Harunkhan Pathan, Mumbai vs Assessee

आयकर अपीलीय अिधकरण, अिधकरण मुंबई IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES 'J' MUMBAI सव ौी आय.पी. बंसल, याियक सदःय एवं ौी आर.सी. शमा , लेखा सदःय के सम 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 )

Appellant by : None Respondent by : Shri Akhilendra P. Yadav Date of hearing : 10/03/2015 Date of pronouncement : 10/03/2015

ORDER

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 [2000] 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, 1961:

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. CIT(A).

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 आदे श क घोषणा खुले यायालय म" 10/03/2015 को क गई ।

Sd/- Sd/- (आर.सी. शमा /R.C.SHARMA ) (आय.पी. बंसल / I.P. BANSAL) लेखा सदःय /ACCOUNTANT MEMBER याियक सदःय / JUDICIAL MEMBER मुंबई Mumbai; %दनांक Dated 10/03/2015 आदे श क ूितिल)प अमे)षत/Copy षत of the Order forwarded to : 1. अपीलाथ, / The Appellant 2. ू-यथ, / The Respondent. 3. आयकर आयु.(अपील) / The CIT(A)- 4. आयकर आयु. / CIT 5. )वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai 6. गाड फाईल / Guard file.

आदे शानुसार/ ार BY ORDER, स-या)पत ूित //True Copy//

उप/सहायक उप सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अिधकरण मुंबई / ITAT, Mumbai व.िन.स./Vm, Sr. PS