Mr. Harunkhan Pathan, C-22/CD-58, Pooja Bhavan, Shrirang Society, Thane (West) 400 601 Vs. Income Tax Officer, Ward 26(2) (3), Mumbai.
March, 11th 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES `J' MUMBAI
[^ .. , Û ^ .. [ , ¢
BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND
SHRI R.C.SHARMA , ACCOUNTANT MEMBER
ITA NO.1938/MUM/2011(A.Y. 2004-05)
Mr. Harunkhan Pathan, Income Tax Officer,
C-22/CD-58, Pooja Bhavan, Ward 26(2) (3),
Shrirang Society, Vs. Mumbai.
Thane (West) 400 601 (Respondent)
PAN: AAFPP 6501L
Appellant by : None
Respondent by : Shri Akhilendra P. Yadav
Date of hearing : 10/03/2015
Date of pronouncement : 10/03/2015
PER I.P.BANSAL, J.M:
This is an appeal filed by the assessee and it is directed against order passed
by Ld. CIT(A)28, Mumbai dated 27/01/2011 for assessment year 2004-05.
Grounds of appeal read as under:
1. The Hon CIT(A) has dismissed the appeal on the grounds of delay in the filing of
appeal. However, the Hon. Supreme Court in the case of Improvement Trust V/s
Ujagar Singh & others (AIT-2010-328-SC) has decided that unless molafides are
writ large on the conduct of the party, generally as a normal rule, delay should be
condoned. In the legal arena an attempt should always be made to allow the matter
to be contested on merits rather than to throw it on such technicalities.
2 ITA NO.1938/MUM/2011(A.Y. 2004-05)
2. The appellant in the original return has neither disclosed the income received
nor claimed deduction for accrued interest on housing loan, thereby clearly
indicating that he had no intentions of evading tax. in fact, he was under a
bonafide belief that necessary tax had been deducted and paid by the employer
because of the following facts
a) The employer had initially been paying HRA which was subjected to tax as part
of salary income.
b) The Lease rent was paid by the employer himself.
c) The perquisite for rent free accommodation was subject to tax as salary income.
3. The appellant, in the original return of income filed at Thane Income Tax Office,
had not considered the lease rent received from M/s. BPCL, the employer. The
accrued interest on Housing Loan, which is deductible from the lease rent
received, was also not considered. The perquisite, in the form of rent free
accommodation, was also subject to tax as part of the salary income of the
appellant. As such, the revenue was not put to loss for non disclosure of lease.
4. As per the order passed by the Commissioner Of income Tax (Appeals) - V.,
Bangalore in the case of ACIT v/s. V.Madhusudan Rao the applicability of section
17 of the Income Tax Act, 1961, as regards the accommodation perquisite
valuation was examined and was decided that Sec. 17 of the Income Tax Act. 1961.
i.e. perquisites does not apply to the case for the following reasons:
(a) Perquisite is a gain or profit incidentally made from employment in addition to
regular salary or wages. In this case, the salary extended is without HRA and
hence is not regular salary.
(b) Value of any rent free accommodation provided to the assessee by his employer
or at concessional rent: The employer is not incurring the expenditure to provide
the rents either on the basis of market value or at any parameters to construe the
concessional rent. I he employer is paying the rents on self lease. i.e. house of
employee taken on lease for self occupation by the employee himself, on the basis
of pay scale which is in lieu of HRA.
(c) The words engrossed in section 1 7 are rent free. Hence, value of perquisite is
chargeable only if the employer is providing rent-free accommodation or at
concessional rate. In the hands of employee, it is rent received. (rents received by
employee himself). Hence, the applicability of this section has no jurisdiction.
5. The High Court, in P.C.Joseph & Bros. v. CIT  243 ITR 0818W, has
stated that, "concealment can be said to be in law the intentional suppression of
3 ITA NO.1938/MUM/2011(A.Y. 2004-05)
truth or fact known to the injury or prejudice of another." As the tax on lease rent
was already paid by the appellant twice, firstly by way of T.D.S. on
accommodation perquisite and secondly on self assessment alongwith revised
return of income, there is no intentional suppression of the fact to the injury or
prejudice of another. Hence, there is no concealment and penalty U/s 271(1)(c)
cannot be attracted.
