Penalty for patently inadmissible house property deductions upheld where claims exceeded the composite deduction scheme

Penalty under section 271(1)(c) was considered in the context of an assessee who claimed separate deductions for depreciation, building maintenance, commission, vacating expenses, architect fees and similar items against income assessable under the head "Income from house property". The Tribunal noted that only the composite deduction under section 24 was available and that the additional claims were not merely debatable but patently impermissible under the statutory scheme. On that basis, the Tribunal applied the principle that a clearly untenable claim in the return can attract penalty for concealment or furnishing inaccurate particulars, and the penalty was upheld against the assessee.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable where the assessee claimed deductions for expenses and depreciation against income assessable under the head "Income from house property".

Analysis: The assessee had claimed separate deductions for depreciation, building maintenance, commission, vacating expenses, architect fees and similar items, in addition to the composite deduction contemplated under section 24. The claim was not merely unsustainable on a debatable view but was ex facie not permissible under the scheme of assessment of house property income. The Tribunal treated the claim as a knowingly wrong and patently inadmissible one, and relied on the settled principle that penalty is warranted where an assessee makes a clearly untenable claim in the return.

Conclusion: The penalty under section 271(1)(c) was rightly upheld and the issue was decided against the assessee.

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