Claim of expenditure involved not a case of concealment of income – ITAT

Claim of expenditure involved is not a case of concealment of income. ITAT deleted penalty u/s 271(1)(c)

In a recent judgment, the ITAT Delhi has held that claim of expenditure involved is not a case of concealment of income. ITAT deleted penalty u/s 271(1)(c)

ABCAUS Case Law Citation:
ABCAUS 4105 (2024) (06) ITAT

In the instant case, the Assessee had challenged the order passed by the CIT(A) NFAC in sustaining penalty u/s 271(1)(c) of the Income Tax Act, 1961 (the Act) levied by the Assessing Officer (AO) .

During the Assessment Year the assessee had sold immovable properties i.e. vacant plots of land. The assessee claimed to have reinvested part of such LTCG into acquisition of a residential house property and in specified bonds issued by REC Limited.

The case was selected for limited scrutiny. During the scrutiny assessment it was established that the total amount invested (i.e. actual value of purchase and stamp duty) towards acquisition of house property was actually less than the amount claimed in the return. The assessee also did not protest this factum determined during the assessment proceedings. The AO made the quantum addition pursuant to such detection.

Another issue observed during the assessment proceedings was that the assessee had made the claim of deduction u/s 54 whereas as per the AO the right provision for making such claim of deduction should have been u/s 54F of the Act.

Based on such issues, penalty proceedings u/s 271(1)(c) were initiated by the AO.

The Tribunal observed that the claim of assessee u/s 54 was found to be erroneous on two counts i.e. incorrect amount of reinvestment. Secondly, LTCG was earned by the assessee on sale of vacant plots of land and deduction was claimed u/s 54 instead of deduction u/s 54F.

The Tribunal observed that deduction u/s 54EC had been allowed by the AO himself. The Tribunal observed that assessee submitted that the brokerage paid and other documentation expenses had not been considered by the AO, hence, it needs to be considered and there was no furnishing of inaccurate particulars of income or concealment of income.

The Tribunal further observed that the penalty had been levied for “concealment of income”. The notice and the penalty proceedings were also issued for “concealment of income”. The Tribunal opined that the present case was a case of claim of expenditure involved in purchase of property and no case of “concealment of income”.

Hence, the penalty levied was deleted. 

Download Full Judgment Click Here >>

• Non- payment of cost imposed can’t trigger automatic confirmation of an invalid exparte assessment.
• Non-deduction of TDS does not make transaction as unexplained in the hands of deductee – ITAT
• Last date to submit MEF 2026-27 extended to 09.09.2026
• Validity of demand u/s 156 for default u/s 115-O, if assessment order u/s 143(3) has Nil demand
• Issue already examined and adjudicated by CIT(Appeals), can’t be reopened on same set of facts