2017 (7) TMI 807 - AT - Income Tax

Appeal delay condoned, HRA denial upheld, penalty for inaccurate income particulars upheld, emphasis on accurate tax return info

Sumeet Sood, C/o Kapil Goel, Adv. Versus ITO, Ward- 46 (1), New Delhi

Sumeet Sood, C/o Kapil Goel, Adv. Versus ITO, Ward- 46 (1), New Delhi - Tmi Issues:- Condonation of delay in filing appeal- Denial of HRA claim and addition of interest income- Validity of penalty under section 271(1)(c)Condonation of Delay:The appeal was filed by the assessee against the order passed by the Commissioner of Income Tax (Appeals) relating to the assessment year 2009-10, which was belated by approximately 238 days. The assessee cited the unfortunate demise of their tax advisor and the subsequent lack of professional advice as reasons for the delay. After considering the submissions, the delay was condoned as the assessee was deemed to be prevented by reasonable cause from filing the appeal in time.Denial of HRA Claim and Addition of Interest Income:The Assessing Officer observed that the assessee had claimed a deduction on account of House Rent Allowance (HRA) without providing supporting documents to prove the payment of rent. It was found that the rent was not actually paid, leading to the denial of the HRA claim. Additionally, interest income on FDR was not declared in the return of income, resulting in an addition to the income. Penalty proceedings were initiated for furnishing inaccurate/incorrect particulars of income, which was upheld by the CIT(A).Validity of Penalty under Section 271(1)(c):The assessee challenged the penalty under section 271(1)(c) on various grounds, including the vague notice issued by the Assessing Officer and the lack of specific mention of the limb under which the penalty was levied. The Tribunal noted that the Assessing Officer had concluded that the assessee furnished inaccurate/incorrect particulars of income, justifying the penalty. However, regarding the denial of the HRA claim, the Tribunal found that it was a wrong claim but did not imply inaccurate particulars of income. The penalty related to non-disclosure of interest on FDR was deleted as the explanation provided showed a bona-fide inadvertent mistake. The appeal was partly allowed, and the penalty was directed to be deleted in the case of non-disclosure of interest income.This judgment highlights the importance of providing accurate information and supporting documentation while filing tax returns to avoid penalties and disputes with tax authorities.