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Facts
The assessees are appealing penalty orders under section 271(1)(c) of the Income Tax Act. The delay in filing the appeals was condoned due to the pandemic and the assessee's personal circumstances. The core issue relates to an excess claim of deduction under sections 54F and 54B of the Act.
Held
The Tribunal held that a mere claim which is not sustainable in law does not amount to furnishing inaccurate particulars. The assessee had rectified the mistake by revising the computation of income, indicating an inadvertent error rather than concealment or furnishing inaccurate particulars. Therefore, penalty under section 271(1)(c) was not leviable.
Key Issues
Whether an excess claim of deduction, which is later rectified by the assessee, amounts to furnishing inaccurate particulars of income attracting penalty under section 271(1)(c) of the Income Tax Act, or if it constitutes an inadvertent mistake not liable for penalty.
Sections Cited
271(1)(c), 250, 143(2), 142(1), 44AD, 54F, 54B, 14A, 36(1)(iii), 10(33), 276C
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Income Tax Appellate Tribunal, PUNE “B” BENCH : PUNE
Before: DR. MANISH BORAD & SHRI VINAY BHAMORE
I.T.A.Nos.1837 to 1839/PUN/2025 (Assessment Year 2015-2016) 1. Amol Vasant Deshmukh ITO, Ward-6(2), Pune PAN : ASAPD 8899 C Tulsabai Vasant Deshmukh 2. vs. PAN : AWQPD 9715 M Rohini Maruti Deshmukh 3. PAN : BHKPD 1741 F All r/o Flat No.104, F-Wing, Madhukosh Society, Lagad Mala, Sinhagad Road, Wadgaon Khurd, Pune Maharashtra-411041 (Appellants) (Respondent) For Assessee : Shri Sarang Gudhate, CA For Revenue : Shri Manoj Tripathi, Addl.CIT Date of Hearing : 11.12.2025 Date of Pronouncement : 17.12.2025 ORDER PER : MANISH BORAD, AM These appeals at the instance of the different assessees are directed against separate orders of Ld. Commissioner of Income Tax (Appeals)-4, Pune [“CIT(A)”] evenly dated 25/02/2020 passed under section 250 of the Income Tax Act, 2 ITA.Nos.1837-1839/PUN./2025 (Amol Vasant Deshmukh & Ors.) 1961 (“Act”) which are arising out of penalty orders passed u/s. 271(1)(c) of the Act, evenly dated 18/05/2018 for the Assessment Year (AY) 2015-16.
Registry has pointed out that there is a delay of 1918 days in each of the appeal. Assessees have filed applications for condonation of delay along with affidavits. The common reasons for delay mentioned therein are mainly due to Covid-19 pandemic, due to which, the appeals could not be filed from the date of passing of impugned orders dated 25/02/2020 till March, 2022. Consequently, one of the key persons namely, Amol Vasant Deshmukh met with serious accident and underwent surgery. Another reason for delay is due to mentioning of e-mail address of the earlier CA due to which necessary information could not reach the assessees. Taking into all these circumstances, we observe that the delay is not intentional and assessee(s) have not gained from delay in filing the appeals. Therefore adopting a justice oriented approach and also taking guidance from the judgments of Hon’ble Apex Court in the case of Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. [(1987) 2 SCC 107] and in the case of Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382), we hereby condone the delay of 1918 days in filing of each of the instant appeals before this Tribunal and admit these appeals for adjudication.
3 ITA.Nos.1837-1839/PUN./2025 (Amol Vasant Deshmukh & Ors.) 3. From perusal of the grounds of appeal
, we notice that common grievance of the assessees is against the levy of penalty u/s.271(1)(c) of the Act at ₹ 18,00,580/-, ₹18,75,645/- and ₹14,60,970/- namely Amol Vasant Deshmukh in Tulsabai Vasant Deshmukh in and, Rohini Maruti Deshmukh in respectively.
4. Since in all these appeals commons issues have been raised, therefore, there were heard together and being disposed of by this common order for the sake of convenience and brevity. For adjudication of issues raised, we take up & 1839/PUN/2025. 5. Grounds of appeal raised by the assessee, namely Amol Vasant Deshmukh in reads as under:-
1. Under the facts and circumstances of the case and in law, Ld Assessing Officer has erred in levying Penalty u/s 271(1)(c) of Rs. 18,00,580/-.
