2016 (11) TMI 945 - AT - Income Tax

Penalty u/s 271(1)(c) - wrong claim of deduction under section 54F - Held that - Only ground on which the assessee s claim of deduction 54F was disallowed was flats Nos. 103 and 104 are two separate properties. It is the claim of the assessee that these two flats are adjacent to each other and contiguous, hence, to be treated as one flat. In this regard, it is to be noted that the expression a residential house as provided under section 54F is a subject matter of judicial interpretation in a number of cases and it has been held that a would not denote one residential house. Therefore, in our view, the issue relating to the assessee s claim of deduction under section 54F, is debatable in nature. Merely because the assessee in the course of assessment proceedings, agreed for disallowance of its claim for deduction under section 54F, will not lead to a conclusion that the assessee has either furnished inaccurate particulars of income or concealed particulars of his income. That being the case, in our view, it is not a fit case for imposition of penalty under section 271(1)(c). Accordingly, accepting the assessee s explanation, we delete the penalty imposed under section 271(1)(c) of the Act. - Decided in favour of assessee.

Summary

Issues:
1. Condonation of delay in filing the appeal.
2. Validity of penalty imposed under section 271(1)(c) for assessment year 2008-09.

Condonation of Delay:
The appeal was filed with a delay of 114 days, and the assessee sought condonation supported by an affidavit citing health issues and being abroad as reasons for the delay. The Departmental representative opposed the condonation. The Tribunal, after considering the reasons for delay, found them reasonable and condoned the delay, admitting the appeal for hearing on merits.

Validity of Penalty Imposed:
The Assessing Officer disallowed the assessee's claim of deduction under section 54F and initiated penalty proceedings under section 271(1)(c). The Commissioner (Appeals) upheld the penalty. The assessee argued that he was eligible for the deduction under section 54F, as the two flats purchased should be treated as one. The Tribunal noted that the issue was debatable as the definition of "a residential house" under section 54F has been subject to judicial interpretation. The Tribunal held that the mere agreement during assessment proceedings did not imply concealment of income. Therefore, the penalty under section 271(1)(c) was deleted, and the appeal was allowed.

Conclusion:
The Tribunal allowed the appeal, deleting the penalty imposed under section 271(1)(c) for the assessment year 2008-09. The judgment was delivered by the Tribunal on May 6, 2016, with Saktijit Dey (Judicial Member) and Rajesh Kumar (Accountant Member) presiding over the case.