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TMI Blog2025 (5) TMI 1567X X X X Extracts X X X X X X X X Extracts X X X X ..... 02/MUM/2024 [Assessment Year 2010-2011] 2. We would first take up appeal preferred by the Assessee for the Assessment Year 2010-2011 which is directed against the order, dated 25/10/2024, passed by the CIT(A) whereby appeal preferred by the Assessee against the Penalty Order, dated 02/03/2022, passed under Section 271(1)(c) of the Act levying penalty of INR. 38,232/- was dismissed by the CIT(A). 3. The Assessee has raised following ground of appeal: "1. The appellant submits that the learned Commissioner of Income-tax (Appeals) ["CIT(A)"] erred in confirming levy of penalty of a sum of Rs. 38,232/- under section 271(1)(c) of the Income tax Act, 1961 (hereinafter referred as "the Act") by the Assessing Officer vide his order dated 02.03.2022 passed under section 271(1)(c) of the Act. 2. The appellant submits that the Ld. CIT (A) ought to have deleted the said penalty on a confirmation of notional deemed rent in respect of one property i.e. Flat No. 17B situated at Kalpana, Netaji Subhash Road, Marine Drive, Mumbai 400 002 by the Assessing Officer considering the order of the ITAT in appellant's own case for Assessment Year 2013-14 wherein such notional rent addition was dele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the aforesaid addition vide order, dated 12/09/2016. 4.3. However, in appeal preferred against above order passed by the CIT(A), the Tribunal, vide Common Order dated 01/07/2019 [passed in ITA No.7216/Mum/2016 for the Assessment Year 2010-2011, ITA No.7215/Mum/2016 for the Assessment Year 2011-2012 and ITA No.7217/Mum/2016 for the Assessment Year 2012-2013] granted relief to the Assessee holding as under: "8. We have heard both the counsel and perused the records. Learned counsel referred to the additional ground and also submitted that a decision of ITAT in the case of co-owner Smt. Vidyaben Bhagwan Kotak in respect of the same flats in which she had half shareholding in Flat No. 16 & 18 at Kalpana, in which the ITAT at paragraph 10 of the said order has accepted that these flats are duplex flats used by the assessee having common staircase and hence it was held that they can be considered as one house which is adjacent to each other. This was so held by the ITAT vide order dated 20.9.2017 in ITA No. 7182 to 7186/Mum/2016. 9. Now we note that this is an additional evidence which was not placed before the authorities below. Though the Revenue has challenged the additional g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. The addition on the basis of which penalty has been levied pertains to addition of Notional Rental Income made by the Assessing Officer vide Assessment Order, dated 27/09/2021. On perusal of the same it is evident that the during the relevant previous year Assessee claimed to be co-owner of Flat 16 and Flat 18 and complete owner of Flat 17B. Before the Assessing Officer the Assessee had claimed that the three flats constituted a single residential house property which was self- occupied. The aforesaid submission of Assessee was rejected by the Assessing Officer. Flat 16 and Flat 18 were accepted by the Assessing Officer to be constituting a single residential house property which was self occupied by following the decision of the Tribunal in the case of other Co-owner of Flat 16 and Flat 18 (i.e., Smt. Vidyaben Bhagwan Kotak) passed in ITA No.7182/Mum/2016 to ITA No.7186/Mum/2013, for the Assessment Year 2006-2007 to 2010-2011, dated 20/03/2017. However, the Assessing Officer concluded that the third flat (i.e. Flat 17B) was a separate house property. Therefore, the Notional Rental Income of INR. 4,15,598/- was brought to tax in the hands of the Assessee. 7. In appeal preferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 254 of the Act,, vide letter dated 21/09/2021, the Assessee had made following submissions (reproduced in paragraph 6 of the Assessment Order, dated 27/09/2021, before the Assessing Officer: "6. In response to this notice, the assessee vide letter dated 21.09.2021 has submitted as under- "I am in receipt of a notice under section 142(1) of the Income tax Act, 1961 for Assessment Year 2010-11 as the Hon'ble ITAT had set aside the matter to the file of Assessing Officer vide its order dated 01.07.2019. In response to above notice, I have to submit as under: 1. I am the owner of the following immovable properties for the year under consideration (a) 100% share in flat No. 178 situated at Kalpana, 96/B, N. Subhash Road, Marine Drive, Mumbai 400 002. (b) 50% share in Flat No. 16 situated at Kalpana, 96/B, N. Subhash Road, Marine Drive, Mumbai 400002. (c) 1/3rd share in Flat No. 18 situated at Kalpana, 96/B, N. Subhash Road, Marine Drive, Mumbai 400 002. 2 During the year under consideration, the ITAT in the ITA no. 7215 to 7217/Mum/2016 under a consolidated order had accepted the fact that the 3 flats are to be considered as one single unit and treated a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flat no. 16 as per Annexure 4. 