2. Under the facts and circumstances of the case and in law, the assessee's case was selected for limited scrutiny for the specific purpose of examining the issue "large deduction claimed u/s 54B, 54C, 54D, 54G and 54GA & Large Investment in property (AIR) as compared to total income". However, Ld Assessing Officer has travelled beyond the scope of limited scrutiny by reclassifying the nature of income and making an addition under the head "Business Income", which is contrary to the scope of enquiry permitted under the limited scrutiny guidelines. Hence addition is not sustainable. Accordingly, penalty cannot be levied on such addition.
4 ITA.Nos.1837-1839/PUN./2025 (Amol Vasant Deshmukh & Ors.) 3. Under the facts and circumstances of the case and in law, in the Assessment Proceedings, Ld Assessing Officer has reclassified the capital receipts as business income. However, while making the addition, the entire gross receipts have been considered without allowing any deduction for related expenses. The assessee has not maintained books of accounts, and therefore, in such circumstances, the income should have been computed on a presumptive basis under section 44AD of the Act, wherein 8% of the gross receipts may be reasonably taken as income. Accordingly, if at all penalty proceedings are to be initiated, the same should be with reference to the deemed income under section 44AD, and not on the entire gross receipts.
4. The appellant craves the permission to add, amend, modify, revise, substitute, delete or alter any/all of the above grounds of appeal if deemed necessary at the time of hearing of the appeal.”
6. Brief facts of the case are that assessee is an individual and e-filed the return of income for A.Y. 2015-16 on 31/08/2015 declaring income of ₹ 30,190/- after claiming deduction u/s. 54F at ₹ 64,01,600/- and u/s. 54B at ₹ 28,80,560/- and has shown Long Term Capital Gain (LTCG) at ₹ NIL. Case selected for limited scrutiny under CASS and valid notices u/s. 143(2) & 142(1) of the Act were served upon the assessee. Ld.AO observed that assessee has shown LTCG at ₹ 90,95,120/-, and against this income, has claimed deduction u/s. 54F & 54B of the Act and declared NIL income under capital gain. Ld.AO, further on examination of records, observed that on account of transaction of conversion of capital asset into stock-in-trade during the F.Y. 2010-11, the assessee’s share of capital gain is ₹ 1,64,17,638/- and the same is required to be offered to tax in the year when consideration is received. Ld.AO further observed that out of 5 ITA.Nos.1837-1839/PUN./2025 (Amol Vasant Deshmukh & Ors.) LTCG of ₹1,64,17,638, assessee has declared LTCG of ₹61,98,677/- and ₹75,04,083/- in the returns for A.Ys. 2013-14 & 2014-15 respectively. Remaining amount of LTCG is ₹ 27,14,877/- and it is eligible for deduction u/s. 54F & 54B of the Act (if any) only to the extent of ₹ 27,14,877/-. Ld.AO observed that in the return of income, assessee has shown LTCG of ₹ 90,95,120/- and has also claimed deduction against this amount u/s. 54F at ₹ 64,01,600/- and u/s. 54B of the Act at ₹ 28,80,560/-. Ld.AO, thus, observed that assessee has claimed excess deduction of ₹ 63,80,243/-. Further, during the course of assessment proceedings itself, assessee has filed a rectified/revised computation of income admitting the mistake and had paid due taxes. This fact is also discernible from the assessment records that before the lapse of date of filing the revised return i.e. 31/03/2017, assessee has been served with notice u/s. 143(2) of the Act on 29/09/2016. Ld.AO assessed the income at ₹ 64,91,229/- and initiated the penalty proceedings u/s. 271(1)(c) of the Act for furnishing inaccurate particulars of income at ₹63,80,243/-. Subsequently, penalty proceedings were initiated by issuing notice u/s. 274 of the Act and vide penalty order dated 18/05/2018, Ld.AO levied penalty of ₹18,00,580/- 7. Aggrieved with the order of penalty, assessee filed appeal before the Ld.CIT(A), but failed to succeed. Now, the assessee 6 ITA.Nos.1837-1839/PUN./2025 (Amol Vasant Deshmukh & Ors.) is in appeal before this Tribunal against levy of penalty u/s. 271(1)(c) of the Act.
