IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : "SMC" NEW DELHI
BEFORE SHRI G.C. GUPTA, VICE PRESIDENT
ITA No: 40,41/Del/2014
AY : - 2005-06,2006-07
Shri Om Singh Malik vs. ITO
503-Patel Nagar, New Mandi, Ward-1(2),
Muzaffarnagar Muzaffarnagar.
(PAN ACKPM7964R)
(Appellant) (Respondent)
ITA No: 42/Del/2014
AY : - 2005-06
Shri Manish Malik vs. ITO
503-Patel Nagar, New Mandi, Ward-1(2),
Muzaffarnagar Muzaffarnagar.
(PAN AJFPM8104P)
(Appellant) (Respondent)
ITA No: 43/Del/2014
AY : - 2005-06
Smt. Ranbiri Devi vs. ITO
503-Patel Nagar, New Mandi, Ward-2(3),
Muzaffarnagar Muzaffarnagar.
(PAN AGRPD8570H)
(Appellant) (Respondent)
ITA No: 44/Del/2014
AY : - 2005-06
Shri Ashish Malik vs. ITO
503-Patel Nagar, New Mandi, Ward1(2),
Muzaffarnagar Muzaffarnagar.
(PAN AIVPM1464F)
(Appellant) (Respondent)
ITA Nos. 40 - 44/Del/2014
Appellant by : Shri Sanjay Kumar Singhal, Advocate
Respondent by :Shri K.K. Jaiswal, Sr. DR
Date of hearing :01.6.2015
Date of pronouncement :3.7.2015
ORDER
PER G.C. GUPTA, VICE PRESIDENT
These five appeals by the assesses for the assessment year 2005-06 and
2006-07 are directed against the order of the CIT(A). Since identical issue is involved
in all these appeals, these are being disposed of with this consolidated order.
2. The only issue in these appeals preferred by the assesees is with regard to
validity of penalty imposed u/s 271(1)© of the Act. Ld. Counsel for the assessee
submitted that the penalty u/s 271(1)© was imposed for addition made on account
of disallowance of interest claimed as deduction as interest paid on borrowed capital
for the purpose of construction of House. He submitted that the AO made the
disallowance on the plea that the house itself was not complete during the relevant
assessment years 2005-06 and 2006-07 and therefore no deduction on account of
interest on borrowed capital could be allowed to the assessee. He submitted that the
assessments for the assessment year 2007-08 was framed on 21.12.2010 in scrutiny
assessment and the AO himself held that the construction of the property was
completed in this year and therefore the deduction claimed by the assessee for the
interest paid on the borrowed capital was allowable and accordingly allowed
deduction of amount representing 1/5 of disallowed amount on account of interest
paid on borrowed capital in earlier years. Ld. Counsel for the assessee filed a copy of
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ITA Nos. 40 - 44/Del/2014
the assessment order in evidence of his submission. Ld. DR has opposed the
submission of the Ld. Counsel for the assessee. He submitted that the assessee has
made a wrong claim of deduction of interest amount on borrowed capital although
the house itself was not complete during the relevant assessment years. He
submitted that by claiming deduction of interest on borrowed capital wrongly the
assessee has inflated expenses to avoid incidence of tax as observed by the CIT(A)
while dismissing the appeal of the assessee on this ground. He referred the relevant
portion of the assessment order as well as the appellate order passed by the CIT(A)
in support of the case of the revenue. He relied on the order of the AO and CIT(A).
3. I have considered the rival submissions and have perused the order of the
AO and the CIT(A). I find that the assesses have disclosed all material facts relevant
for their assessments at the time of original assessment before the AO itself. It is a
case of honest difference of opinion between the assessee and the revenue
regarding the correct assessment year of deduction on account of interest accrued
on borrowed capital. I find that the AO himself has allowed the deduction on
account of interest on borrowings from the bank in the assessment framed in
scrutiny assessment for the assessment year 2007-08 and has allowed 1/5 of such
interest accrued in the earlier years on account of interest paid on borrowed capital.
The assessee has raised the loan from the bank and the genuineness of the interest
accrued on such borrowings is not in dispute. The AO has rightly allowed the
deduction on account of interest on borrowed amount in the subsequent assessment
year 2007-08 when the construction of the property in question was completed.
Merely because the deduction of interest on borrowed capital was allowable as per
law in a different assessment year, as admitted by the AO, and the assessee has
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made the claim in some other assessment year, it could not be said that the
assessee is guilty for concealment of income or for filing of inaccurate particulars of
income. In this view of the matter I hold that the penalty u/s 271(1)(c) could not be
sustained and is accordingly cancelled and the grounds of appeal of the assessee are
allowed in all the appeals before me.
4. In the result all the appeals of the assesees are allowed.
Order pronounced in the Open Court on 3.7.2015.
sd/-
(G.C. GUPTA)
VICE PRESIDENT
Dated: the 3.7.2015
*veena
Copy of the Order forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
6. Guard File
By Order
Dy. Registrar
Sl. Description Date
No.
1. Date of dictation by the Author 1.6.2015
2. Draft placed before the Dictating Member 1.6.2015
3. Draft placed before the Second Member
4. Draft approved by the Second Member
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5. Date of approved order comes to the Sr.
PS
6. Date of pronouncement of order
7. Date of file sent to the Bench Clerk
8. Date on which file goes to the Head Clerk
9. Date of dispatch of order
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