6. The Hon. ITAT Mumbai, in the following identical cases of other BPCL
employees, has deleted the penalty levied u/s. 271(1)(c) of the Income Tax Act,
ITA No. Bench Name of Case Date of Order Assessment Year
3522/M/2008 B Mr. Makarand C. Joshi 17/09/2009 2001-02
2828/M/2008 D Mr. Ravindra L. Sathe 22/12/2009 2001-02
6181/M/2009 A Mr. Kishore Kumar Nair 20/08/2010 2002-03
6183/M/2009 A Mr. Uday Kumar Sawant 20/08/2010 2002-03
5215/M/2009 A Mr. Pramod L. Sarang 20/08/2010 2003-04
5216/M/2009 A Mr. Pramod L. Sarang 20/08/2010 2004-05
4900/M/2009 A Mr. Santosh S. Namjoshi 20/08/2010 2003-04
4901/M/2009 A Mr. Santosh S. Namjoshi 20/08/2010 2004-05
6182/M/2009 A Mr. Bhagwan V. Suryavanshi 20/8/2010 2001-02
5217/M/2009 A Mr. Bhagwan V. Suryavanshi 20/8/2010 2002-03
5218/M/2009 A Mr. Bhagwan V. Suryavanshi 20/8/2010 2003-04
5219/M/2009 A Mr. Bhagwan V. Suryavanshi 20/8/2010 2004-05
6184/M/2009 F Mr.Uday Kumar Sawant 31/8/2010 2004-05
In the light of the above facts, the appellant humbly requests you to kindly set
aside the demand raised and delete the penalty levied u/s. 271(1)(c) of the Income
Tax Act, 1961."
2. The assessee in the present appeal is an employee of BPCL and has entered
into a lease agreement with its employer about taking assessee's own flat on lease
rent by the employer and giving rent to the assessee and rent free accommodation.
The assessee claimed interest on borrowed capital under the head income from
house property and claimed refund. Accordingly, the AO is of the view that
claiming of interest was a deliberate intention to defraud the Revenue as assessee
did not show lease rent received and claiming refund. On such addition
concealment penalty of Rs.15,694/- is levied.
4 ITA NO.1938/MUM/2011(A.Y. 2004-05)
3. The assessee filed belated appeal before Ld. CIT(A) as the same was due to
be filed on 22/7/2008 but it was filed on 24/11/2008. The Ld. CIT(A) has
dismissed the appeal filed by the assessee on the ground that assessee did not file
request for condonation of delay alongwith reason/explanation and thus, appeal
filed by the assessee is not entertainable. Therefore, Ld. CIT(A) without going
into the merits without allowing the assessee any opportunity to explain the delay
has dismissed the appeal. The assessee is aggrieved, hence, has filed
aforementioned grounds of appeal.
4. Notice of hearing was sent to the assessee, however, none was present on the
date of hearing. As the appeal is small, we proceed to decide the present appeal
ex-parte qua the assessee.
5. We have heard Ld. DR, who relied upon the order passed by AO & Ld.
5.1 The grounds of appeal which have been reproduced above, at Sl.No.6, it has
described several decisions of Tribunal like the case of the assessee where such
concealment penalty has been deleted. Therefore, this case is covered by the
aforementioned decisions. We are aware that the appeal filed by the assessee
before Ld. CIT(A) was belated one, but in the interest of justice Ld. CIT(A)
should have required the assessee to file application for condonation of delay
which has not been done by Ld. CIT(A). In the facts and circumstances of the
case, even restoration of the appeal before Ld. CIT(A) will not serve the interest of
justice as the same would involve multiple proceedings and the amount involved in
the present appeal is very small. Therefore, we are of the opinion that following
the aforementioned decisions mentioned in grounds of appeal we have to delete
5 ITA NO.1938/MUM/2011(A.Y. 2004-05)
the penalty. Accordingly, the impugned penalty is deleted and appeal filed by the
assessee is allowed.
6. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 10/03/2015
(.. [ /R.C.SHARMA ) (.. / I.P. BANSAL)
/ACCOUNTANT MEMBER Û / JUDICIAL MEMBER
Mumbai; Dated 10/03/2015
/Copy of the Order forwarded to :
1. / The Appellant
2. × / The Respondent.
3. () / The CIT(A)-
4. / CIT
5. , ,
/ DR, ITAT, Mumbai
6. [ / Guard file.
/ BY ORDER,
× //True Copy//
/ (Dy./Asstt. Registrar)
, / ITAT, Mumbai
.../Vm, Sr. PS