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Facts
The assessee filed a return of income on 25/04/2008 disclosing sale proceeds of a house. The AO levied a penalty under Section 271(1)(c) on the entire sale consideration, which was upheld by the CIT(A). The assessee had purchased two new houses, and the CIT(A) restricted the deduction under Section 54F, with further relief granted upon rectification.
Held
The Tribunal held that the penalty was levied arbitrarily and unstainably. The penalty should have been calculated on the final assessed income after considering reliefs granted by the CIT(A), not the gross sale consideration. The authorities below were found to be perverse in their orders.
Key Issues
Whether the penalty under Section 271(1)(c) was rightly sustained based on the entire sale consideration despite subsequent reliefs granted by the CIT(A), and whether the authorities below acted perversely.
Sections Cited
250, 271(1)(c), 54F, 154
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCH “SMC”, JAIPUR
(A. Y. 2008-09) Malti Agarwal, B 13B Girdhar Colony, Murlipura Thana Road, Jaipur 302 039 PAN No.: AAMPA 1590K ...... Appellant Vs. ITO, Ward 4(3), Jaipur …...Respondent Appellant by : Mr. Dheeraj Borad, CA Respondent by : Mr. Gautam Singh Choudhary, JCIT Ld. DR Date of hearing : 14/08/2025 Date of pronouncement : 14/08/2025 O R D E R PER GAGAN GOYAL, A.M:
This appeal by assessee is directed against the order of NFAC, Delhi dated 05.03.2025 passed u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’). The assessee has raised the following grounds of appeal: - Malti Agarwal
1. That on the facts and in law, the sustenance by the Ld. CIT (A) of penalty of Rs. 1,82,310/- levied under section 271(1)(c) of the IT Act by the AO is most arbitrary, unjust, and untenable in law and in the alternative it is excessive.
2. That on the facts and in law the Ld. CIT (A) failed to issue any notice of hearing to the appellant assessee before passing the impugned appellate order.
3. That on the facts and in law the Ld. CIT (A) failed to provide opportunity of being heard to the appellant as per the provisions of section 250(1) of the IT Act before passing the impugned order and in the absence of providing of opportunity of being heard to the appellant, the impugned order is void and not maintainable in law.
4. That before sustaining the order of penalty passed by the AO levying penalty of Rs. 1,82,310/- against the appellant, the Ld. CIT (A) did not make any inquiry in compliance to section 250(4) of the IT Act and accordingly the impugned order passed by him is unjustified and liable to be cancelled.
5. That before levying/sustaining the penalty, both the lower authorities, namely, the AO as well as the Ld. CIT (A) failed to take into consideration quantum reliefs granted by the Commissioners of Income Tax (Appeals) in both the orders passed by them, one under section 250 dated 27/03/2018 and the other being rectification order under section 154 dated 09/03/2020 respectively.
That the appellant craves leave to add, alter, amend and/0R substitute the ground of appeal as and when necessary.
2. The brief facts of the case are that in this case the penalty has been levied by the AO on the basis that the assessee did not file return of income (whereas in fact return was duly filed declaring sale consideration of Rs. 21,00,000/-) and consequently taking entire sale consideration of Rs. 21,00,000/- as the amount of total income from long term capital gain, and taking this amount as unexplained income he levied penalty of Rs. 1,82,310/- under section 271(1)(c) of the Act against the assessee and in first appeal the Id. CIT(A) upheld the levy of penalty.
Malti Agarwal 3. The correct facts of this case are that the assessee filed return of income on 25/04/2008 disclosing sale proceeds of the house at Rs. 21,00,000/-. It was also explained by the assessee that this property was purchased by the appellant in the year 1982-83 and certain expenses were subsequently incurred for legal charges, cost of improvement etc. The assessee had also purchased two new house properties for total amount of Rs. 27, 31,935/- for claiming deduction under section 54F of the IT Act. However, in the quantum appeal the CIT(A) restricted the deduction under section 54F of the IT Act to the amount of Rs. 12,15,000/- and allowed substantial relief to the assessee vide its order under section 250 dated 27/03/2018. That further on the application under section 154 filed by the assessee, the CIT(A) vide its order under section 154 of the IT Act dated 09/03/2020 allowed further relief of Rs. 1,00,755/- in relation to the incidental charges incurred on cost of stamps, typing, legal fees, registration charges etc.
That in view of above mentioned reliefs granted by the Ld. CIT (A) in first appeal and later on under section 154 of the Act, the income from long term capital gain was reduced to a very nominal amount of Rs. 1, 66,612/- and such total income of Rs. 1, 66,612/- on which total tax payable comes to Rs. 3,937/- should have been the basis of penalty and not total income of Rs. 21, 00,000/-. In support of it a copy of income tax computation form issued by the ITO Ward 4(1), Jaipur showing total assessed income at Rs. 1, 66,612/- after appeal effect forms part of the paper book. But the AO while passing the order under section 271(1)(c) of the Act levied penalty of Rs. 1,82,310/- by treating the entire sale consideration of Rs. 21,00,000/- as concealed income. It is observed that this is gross negligence on the part of the