NARESH T. WADHWANI,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 8, PUNE

The assessee has raised the following grounds of appeal:- 1. The learned CIT(A) has erred in law and on facts in confirming the jurisdiction to levy penalty when the notice u/s 274 did not specify the charge for levy of penalty of Rs.1,19,581/- u/s 271(1)(c) of the Act.

The ground of appeal No.1 raised by assessee is not pressed and hence the same is dismissed as not pressed.

The issue raised in ground of appeal No.2 is against penalty levied on addition of ₹ 1,19,581/-.

Briefly, in the facts of the case, the assessee had declared income from capital gains but had wrongly adopted the indexed cost of acquisition for financial year 2006-07 instead of applying indexed cost for assessment year 2010-11. Consequently, sum of ₹ 85 lakhs was disallowed and added to the income of assessee. The Assessing Officer initiated penalty proceedings for furnishing inaccurate particulars of income to the extent of ₹ 85 lakhs. The assessee was held to have furnished inaccurate particulars of income and penalty under section 271(1)(c) of the Act was levied.

The CIT(A) has restricted said penalty to addition of ₹ 1,19,581/- in turn, relying on the ratio laid down by the Hon’ble Delhi High Court in the case of CIT Vs. Zoom Communication reported in 327 ITR 510 (Del).

The assessee is in appeal against the order of CIT(A).

The learned Authorized Representative for the assessee stressed that there is no merit in the aforesaid levy of penalty as mistake had occurred in applying the correct indexed rate. There is merit in the plea of assessee especially where the levy of penalty was restricted to addition of ₹ 1,19,581/-.

In the result, the appeal of assessee is allowed.