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INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD

ITA No. 2949/Ahd/2015 Assessment Year: 2011-2012
Shri Narayanbhai Keshavlal Patel (Appellant) vs. DCIT (Respondent)
Date of Order: 18-02-2016

ORDER

This appeal, at the instance of the assessee, is directed against the order of the CIT (A)-10, Ahmedabad, dated 19.08.2015. The relevant assessment year is 2011-12.

2. The solitary issue that arises for our consideration is whether the CIT(A) is justified in confirming the levy of penalty amounting to Rs.1,62,420/-, imposed by the Assessing Officer u/s 271(1)(c) of the Act.

3. Briefly stated the facts of the case are as follows:-

The assessee is an individual. He is engaged in the business of organizer and developer of construction schemes. Return of Income was filed for the relevant assessment year on 20.07.2011, declaring total income of Rs.5,64,11,290/-. During the course of assessment proceedings, the assessee noticed that while computing the Short Term Capital Gain (STCG) on sale of land bearing survey No.635 at Village Uvarasad, he had taken the full cost of acquisition though he had onehalf share therein. This had resulted into understatement of STCG by Rs.5,08,800/-. Hence, the assessee by letter dated 17.09.2013 offered the same. The Assessing Officer accepted the mistake brought to his notice by the assessee and assessed the same while completing assessment u/s 143(3) on 11.11.2013. However, the Assessing Officer initiated penalty proceedings u/s 271(1)(c) in respect of the said addition. The assessee furnished explanation vide reply dated 18.11.2013 and 26.05.2014. But, the Assessing Officer rejected the said explanation and levied the penalty. The CIT(A) confirmed the penalty.

4. Aggrieved by the confirmation of penalty by the CIT(A), the assessee is in appeal before the Tribunal, raising the following grounds:-

1.1 The order passed u/s 250 on 19.08.2015 for AY 2011-12 by CIT(A)-10 Abad upholding the penalty of Rs.1,62,420/- levied u/s 271(1)(c) by AO is wholly illegal, unlawful and against the principles of natural justice.

1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned penalty.

2.1 The Ld. CIT(A) has grievously erred in law and on facts in confirming the penalty of Rs.1,62,420/- levied u/s 271(1)(c) by AO, though the appellant had neither concealed any income nor furnished any inaccurate particulars of income. On the contrary, the appellant had suo motu had without prior detection by AO disclosed the mistake excess cost of acquisition taken while computing LTCG in the return of income.

2.2 That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) ought not to have upheld penalty of Rs.1,62,420/- levied u/s 271(1)(c) by AO.

3.1The Ld. CIT(A) has erred in observing that the appellant did not admit till he was concerned by AO.

5. The ld. Authorized Representative reiterated the submissions made before the Income-tax Authorities and the ld. Departmental Representative, on the other hand, supported the orders of the Income-tax Authorities.

6. I have heard the rival submissions and perused the material on record. The excess claim of cost of acquisition made by the assessee was not detected by the Assessing Officer, but the assessee had suo motu and voluntarily brought to the notice of the Assessing Officer by letter dated 17.09.2013. The assessee had furnished all the relevant documents which would show the share of the assessee in the said land, e.g., the copy of sale deed of the said land was placed on the record of the Assessing Officer which clearly point out the share of the assessee. Thus, there was no attempt on the part of the assessee to hide or conceal anything relating to this claim. In view of the above facts and circumstances of the case, the Assessing Officer was not justified in imposing penalty. Reliance is placed on the decision of Reliance Petro Products P Ltd, reported in 322 ITR 158 (SC), wherein it is held that mere rejection of any claim would not automatically invite penalty so long as the claim is bonafide and genuine, the rejection of such claim would not amount to furnishing inaccurate particulars of income. In the light of above, I delete the penalty imposed u/s 271(1)(c) of the Act.

7. In the result, the appeal of the assessee is allowed.

Order pronounced in the Court on 18th February, 2016 at Ahmedabad.

(GEORGE GEORGE K.)
JUDICIAL MEMBER

No Penalty 271(1)(c)-Excess cost of acquisition claimed not detected by ITO suo motu voluntarily brought to the notice of the Assessing Officer by assessee | 20-02-2016 |

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