SHRI VINODKUMAR SHARMA,VADODARA vs. THE INCOME TAX OFFICER, WARD-3(2), VADODARA

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ITA 1298/AHD/2017Status: DisposedITAT Ahmedabad30 April 2019AY 2010-113 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee did not admit to furnishing inaccurate particulars, but rather accepted that some expenses might be disallowed. Since the AO did not prove the assessee's explanation for the expenditure was false, penalty was not imposable.

What were the facts?

The assessee declared income from the sale of an immovable property. The Assessing Officer (AO) disallowed a portion of the claimed expenditure, leading to an addition to the income. Subsequently, the AO initiated penalty proceedings under Section 271(1)(c).

What were the issues?

Whether penalty under Section 271(1)(c) can be imposed when the assessee has not admitted to furnishing inaccurate particulars and the AO has not proven the explanation for expenditure to be false.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD – BENCH ‘D’

Before: SHRI RAJPAL YADAV & SHRI PRADIP KUMAR KEDIA

For Appellant: Shri Amar K. Shah, AR
Hearing: 08/03/2019Pronounced: 30/04/2019

आयकर अपील�य अ�धकरण, अहमदाबाद �यायपीठ - अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD – BENCH ‘D’

BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 1298/Ahd/2017 �नधा�रण वष�/Assessment Year: 2010-11 Shri Vinodkumar Sharma ITO, Ward-3(2) Prop: of R.B. Transport Co. Vs Vadodara. 4-Rutvi Flats Bhadram Nagar New Sama Road Vadodara 390 008. अपीलाथ�/ (Appellant) �� यथ�/ (Respondent) Assessee by : Shri Amar K. Shah, AR Revenue by : Aoita Shukla, Sr.DR

सुनवाई क� तार�ख/Date of Hearing : 08/03/2019 घोषणा क� तार�ख /Date of Pronouncement : 30/04/2019 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : Assessee is in appeal before the Tribunal against order of the ld.CIT(A)-4, Vadodara dated 5.1.2017 passed for the Asstt.Year 2010-11.

2.

Sole grievance of the assessee is that the ld.CIT(A) has erred in confirming penalty of Rs.1,02,800/- imposed by the AO under section 271(1)(c) of the Income Tax Act.

3.

Brief facts of the case are that is an individual. He has filed return of income on 25.3.2011 declaring total income at Rs.2,83,880/-. On scrutiny of the accounts, it revealed to the AO that the assessee was

ITA No.1298 /Ahd/2017 - 2 -

having 1/4th share in an immovable property which was sold on 25.1.2010 for a consideration of Rs.82,49,000/-. The assessee has shown short term capital gain at Rs.62,583/- on sale of immovable property. The assessee has claimed certain expenditure which was incurred for development of the property. The ld.AO did not accept the claim of the assessee fully and he made an addition of Rs.6,65,355/-. The details of the expenditure claimed by the assessee vis-à-vis allowed/disallowed by the AO read as under: Particulars Amount of Amount allowed Amount of expense by the AO (Rs.) addition made by capitalized by the the AO (Rs.) appellant (Rs.) Brokerage on 39,000/- 9,750/- 29,250/- purchase of land Earth filling, 12,67,472/- 7,43,870/- 5,23,602/- fencing and security charges for the year 2008- 09 and 2009-10 Brokerage on sale 1,50,000/- 37,500/- 1,12,500/- Total 6,65,352/-

4.

The ld.AO thereafter initiated penalty proceedings for concealment of income. However, in the show cause notice, issued under section 274 read with section 271(1)(c) of the Act, he has mentioned both the expressions for visiting the assessee with penalty i.e. for concealment of income or furnishing of inaccurate particulars. In the penalty order available on page no.14 of the paper book, the ld.AO observed that penalty was initiated for concealment of income, but is being imposed for furnishing inaccurate particulars. Appeal to the CIT(A) did not bring any relief to the assessee.

ITA No.1298 /Ahd/2017 - 3 -

5.

With the assistance of the ld.representatives, we have gone through the record carefully. A perusal of penalty order would indicate that the ld.AO has observed that the assessee has admitted qua a fact that he has furnished inaccurate particulars. He made reference to the assessment order. We have perused the assessment order. The assessee has nowhere admitted that he has furnished inaccurate particulars. What the assessee has admitted is that, in case the expenses are partly disallowed, then he did not dispute. It could not be construed that the assessee has admitted allegations that he has furnished inaccurate particulars. The AO has nowhere brought any material or reasoning for harbouring this plea. The only question is that, out of total expenditure claimed by the assessee, partly not accepted by the AO. His explanation qua the expenditure was not found to be false. The assessee could not substantiate his claim of expenditure with help of evidence. In these circumstances penalty upon the assessee cannot be imposed with help of Explanation 1 to section 271(1)(c) of the Act. If the AO was able to demonstrate that the explanation of the expenditure given by the assessee was false, then his case can be appreciated. Taking into consideration all these facts and circumstances, we are of the view that penalty is not imposable upon the assessee. We accordingly allow the appeal of the assessee and delete impugned penalty.

6.

In the result, appeal of the assessee is allowed. Pronounced in the Open Court on 30th April, 2019.

Sd/- Sd/- (PRADIP KUMAR KEDIA) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated, 30/04/2019

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