APURVA CHANDRAKANT SHAH,MUMBAI vs. ACIT 18(1), MUMBAI

The issue raised is that learned CIT(A) erred in sustaining penalty u/s. 271(1)(c) of the Act amounting to Rs. 12,066/-.

In this case the assessee is an individual earning income from salary, capital gain and other sources. In the assessment order Assessing Officer noted that the assessee was asked to submit proof of chapter VIA deduction, the assessee submitted that assessee has inadvertently advanced the claim of a payment of said sum of Rs. 1,45,750/- u/s. 80C in addition to claim u/s. 80C for LIC, PPF and NSC amounting to Rs. 60,951/-. Hence, the Assessing Officer restricted the claim of deduction u/s. 80C of Rs. 60,951/-. On this issue penalty was also levied u/s. 271(1)(c) of the Act. In penalty order it was noted that the assessee has submitted that assessee has wrongly claimed deduction of Rs. 1,00,000/- instead of Rs. 60,951/-. Hence, the Assessing Officer levied penalty of Rs. 12,066/- on the difference of Rs. 36,198/-.

I have heard learned Departmental Representative and perused the record. Upon careful consideration I find that in this case Assessing Officer does not even mention as to what was the claim of assessee for deduction u/s. 80C. He has simply noted the submission of the assessee and thereafter he has made computation. There is not even whisper that the Assessing Officer is making addition of Rs. 36,198/-. In these circumstances, I find that there is complete lack of application of mind in the assessment order levying the penalty u/s. 271(1)(c) of the Act. Hence the penalty in this regard is totally unjustified. Moreover, the conduct of the assessee is not contumacious to warrant levy of penalty u/s. 271(1)(c). In this regard I place reliance upon the order of the Larger Bench of Hon'ble Apex Court in the case of Hindustan Steel Ltd. v. State of Orissa (83 ITR 26) for the proposition that in such circumstances the authority may not levy penalty. Accordingly, I direct that penalty of Rs. 12,066/- in this case is deleted.

In the result, appeal filed by the assessee stands allowed.