Penalty can’t be levied for Lack of Evidence supporting HRA Claim If Assessee admitted Fault: ITAT Chennai

CASE LAW DETAILS

CASE NAME:   Shri Pradipta Kumar Das VS the ACIT

DATE OF JUDGEMENT /ORDER: 25.06.2019

RELATED ASSESSEMENT YEAR: 2013-14

COURT: ITAT, Chennai

FACTS OF THE CASE:

1. The appellant is an individual, deriving income under the head ‘’income from salaries”. During the relevant period. the return of income for the AY 13-14 was disclosing total income of Rs. 21,77,500/- Against the said return assessment was completed by the ACIT  and passed order u/s 143(3) of I.T Act declaring total income of Rs.26,38,801/-
2. While doing so, the A.O disallowed the claim of exemption of House Rent Allowance (HRA) by finding that the assessee had not filed any evidence in support of the claim.3.
3. Further, the Officer issued show cause notice calling upon assessee to explain why an  under section 271 (1) (c) of the Act should not be made for furnishing inaccurate particulars of income resulting in disallowances of the claim of exemption u/s.10(13A) of the Act.4.
4. The assessee did not file any explanation to the show cause notice and therefore the AO proceeded with levy of penalty under section 271 (1) (c) of the Act.5.
5. Being aggrieved by the penalty, the appellant filed appeal with a delay of 229 days. The delay was due to health issues as the assessee was undergoing cancer treatment. It was further submitted that the delay was neither willful nor wanton one, if the delay is not condoned it was cause severe hardship to the assessee

 

HELD:

1. The court considered that it is a fit case to condone the delay and accordingly admit the appeal for adjudication.
2. As regards to the merits of case, after analyzing the order passed under section 271(1) (c) of the Act, the Tribunal held that the penalty was levied for filing inaccurate particulars of income.3.
3. But the fact remains that perusal of the assessment order would suggest that assessee had not filed any details whatsoever in support of the claim of HRA. Further, it is settled law that mere disallowance of claim does not entitle levy of penalty as held by the Hon’ble Supreme Court in the case of CIT vs. Reliance Petro Products Ltd, 322 ITR 158.4.
4. Furthermore, the employer had not disputed the claim for exemption of HRA. Therefore in the light of the above findings, it is not a fit case for levy of penalty.5.
5. Accordingly, we direct the Assessing Officer to delete the penalty of 2,17,821/- made u/s.271(1)(c) of the Act the Tribunal said.