty for concealment of income, contending that had the return not been scrutinized, the income would have escaped assessment. The CIT(A) deleted the penalty, referencing the Bombay High Court's decision in DIT Vs Administrator of Late Mr. F.E. Dinshaw, which held that a rejected claim does not amount to furnishing inaccurate particulars or concealment of income. The Tribunal upheld the CIT(A)'s decision, finding no merit in the Revenue's appeal, and dismissed the appeal for AY 2009-10.

2. Eligibility for Municipal Ratable Value for Deemed Let Out Properties under Section 23(1) for AY 2010-11:
The Revenue challenged the CIT(A)'s decision that the assessee was eligible for Municipal Ratable Value for deemed let out properties. The AO had computed notional rent based on the total investment in properties and added it under Income from House Property. The CIT(A) directed the AO to verify the municipal ratable value and modify the order accordingly. The Tribunal referenced the Bombay High Court's decision in CIT vs. Tip Top Typography, which provided guidelines for determining fair rental value, including considering municipal ratable value as a safe guide unless there was cogent material to discard it. The Tribunal modified the CIT(A)'s order, directing the AO to assess the rental income in accordance with the High Court's decision. Thus, the appeal for AY 2010-11 was allowed for statistical purposes.

Conclusion:
The appeal for AY 2009-10 was dismissed, upholding the deletion of the penalty under section 271(1)(c). The appeal for AY 2010-11 was allowed for statistical purposes, directing the AO to reassess the rental income based on the jurisdictional High Court's guidelines. The Tribunal emphasized adherence to established legal principles and factual accuracy in both cases.