8. Learned counsel for the assessee submitted that assessee has rectified the mistake immediately on the issuance of notice u/s. 143(2) of the Act. He also submitted that assessee could have easily revised the return because the due date of filing revised return was 31/03/2017 and the notice u/s. 143(2) has been issued on 29/09/2016. He further submitted that the increase in income from LTCG is arising due to increase of stamp duty value and the assessee having received more consideration than the amount which was finalized during the F.Y. 2010-11. He submitted that as against the remaining LTCG of ₹ 27,14,877/- which the assessee was required to offer tax in the return for A.Y. 2015-16, the assessee has shown LTCG of ₹ 90,95,120/- and has claimed the benefit of sections 54F & 54B of the Act against this sum. He submitted that all the details were furnished in the return of income and only due to inadvertent mistake, the assessee has claimed higher amount of deduction u/s. 54F & 54B of the Act that too, when the assessee has made the investments as per the provisions of sections 54F & 54B of the Act. He further submitted that assessee on the moment it came to the assessee’s knowledge about the mistake, he has rectified and filed the revised computation of income and has claimed deduction u/s. 54F & 54B of the Act only to the extent of 7 ITA.Nos.1837-1839/PUN./2025 (Amol Vasant Deshmukh & Ors.) ₹27,14,877/-. Referring to plethora of judgments filed in the legal compilation submitted that for such unintentional mistake, assessee should not be penalized with levy of penalty u/s. 271(1)(c) of the Act. Reliance was heavily placed on the judgment of Hon'ble Apex Court in the case of CIT vs. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158 (SC). Ld counsel for the assessee has also referred other decisions and CBDT instructions which are as under:-
On the other hand, Ld. Departmental Representative (DR) vehemently argued supporting the order of Ld. CIT(A).
We have heard rival contentions and perused the records placed before us. The grievance of the assessee namely Amol Vasant Deshmukh in is against the levy of penalty u/s. 271(1)(c) of the Act at ₹18,00,580/-, which has been levied by the Ld.AO for excess claim of deduction 8 ITA.Nos.1837-1839/PUN./2025 (Amol Vasant Deshmukh & Ors.) u/s. 54F & 54B of the Act. At the cost of repetition, we note that assessee along with other co-owners entered into a development agreement of a land on 30/07/2010 and the capital gain was calculated on that date on account of conversion of capital asset into stock-in-trade. There is no dispute at the end of the Ld.AO that assessee’s share of LTCG is ₹ 1,64,17,638/- which has been worked out on the basis of the figures of sale consideration available on the date of entering into the development agreement. As per the provisions of Income-tax Act, assessee is required to offer LTCG to tax as and when the sale consideration is received. The assessee received sale consideration is spread over three years. For A.Ys. 2013-14 & 2014-15 assessee has shown LTCG of ₹ 61,98,677/- and ₹ 75,04,083/- in his income tax return and also claimed benefit of sections 54F & 54B as per the provisions of the Act and duly specifying the conditions therein. The remaining amount of LTCG which remained to be offered to tax ₹ 27,14,877/- . The assessee received remaining consideration during the instant year i.e. 2015-16, but due to increase in the stamp valuation and increase in the sale consideration, assessee has shown LTCG of ₹ 90,95,120/-. Further, assessee has claimed the benefit of deduction u/s. 54F & 54B of the Act at ₹64,01,600/- and ₹28,80,560/- respectively.
9 ITA.Nos.1837-1839/PUN./2025 (Amol Vasant Deshmukh & Ors.) 11. We further observe that Ld.AO on noticing that as against the remaining amount of LTCG of ₹ 27,14,877/- the benefit of exemption u/s. 54F & 54B, could not exceed ₹ 27,14,877/-. We note that assessee has claimed excess benefit of ₹ 63,80,243/-. We further observe that the last date for revising the return of income for A.Y. 2015-16 is 31/03/2017 and prior to the expire of the said date, assessee has been served with notice u/s. 143(2) of the Act on 29/09/2016. Assessee has furnished revised computation of income and has reduced the claim of deduction u/s. 54F & 54B only to ₹27,14,877/- and had opted for not revising the return of income during the course of assessment proceedings.