5. Certificate dated 06.07.2018 issued by the Kalpak Co-operative housing Society Ltd., Kalpana certifying That Flat No. 16& 18 situated at 5th and 6th floors respectively and are used as duplex flats having a common staircase attached to both floors inside the said premises and therefore adjacent to each other as per Annexure 5." 9. We have perused the decision of the Tribunal, in the case of the Assessee for the Assessment Year 2013-2014 [in ITA No.5245/Mum/2019, dated 17/02/2021], and we find that the Tribunal had accepted the contention of the Assessee that Flat 16, Flat 18 and Flat 17B constituted as a single unit. The relevant extract of the decision of the Paragraph read as under: "2 The only issue to be decided in this appeal is with regard to determination of rental income for flat Nos. 16,18 and 17B held by the assessee. The interconnected issue involved therein is whether the flat Nos. 16 & 17B situated in 5th floor, flat No.18 situated in 6th Floor could be considered as a single unit or separate unit. 3. We have heard rival submissions and perused the materials available on record. We find that assessee is an individual earning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... market rate of the property at Rs.60/- per sq.ft and offered the notional income at Rs. 9,96,760/- in A.Y.2014-15. The ld. CIT(A) observed that flat No.16 and flat No. 18 are two separate units in which the assessee has half undivided share and 1/3rd share respectively and that flat No.17B alone could be treated as self-occupied property. With these observations, he upheld the action of the ld. AO. However, the ld. CIT(A) gave directions to the ld. AO to verify the records and if proof of municipal payment is produced by the assessee, the assessee be given deduction thereon in accordance with the provisions of the Act from the notional rental income. 3. At the outset, we find that there is no dispute that assessee is having three properties namely 1/3 share in flat No.18, half share in flat No.16 and full share in flat No.17B. It is not in dispute that flat Nos. 16 & 18 are situated at 5th and 6th floor respectively at Kalpana 96, Netaji Subhash Road, Marine Drive, Mumbai 400 002. It is not in dispute that these flats are duplex flats having a common staircase attached to both the floors inside the said premises and therefore, adjusted adjacent to each other. This is also evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of hearing the Learned Departmental Representative had questioned the bonafide of claim made by the Assessee on the ground that Certificate, dated 25/05/2018 and 06/07/2018, were issued by the Kalpak Co-operative Housing Society Ltd. after the date of passing the assessment order for the relevant assessment year. We find that while adjudicating appeal for the year 2013-2014 (where Assessment Order under Section 143(3) of the Act was passed on 29/01/2016 - a date prior to the issuance of the aforesaid certificates), the Tribunal had taken into consideration the aforesaid certificates issued by the Kalpak Co-operative Housing Society Ltd. and had arrived at conclusion that all the three flats i.e. Flat 16, Flat 17B and Flat 18 constituted a single unit. The aforesaid finding of fact returned by the Co-ordinate Bench of Tribunal continues to hold good. There is nothing on record to show that the aforesaid decision was overturned in appellate proceedings. In the aforesaid decision, the Tribunal had also taken note of the fact that while adjudicating appeal for the Assessment Years 2010-2011 to 2012-2013 (supra), the Tribunal had remitted the issue to the file of the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment in appellate forum. By not contesting the assessment, he has deemed to have accepted the finding that Flat No. 17B is a separate independent unit. When on identical issue he has contested for other assessment years, he should have followed the same for the assessment year under consideration too However, by not doing so, he has indirectly accepted/consented with the findings arrived by the AO in his reassessment order that Flat No.17B is a separate independent unit. Therefore the addition made by the AO in treating the Flat No.17B as a separate unit is justified and the addition made by the AO clearly satisfies the fact that the assessee has concealed his particulars of income by not disclosing the rental income/deemed rental income in respect of Flat No.17B. Accordingly it is found that this is a fit case for levy of penalty. 4.0 Accordingly, I am of the opinion that it is a fit case for levy of penalty U/s 271(1)(c) of the IT. Act ...................." In our view, for this reason also penalty levied under Section 271(1)(c) of the Act cannot be sustained. 12. Thus, in view of the above penalty of INR. 38,232/- levied by the Assessing Officer under Section 271(1)( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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