SURESHKUMAR PRABHULAL THAKKAR,BANASKANTHA vs. THE DY.CIT, CIRCLE-GANDHINAGAR, GANDHINAGAR

This is an appeal filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi (in short “the CIT(A)”) dated 28.04.2025 for the Assessment Year (A.Y.) 2016-17 in the proceedings under Section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

The brief facts of the case are that the assessee had filed his return of income for the A.Y. 2016-17 declaring total income of Rs.34,40,070/-. The assessee had disclosed Long Term Capital Gain (LTCG) of (Assessment Year: 2016-17) Sureshkumar Prabhulal Thakkar vs. DCIT Page 2 of 5 Rs.35,59,770/- on sale of lands and plots. In the course of assessment, it was found that the assessee had claimed deduction for transfer expense of Rs.3,25,000/- in respect of sale of land, of which the assessee was only 1/7th owner. The Assessing Officer found that no such expense was claimed by another co-owners on account of cost of improvement or for transfer expense. The assessee had explained that the cost of improvement was for levelling and earth work etc. and the transfer expense was for commission paid to the broker. The Assessing Officer had rejected the explanation of the assessee and also disregarded the evidences brought by the assessee in support of the expenses for the reason that no such expense was claimed by the other co-owners. Accordingly, total addition of Rs.7,96,800/- was made while completing the assessment under Section 143(3) of the Act on 26.12.2018. The Assessing Officer had also initiated penalty proceedings under Section 271(1)(c) of the Act for furnishing inaccurate particulars of income. Thereafter, a separate penalty order under Section 271(1)(c) of the Act was passed on 19.01.2022 whereby penalty of Rs.1,38,391/- was imposed under Section 271(1)(c) of the Act.

Aggrieved with the penalty order of the Assessing Officer, the assessee filed an appeal before the Fist Appellate Authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed.

Now the assessee is in second appeal before us. The following grounds have been taken in this appeal: - (Assessment Year: 2016-17) Sureshkumar Prabhulal Thakkar vs. DCIT Page 3 of 5

Shri Sanjay R. Shah, Ld. AR of the assessee submitted that the Assessing Officer was not correct in imposing the penalty under Section 271(1)(c) of the Act as no material was brought on record that the assessee had furnished inaccurate particulars of income. He submitted (Assessment Year: 2016-17) Sureshkumar Prabhulal Thakkar vs. DCIT Page 4 of 5 that merely because the assessee did not file appeal in the quantum addition, the penalty under Section 271(1)(c) of the Act could not have been mechanically levied.

Per contra, Ms. Urvashi Mandhan, Ld. Sr. DR, submitted that the assessee did not dispute the addition of Rs.7,96,800/- in respect of transfer expense and cost of improvement, which was reduced from LTCG. This substantiated that the particulars of income as filed by the assessee were not correct. Therefore, the Assessing Officer had rightly imposed the penalty under Section 271(1)(c) of the Act.

We have considered the rival submissions. The Assessing Officer had rejected the claim of the assessee merely for the reason that no such expense in respect of improvement and transfer expense was claimed by the other co-owners. The assessee had furnished vouchers for cost of improvement undertaken by him and also furnished the name of person to whom commission was paid. The Assessing Officer did not make any enquiry in this regard and no evidence was brought on record to establish that the material or evidence as brought on record by the assessee was incorrect. In the absence of any evidence on record to controvert the materials brought on record by the assessee in support of the deductions as claimed, it cannot be held that the assessee had furnished any inaccurate particulars of income. The Assessing Officer had made the disallowance on the basis of circumstantial evidence only considering the fact that no such expense was claimed by other co-owners. However, no material was brought on record by the Assessing Officer to establish that the particulars of income/expense as claimed by the assessee was inaccurate. Under the circumstances, we do not find any justification for (Assessment Year: 2016-17) Sureshkumar Prabhulal Thakkar vs. DCIT Page 5 of 5 imposing penalty under Section 271(1)(c) of the Act for furnishing inaccurate particulars of income by the assessee. Therefore, the penalty under Section 271(1)(c) of the Act as imposed by the Assessing Officer is cancelled.

In the result, the appeal of the assessee is allowed.