INCOME TAX OFFICER, WARD-4(1), DELHI vs. BHUDEV BUILDING MATERIALS PRIVATE LIMITED, DELHI

ITA 2009/DEL/2026Status: DisposedITAT Delhi28 September 20268 pages
AI SummaryDismissed

What were the facts?

The Revenue (Income Tax Officer) is appealing an order dated 01/01/2026 by the Commissioner of Income-tax (Appeals)/NFAC, Delhi. This order deleted a penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961. The penalty arose from reassessment proceedings under Section 147 for Assessment Year 2015-16. The assessee, Bhudev Building Materials Private Limited, initially filed a return declaring a loss of Rs.14,57,003/-. Reassessment was initiated due to a claimed fictitious short-term capital loss of Rs.1,14,59,383/- on the sale of equity shares. While the assessee provided documentary evidence, no set-off or carryforward of this loss was claimed in the original return. However, in response to a notice under Section 148, the assessee claimed carryforward of this loss, which the Assessing Officer (AO) deemed non-est under Section 80. The reassessment was completed at the originally returned loss. The AO then initiated penalty proceedings under Section 271(1)(c), imposing a penalty of Rs.76,21,433/-, which the CIT(A) subsequently deleted.

What did the Tribunal hold?

The Tribunal held that the order passed by the Ld. CIT(A) deleting the penalty was just and proper and did not warrant interference. The Tribunal considered the facts that the short-term capital loss was disclosed, there was no suppression of income, and the loss was neither utilized for set-off nor carried forward in reality. The "wrong claim" in the e-return filed under Section 148 was explained as system-driven and legally non-operative in view of Section 80 of the Act. Furthermore, no tax advantage accrued, and the reassessment concluded at the original returned loss. Therefore, the Tribunal found that the mens rea or deliberate furnishing of inaccurate particulars was not present. The Tribunal respectfully relied on the Bombay High Court's decision in CIT vs. First India Private Limited and the Apex Court's decision in Reliance Petroproducts Pvt. Ltd. 322 ITR 158 (SC), which held that mere rejection of a claim does not automatically attract penalty and that penalty provisions cannot be invoked merely because an assessee made a claim which did not ultimately result in tax benefits. The Tribunal concluded that the CIT(A)'s order was sound.

What were the issues?

1. Whether the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961, is sustainable when the assessee did not claim any set-off or carryforward of the disputed loss, and no tax advantage was derived, rendering the 'tax sought to be evaded' NIL? Assessee's Contention: The assessee argued that Explanation 4 to Section 271(1)(c) requires the computation of 'tax sought to be evaded'. Since no set-off of loss was claimed and no tax advantage was derived, the tax sought to be evaded is NIL, and thus the penalty does not survive. The assessee relied on the Bombay High Court judgment in CIT vs. First Data (India) (P.) Ltd. [2016] 66 taxmann.com 27 (Bombay). Revenue's Contention: The Revenue relied on the order passed by the Assessing Officer in imposing the penalty under Section 271(1)(c).

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 250,Section 147,Section 148,Section 80

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “B”: NEW DELHI

Before: MS MADHUMITA ROY & SHRI KRINWANT SAHAY

For Respondent: Shri Mahendra Singh, Sr. DR
Hearing: 01/07/2026Pronounced: 28/09/2026

PER MADHUMITA ROY, J. M.: The instant appeal filed by the Revenue is directed against the order dated 01/01/2026 passed by the Ld. Commissioner of Income-

tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter

referred to as the ‘Ld. CIT(A)’/’NFAC’] under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out

of the Assessment Order dated 31/05/2023 passed by the Assessment Unit, Income-tax Department under Section 147 of the Act for Assessment Year 2015-16. 2 private limited company, engaged in the bus

The order continues below.

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