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Facts
The assessee filed a return for AY 2021-22 declaring income of Rs.7,45,320/-. The AO made additions for Short Term Capital Gain (STCG) and unexplained investment. The AO initiated penalty proceedings u/s 270A of the Act. The CIT(A) confirmed the penalty.
Held
The Tribunal noted that the quantum appeal against the assessment order was pending. It also noted that the AO accepted the claim that the capital gain was Long Term Capital Gain (LTCG) in the remand report. Therefore, the Tribunal set aside the penalty order and restored the matter to the AO for fresh decision.
Key Issues
Whether the penalty imposed under section 270A was justified when the quantum appeal was pending and the nature of capital gain was accepted as LTCG in the remand report.
Sections Cited
270A, 143(3), 144B, 54, 272A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against the order dated 30.08.2024 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)”] whereby he confirmed the penalty of Rs.31,07,110/- levied by the Ld. Assessing Officer (“AO”) u/s 270A of the Income Tax Act, 1961 (the “Act”) pertaining to Assessment Year (“AY”) 2021-22.
2. Briefly stated, the facts are that the assessee an individual. For AY 2021-22, he filed his return of income on 30.12.2021 declaring total income at Rs.7,45,320/-. The assessee’s case was selected for complete scrutiny for the reason Capital Gains/Deduction Claimed. The Ld. AO completed the assessment u/s 143(3) r.w.s. 144B of the Act vide his order dated 09.12.2022 thereby making the following additions : (i) Short Term Capital Gain (STCG) of Rs.1,59,77,75/- and (ii) unexplained investment of Rs.3,05,00,000/-. Simultaneously, he initiated the penalty proceedings u/s 270A of the Act and accordingly, issued show cause notice(s) to the assessee. The assessee filed its part submissions in response thereto. The submissions of the assessee are reproduced below : “1. Capital Gain arising out of sale of land is only Long Term Capital Gain in the relevant year. The said Land is acquired through by registered Power of Attomey on 4th Feb 2015. The Amount of Sale Proceeds with ICICI Bank A/c and Out of Which small period of Fixed Deposits made out of these Sale Proceeds only and not any other income and which reflected my bank account. After a certain period, Fixed Deposits were broken and funds were credited in my same bank account, which were use to Purchase of Agriculture Land.
As discussed earlier amount received only 4 crores as sale of land and out of which amount of Rs 2,50,00,000 as purchase of land Rs. 1280000 as stamp duty and after purchase of land demarcation and common road issue raised the purchase of land advocate appointed for the whole transaction registration and other legal issues for visit time to time and resolved the matters as earlier hence we paid Rs. 3,00,000/- to advocate fotal amount now work out to Rs.2,65,80,000/-. After that paid amount of Rs.86,68,858/- for Cost of Improvement in such land."
2.1 The above submissions of the assessee were found not acceptable by the Ld. AO. He concluded that the assessee has underreported his income to the tune of Rs.1,59,77,750/- by claiming wrong deduction on account of indexed cost of acquisition and excess deduction u/s 54 of the Act in respect of the capital gain earned by the assessee from sale of immovable property which were not substantiated by any evidence and therefore the assessee is liable for penalty of Rs.31,07,110/- u/s 270A of the Act which is equal to 50% of the amount of tax payable on underreported income. Accordingly, the Ld. AO vide his order dated 23.06.2023 imposed the impugned penalty of Rs.31,07,110/- u/s 270A of the Act on the assessee which has been confirmed the Ld. CIT(A).
Aggrieved, the assessee is in appeal before the Tribunal raising the following grounds of appeal :
1. The learned assessing officer has erred in fact and in law in passing order u/s 272A of the Income Tax Act, 1961 without giving any opportunity of being heard to the appellant. The learned assessing officer has erred in law and in fact levied penalty under section 272A(1) of the Income Tax Act 1961 of Rs.31,07,110/- on underreporting of short term capital gain income of Rs 1,59,77,750/-.
2. The appellant craves to leave to add or alter, amend, modify the grounds of appeal.”
The Ld. AR submitted that during the appellate proceedings, the Ld. CIT(A) had called for a remand report (placed at pages 1 to 15 of the paper book-I) from the Ld. AO wherein the Ld. AO has accepted the claim of the assessee that the nature of the capital gain in dispute is a Long Term Capital Gain (LTCG) which is taxable @ 20% as against his earlier finding in the order passed u/s 143(3) of the Act to be a Short Term Capital Gain (STCG) chargeable to tax @ 30%. The Ld. AR submitted the following chart demonstrating his above submission :
4.1 The Ld. AR also brought to our attention that the quantum appeal of the assessee against the assessment order passed u/s 143(3) of the Act is still pending before the Ld. CIT(A) for adjudication. However, the Ld. CIT(A) proceeded to pass the impugned penalty order even before deciding the quantum appeal of the assessee pending before him till date. In view of the above submission, the Ld. AR therefore prayed that the matter may be restored to the file of the Ld. AO to decide the issue afresh on merits after giving due opportunity of being heard to the assessee.
The Ld. DR had no objection to the above request of the Ld. AR.
We have heard the Ld. Representatives of the parties and perused the material on record. Considering the totality of the facts and in the circumstances of the case enumerated above and in the absence of any objection being raised by the Ld. DR, we deem it fit, in the interest of justice to set aside the impugned penalty order of the Ld. CIT(A) and restore the matter back to the file of the Ld. AO for decision afresh as per the facts and law after allowing a reasonable opportunity of being heard to the assessee who shall provide the requisite details in terms of submitting the relevant documents/evidence as may be required/called upon. We order accordingly.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 21st April, 2025.