12. Now for such excess claim of deduction u/s. 54F & 54B of the Act in the income tax return at ₹63,80,243/-, whether such mistake is liable to be visited by penalty u/s. 271(1)(c) of the Act. Here, we would like to take a note of the judgment of Hon'ble Supreme Court in the case of Reliance Petroproducts (P.) Ltd. (supra) wherein Hon'ble Court has held that “A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars”. The judgment of the Hon'ble Apex Court reads as under (relevant extract):- “2. The only question in this appeal which has been filed by the Commissioner of Income-tax-III is as to whether the respondent-assessee is liable to pay the penalty amounting to Rs. 11,37,949 under section 271(1)(c) of the Income-tax Act 10 ITA.Nos.1837-1839/PUN./2025 (Amol Vasant Deshmukh & Ors.) (hereinafter referred to as "the Act") ordered by the Assessing Authority. The Commissioner of Income-tax (Appeals), however, deleted the said penalty. The order of the Commissioner (Appeals) was appealed against before the Income-tax Appellate Tribunal (hereinafter referred to "the Tribunal") which confirmed the order of the Commissioner (Appeals) and dismissed the appeal filed by the revenue. However, the revenue challenged the said order before the High Court which confirmed the orders passed by the Commissioner (Appeals) and the Tribunal while dismissing the Tax Appeal filed by the revenue.
Few facts would be relevant.
The assessee is a company and the relevant assessment year is 2001-02. The return was filed on 31-1-2001 declaring loss of Rs. 26,54,554. This assessment was finalized under section 143(3) of the Act on 25-11-2003 whereby the total income was determined at Rs. 2,22,688. In this assessment the addition in respect of interest expenditure was made. Simultaneously penalty proceedings under section 271(1)(c) of the Act were also initiated on account of concealment of income/furnishing of inaccurate particulars of income. The said expenditure was claimed by the assessee on the basis of expenditure made for paying the interest on the loans incurred by it by which amount the assessee purchased some IPL shares by way of its business policies. However, admittedly, the assessee did not earn any income by way of dividend from those shares. The company in its Return claimed disallowance of the amount of expenditure for Rs. 28,77,242 under section 14A of the Act.
By way of response to the show-cause notice regarding the penalty in its reply dated 22-3-2006, the assessee claimed that all the details given in the Return were correct, there was no concealment of income, nor were any inaccurate particulars of such income furnished. It was pointed out that the disallowance made by the Assessing Authority in the assessment order under section 143(3) of the Act were solely on account of different views taken on the same set of facts and, therefore, they could, at the most, be termed as difference of opinion but nothing to do with the concealment of income or furnishing of inaccurate particulars of such income. It was claimed that mere disallowance of the claim in the assessment proceedings could not be the sole basis for levying penalty under section 271(1)(c) of the Act. It was submitted specifically that it was an investment company and in its own case for assessment year 2000-01 the Commissioner (Appeals) had deleted the disallowance of interest made by the Assessment Officer and the Tribunal has also confirmed the stand of the Commissioner (Appeals) for that year and, therefore, it was on the basis of this that the expenditure was claimed. It was further submitted that 11 ITA.Nos.1837-1839/PUN./2025 (Amol Vasant Deshmukh & Ors.) making a claim which is rejected would not make the assessee-company liable under section 271(1)(c) of the Act. It was again reiterated that there was absolutely no concealment, nor were any inaccurate particular ever submitted by the assessee-company.
Shri Bhattacharya, Learned ASG submits that Commissioner (Appeals), the Tribunal as well as the High Court have ignored the positive language of section 271(1)(c) of the Act. He pointed out that the claim of the interest expenditure was totally without legal basis and was made with the mala fide intentions. It was further pointed out that the claim made for the interest expenditure was not accepted by the Assessing Authority nor by the Commissioner (Appeals) and, therefore, it was obvious that the claim for the interest expenditure did not have any basis. He further pointed out that the contention about the earlier claims being finalized was also not correct as the appeal was pending before the High Court against the order of the Tribunal for the year 2000- 01. According to the learned ASG, even otherwise, the expenditure on interest could not have been claimed in law, as under section 36(1)(iii), only the amount of interest paid in respect of capital borrowed for the purposes of the business or profession could have been claimed and it was clear that the interest in the present case was not in respect of the capital borrowed. Our attention was also invited to section 14A of the Act, which provides that no deduction could be allowed in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. The learned ASG also invited our attention to provision of section 10(33) to show that the income arising from the transfer of a capital asset could not be reckoned as an income which can form the part of the total income. In short, the contention was that the assessee in this case had made a claim which was totally unacceptable in law and thereby had invited the provisions of section 271(1)(c) of the Act and had, therefore, exposed itself to the penalty under that provision.
