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Facts
The assessee, a corporate entity dealing in artworks, declared a loss for AY 2012-13. During assessment, they claimed a capital loss on closure of an investment, which they later withdrew. The AO added this back to income and initiated penalty proceedings under Section 271(1)(c).
Held
The Tribunal observed that the claimed loss was for carry forward and no benefit had been availed by the assessee. As the loss was revenue neutral and no benefit was derived, the Tribunal held that there was no basis for imposing a penalty under Section 271(1)(c).
Key Issues
Whether penalty under Section 271(1)(c) can be imposed when the claimed loss for carry forward did not result in any benefit to the assessee.
Sections Cited
271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
(Assessment Year: 2012-13) M/s. Synergy Art Foundation Ltd. DCIT, Circle 8(2)(1) 3rd Pasta Lane, 8/9, Colaba, Room No. 624, 6th Floor, Mumbai-400 005 Vs. Aayakar Bhawan, M. K. Road, Mumbai-400 020 PAN/GIR No. AABCS 7467 F (Appellant) : (Respondent) Appellant by : Shri J. Prabhakar – CA Respondent by : Shri Arun Kanti Datta – CIT DR Date of Hearing : 17.12.2025 Date of Pronouncement : 05.01.2026 O R D E R
Per Saktijit Dey, Vice President:
This is an appeal by the assessee against order dated 13.08.2025, passed by National Faceless Appeal Centre (‘NFAC’ for short), confirming the penalty imposed of Rs.8,44,632/- u/s. 271(1)(c) of the Income Tax Act, 1961 (‘the Act’ for short) for the assessment year (A.Y.) 2012-13.
Briefly stated the facts are, the assessee is a resident corporate entity engaged in the business of selling artworks and paintings. For the assessment year under dispute, the assessee had filed its return on 30.09.2012, declaring loss of Rs.34,84,139/-.
In course of assessment proceeding, the Assessing Officer (A.O. for short) noticed that the assessee had claimed capital loss of Rs.26,06,892/- on account of closure of an investment named as Yatra Art Funds. When the A.O. called upon the assessee to furnish
M/s. Synergy Art Foundation Ltd. vs. DCIT the details and justify its claim, the assessee in its reply dated 11.03.2015 withdrew the claim. Accordingly, the A.O. added back the sum to the income of the assessee. Based on such addition, the A.O. initiated proceedings for imposition of penalty u/s. 271(1)(c) of the Act. Though the assessee furnished its explanation, objecting to imposition of penalty, however, the A.O. passed an order imposing penalty of Rs.8,44,632/-, alleging concealment of income as well as furnishing of inaccurate particulars of income.
Challenging the imposition of penalty, though, the assessee filed an appeal before the first appellate authority, however, penalty was sustained.
Before us, ld. Counsel appearing for the assessee submitted that the loss claimed by the assessee is revenue neutral as the assessee has only sought for carry forward of loss. Therefore, there is no case of imposition of penalty u/s. 271(1)(c) of the Act.
Per contra, ld. Departmental Representative (ld. DR for short) strongly relied upon the observations of A.O. and first appellate authority.
We have considered rival submissions and perused the materials available on record. On perusal of the computation of income furnished by the assessee along with the return of income, it is observed that in the year under consideration, the assessee had returned loss. The computation of income further reveals that the assessee has claimed carry forward of loss of Rs.26,06,892/-. Essentially, the assessee would have derived benefit had the carry forward of loss been allowed as the said loss would have been available for set off against future income. No such benefit has been availed by the assessee. That being the case, in our view, there cannot be a situation for imposition of