September 2019

Section 271(1)(c) – Imposition of penalty on account of inadvertent and bona fide error on the part of the assessee would be unwarranted

Jagdish D. Shah | Jagdish T. Punjabi
Chartered Accountants

15.  Rasai Properties Pvt. Ltd. vs. DCITITAT Mumbai: ShamimYahya (AM) and Ravish Sood (JM) ITA No. 770/Mum./2018 A.Y.: 2013-14 Date of order: 28th June, 2019; Counsel for Assessee / Revenue: Nilesh Kumar Bavaliya / D.G. Pansari

 

Section 271(1)(c) – Imposition of penalty on account of inadvertent and bona fide error on the part of the assessee would be unwarranted

 

FACTS

For the assessment year under consideration, the assessee filed its return of income declaring total income of Rs. 80,19,650. In the schedule of Block of Assets, there was a disclosure of a sum of Rs. 67,00,000 against caption ‘Deductions’ under immovable properties.

 

On being queried about the nature of the aforesaid deduction, the assessee submitted that the same pertained to certain properties which were sold during the year under consideration. The AO called upon the assessee to explain why it had not offered the income from the sale of the aforementioned properties under the head income from ‘Long-Term Capital Gain’ (LTCG). In response, the assessee offered long-term capital gain of Rs. 19,45,176 and also made a disallowance of Rs. 93,453 towards excess claim of municipal taxes.

 

In the assessment order, the AO initiated penalty proceedings u/s 271(1)(c) for furnishing of inaccurate particulars of income and concealment of income in the context of the aforesaid addition / disallowance. Subsequently, the AO being of the view that the assessee had filed inaccurate particulars of income within the meaning of 271(1)(c) r.w. Explanation 1, imposed a penalty of Rs. 6,29,936.

 

Aggrieved, the assessee preferred an appeal to the CIT(A) who deleted the penalty with reference to the disallowance of Rs. 93,453 but confirmed it with reference to addition of long-term capital gain which was offered for taxation in the course of the assessment proceedings.

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