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Income Tax Appellate Tribunal, “SMC-II” Bench, Mumbai
This appeal by the assessee is directed against order of learned CIT a dated 25.10.2018 and pertains to assessment year 2010-11.
The issue raised is that learned CIT appeals erred in sustaining the penalty levied under section 271(1)(c) of the I.T. Act amounting to rupees 4,12,242/-.
Brief facts are that the Return of Income was e-filed u/s 139(4) on 30/03/2011 declaring total income of Rs. 35,000/-. The Return of Income was processed u/s 143(1) of the I.T. Acton 19/05/2011. Subsequently, the case was selected for scrutiny. The notice under section 143(2) of the I.T. Act was issued on 28/09/2011 and duly served upon the assessee on 29/09/2011. Thereafter the assessee has filed his revised return of income on 31/03/2012 declaring total income of Rs. 20,95,448/-. Thereafter notice u/s. 142(1) of the I.T. Act dated 2.7.2012 was issued to the assessee for furnishing copy of the return of income, balance sheet, profit and loss account and capital account.
2 Mr. Jignesh D. Shah The assessing officer made the assessment of long-term capital gain by observing as under :- “On perusal of AIR information it is seen that the assessee has purchased immovable property valued at Rs. 1,80,00,000/-. The assessee contended during the assessment proceeding that, he had sold the said property which is reflected as purchased in AIR. The sale is also confirmed by the Sub- registrar vide his letter dated 11/10/2012. The inheritance property was acquired by the assessee jointly with his two sisters Mrs. Varsha Gandhi and Mrs. Neeta Yagnik. The valuation report of this property as on 01/04/1981 was determined by Govt. approved valuer Rajesh Shah Engineers and Consultant Pvt. Ltd. at Rs. 7,30,800/- And the said property was sold by the them on 29/04/2009 at Rs. 1,08,00,000/-.
The Capital Gain works out is as under: Sale Consideration : 1,08,00,000/ - Cost of acquisition as per valuer report Rs. 7f30,800/-
Less Index cost 730800 X 632 /100 = 46,18,656/-
Total L.T.C.G. : Rs. 61,81,344/-
As the property was sold by three co-owners and his share of profit as per assessee's letter dated 17/12/2012 is one-third. Hence, one third of Rs. 61,81,344/-, that is Rs. 20,60,448/- is added to the total income of the assessee.
Since the assessee had not filed his original return of income as per the provision sub-section (1) of the section 139, and subsequently the revised return of income was not valid which is filed after receiving of notice u/s 143(2) of IT Act 1961, the penalty u/s 271(1)(c) of the I.T. Act hereby initiated.”
Furthermore during the course of assessment proceedings u/s. 143(3), the assessee vide Assessing Officer’s letter dated 23/1 1/2012, was asked to explain why (he payment of Rs. 2,80,287/- through Slate Bank of India credit and should not be treated as unexplained expenditure u/s. 69C. The assessee vide letter dated 17/01/2013, submitted that Rs. 65,727/- against the credit card payment was paid out of personal savings. Assessing Officer noted that the total income of the assessee is Rs. 35,000/- only, and the source of personal saving is not explained by the assessee. Hence, the credit card payment of Rs. 65,727/- paid out of personal saving by the assessee was treated as unexplained u/s 143(3).
3 Mr. Jignesh D. Shah
Penalty under section 271(1)(c) was also levied on the above disallowance/addition which was sustained by learned CIT(A). Against this order assessee is in appeal before the ITAT.
I have heard learned Departmental Representative and perused the record. I find that the present case assessing officer has issued notice to the assessee to file the return of income. Upon getting the reply from the assessee and the revised return of income, the assessing officer has made the assessment of long term capital gain without any further additional disallowance. In this view of the matter in my considered opinion assessee cannot be held guilty of concealment or furnishing of inaccurate particulars of income. Further more in my considered opinion the conduct of the assessee is not contumacious and of to warrant levy of penalty. This proposition draws support from honourable Supreme Court decision in the case of Hindustan Steel Vs. State of Orissa Vs. (83 ITR 26).
Furthermore as regards disallowance of credit card expense of rupees 65,727/- I find that it will be presumptuous to hold that a person having the income including the capital gain of the magintude of the assessee as evident above cannot save that much of money. In this view of the matter penalty for concealment or furnishing of inaccurate particulars of income is not sustainable on the same legal proposition as mentioned above. Accordingly I set aside the orders of authorities below and delete the penalty.
In the result assessee's appeal is allowed.
Order pronounced under Rule 34(4) of the ITAT Rules on 24.9.2020.