As against this, learned Counsel appearing on behalf of the respondent pointed out that the language of section 271(1)(c) had to be strictly construed, this being a taxing statute and more particularly the one providing for penalty. It was pointed out that unless the wording directly covered the assessee and the fact situation herein, there could not be any penalty under the Act. It was pointed out that there was no concealment or any inaccurate particulars regarding the income were submitted in the Return. Section 271(1)(c) is as under :— "271. (1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person— 12 ITA.Nos.1837-1839/PUN./2025 (Amol Vasant Deshmukh & Ors.)
(c) has concealed the particulars of his income or furnished inaccurate particulars of such income." A glance at this provision would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. Present is not the case of concealment of the income. That is not the case of the Revenue either. However, the learned Counsel for revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of the income. As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word "particulars" used in the section 271(1)(c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the Return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. The learned Counsel argued that "submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income". We do not think that such can be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In CIT v. Atul Mohan Bindal [2009] 9 SCC 589, where this Court was considering the same provision, the Court observed that the Assessing Officer has to be satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income. This Court referred to another decision of this Court in Union of India v. Dharamendra Textile Processors [2008] 13 SCC 369, as also, the decision in Union of India v. Rajasthan Spg. & Wvg. Mills [2009] 13 SCC 448 and reiterated in para 13 that :— "13. It goes without saying that for applicability of section 271(1)( c), conditions stated therein must exist."
Therefore, it is obvious that it must be shown that the conditions under section 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the Return filed because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. In Dilip N. Shroff v. Jt. CIT [2007] 6 SCC 329, this Court explained the terms "concealment of 13 ITA.Nos.1837-1839/PUN./2025 (Amol Vasant Deshmukh & Ors.) income" and "furnishing inaccurate particulars". The Court went on to hold therein that in order to attract the penalty under section 271(1)(c), mens rea was necessary, as according to the Court, the word "inaccurate" signified a deliberate act or omission on behalf of the assessee. It went on to hold that Clause (iii) of section 271(1) provided for a discretionary jurisdiction upon the Assessing Authority, inasmuch as the amount of penalty could not be less than the amount of tax sought to be evaded by reason of such concealment of particulars of income, but it may not exceed three times thereof. It was pointed out that the term "inaccurate particulars" was not defined anywhere in the Act and, therefore, it was held that furnishing of an assessment of the value of the property may not by itself be furnishing inaccurate particulars. It was further held that the assessee must be found to have failed to prove that his explanation is not only not bona fide but all the facts relating to the same and material to the computation of his income were not disclosed by him. It was then held that the explanation must be preceded by a finding as to how and in what manner, the assessee had furnished the particulars of his income. The Court ultimately went on to hold that the element of mens rea was essential. It was only on the point of mens rea that the judgment in Dilip N. Shroff's case (supra) was upset. In Dharamendra Textile Processors' case (supra), after quoting from section 271 extensively and also considering section 271(1)(c), the Court came to the conclusion that since section 271(1)(c) indicated the element of strict liability on the assessee for the concealment or for giving inaccurate particulars while filing Return, there was no necessity of mens rea. The Court went on to hold that the objective behind enactment of section 271(1)(c) read with Explanations indicated with the said section was for providing remedy for loss of revenue and such a penalty was a civil liability and, therefore, willful concealment is not an essential ingredient for attracting civil liability as was the case in the matter of prosecution under section 276C of the Act. The basic reason why decision in Dilip N. Shroff's case (supra) was overruled by this Court in Dharamendra Textile Processors' case (supra), was that according to this Court the effect and difference between section 271(1)(c) and section 276C of the Act was lost sight of in case of Dilip N. Shroff (supra). However, it must be pointed out that in Dharamendra Textile Processors' case (supra), no fault was found with the reasoning in the decision in Dilip N. Shroff's case (supra), where the Court explained the meaning of the terms "conceal" and "inaccurate". It was only the ultimate inference in Dilip N. Shroff's case (supra) to the effect that mens rea was an essential ingredient for the penalty under section 271(1)(c) that the decision in Dilip N. Shroff's case (supra) was overruled.
