ITO, MUMBAI vs. SURESH AMRUTRAO CHAVAN, MUMBAI

ITA 5305/MUM/2025Status: DisposedITAT Mumbai14 August 202611 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the issue of treating negative net worth for capital gains computation was debatable, with divergent judicial views and a substantial question of law admitted by the High Court. Therefore, penalty under Section 271(1)(c) was not warranted.

What were the facts?

The assessee disclosed a capital gain from a slump sale, offering the sale consideration to tax. The Assessing Officer made an addition by considering the negative net worth of the undertaking, which the assessee had treated as nil. The assessee later did not press this ground in the quantum appeal.

What were the issues?

Whether a penalty under Section 271(1)(c) is leviable when the addition arises from a debatable legal issue regarding the computation of capital gains on a slump sale, especially when the assessee had disclosed all material facts.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 50B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI

Before: SHRI OM PRAKASH KANT & SHRI PAWAN SINGH

For Appellant: Shri Sahil Garud, CA
For Respondent: Shri Rajgopal Parthasarathi - SR DR
Hearing: 30.07.2026Pronounced: 14.08.2026

PER OM PRAKASH KANT, AM

This appeal by the Revenue is directed against the order dated 27.06.2025 passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘the learned CIT(A)’], for the assessment year 2012-13, whereby the penalty of ₹1,04,12,824/- levied by the Assessing Officer under section 271(1)(c) of the Income-tax Act, 1961 [in short, ‘the Act’] was deleted.

ITA 5305/MUM/2025 SURESH AMRUTRAO CHAVAN

2.

The grounds raised by the Revenue are reproduced as under: -

“1. On the facts and circumstances of the case and in law, the Ld. CIT (A)

The order continues below.

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