14 ITA.Nos.1837-1839/PUN./2025 (Amol Vasant Deshmukh & Ors.) 9. We are not concerned in the present case with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word "inaccurate" has been defined as :— "not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript." We have already seen the meaning of the word "particulars" in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars.
10. It was tried to be suggested that section 14A of the Act specifically excluded the deductions in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. It was further pointed out that the dividends from the shares did not form the part of the total income. It was, therefore, reiterated before us that the Assessing Officer had correctly reached the conclusion that since the assessee had claimed excessive deductions knowing that they are incorrect; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms; (i) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its Return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the Return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that by itself would not, in our opinion, attract the penalty under section 271(1)(c). If we accept the contention of the revenue then in case of every Return where the claim made is not accepted by Assessing Officer for any reason, the 15 ITA.Nos.1837-1839/PUN./2025 (Amol Vasant Deshmukh & Ors.) assessee will invite penalty under section 271(1)(c). That is clearly not the intendment of the Legislature.
In this behalf the observations of this Court made in Sree Krishna Electricals v. State of Tamil Nadu [2009] 23 VST 249 as regards the penalty are apposite. In the aforementioned decision which pertained to the penalty proceedings in Tamil Nadu General Sales Tax Act, the Court had found that the authorities below had found that there were some incorrect statements made in the Return. However, the said transactions were reflected in the accounts of the assessee. This Court, therefore, observed : "So far as the question of penalty is concerned the items which were not included in the turnover were found incorporated in the appellant's account books. Where certain items which are not included in the turnover are disclosed in the dealer's own account books and the assessing authorities include these items in the dealer's turnover disallowing the exemption, penalty cannot be imposed. The penalty levied stands set aside." The situation in the present case is still better as no fault has been found with the particulars submitted by the assessee in its Return.
The Tribunal, as well as, the Commissioner of Income-tax (Appeals) and the High Court have correctly reached this conclusion and, therefore, the appeal filed by the revenue has no merits and is dismissed.”
In the light of the above judgment and on examining the facts of the instant case, we find that assessee has furnished all the particulars of income properly in the income tax return and has shown the correct LTCG of ₹ 90,95,120/- as against the old amount calculated at ₹ 27,14,877/-. It is also not the case of the Revenue that claim of deduction u/s. 54F/54B made by the assessee is not as per the provisions of the Act and that any of the conditions provided u/s. 54F/54B of the Act, has not been fulfilled. The only mistake pointed out by the Ld.AO is that incorrect claim of higher deduction u/s. 54F/54B of the Act has been made by ₹ 63,80,243/-. It is 16 ITA.Nos.1837-1839/PUN./2025 (Amol Vasant Deshmukh & Ors.) further an admitted fact that assessee has revised the computation of income during the assessment proceedings itself in spite of the fact that assessee could have easily revised the income tax return. All these facts clearly demonstrate that inadvertent mistake has been committed by the assessee making a wrong claim of deduction u/s. 54F/54B of the Act, however, it is not a case of concealment of particulars of income or furnishing inaccurate particulars and therefore the ratio laid down by the Hon'ble Supreme Court in the case of Reliance Petroproducts (P.) Ltd. (supra) squarely applies on the facts of the instant case. Therefore, we are of the considered view that Ld.CIT(A) erred in confirming the action of the Ld.AO in levying penalty u/s. 271(1)(c) of the Act. Finding of the Ld.CIT(A) is set aside and impugned penalty is deleted. Grounds of appeal
raised by the assessee are allowed.
14. So far as remaining & 1839/PUN/2025 are there, since both the parties have agreed that the issues raised therein verbatim and also the facts are similar and arising out of the same transaction and the basis of levying penalty is the same, we therefore, apply our decision in & 1839/PUN/2025 and set aside the findings of the Ld.CIT(A) and delete the impugned penalties. Grounds of appeals raised therein are allowed as per the terms indicated hereinabove.
17 ITA.Nos.1837-1839/PUN./2025 (Amol Vasant Deshmukh & Ors.) 15. In the result, all the appeals (ITA Nos. 1837, 1838 & 1839/PUN/2025) filed the Assessees are allowed.
Order pronounced in the open Court on 17.12.2025.