ACHALA PUNJA,CHENNAI vs. DEPUTY COMMISSIONER OF INCOME TAX NON CORPORATE CIRCLE 3(1), CHENNAI

ITA 2630/CHNY/2025Status: DisposedITAT Chennai09 March 2026AY 2014-158 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty levied under Section 271(1)(c) is unsustainable and directed its deletion. The reasoning was that the foundation for the penalty, which was the disallowance of exemption under Section 54, no longer survived to a substantial extent. In the quantum appeal (ITA No.1483/Chny/2025), this Tribunal had allowed the assessee's claim for exemption under Section 54 to the extent of Rs.6,01,33,095/-, sustaining a disallowance only to the limited extent of Rs.14,99,190/-. The Tribunal noted that the assessee had disclosed the entire transaction and claimed exemption based on payments made to the builder. The issue was primarily one of quantification of eligible investment for Section 54, which was largely accepted by the Tribunal after examining supporting evidence. The remaining disallowance of Rs.14,99,190/- could not be construed as concealment of particulars, as the assessee had filed relevant details. The disallowance arose from a difference in appreciation of evidence and interpretation of Section 54, not from concealment. Therefore, the penalty was deleted.

What were the facts?

The assessee, Achala Punja, appealed an order dated 18.07.2025 by the CIT(A), NFAC, Delhi, which upheld a penalty of Rs.61,31,504/- levied under Section 271(1)(c) of the Income Tax Act, 1961. This penalty stemmed from an order dated 16.09.2022 by the Income Tax Officer, Non-Corporate Ward 3(3), Chennai, for Assessment Year 2014-15. The assessee had originally declared a total income of Rs.49,02,590/- and claimed an exemption of Rs.6,16,32,285/- under Section 54. The assessment was reopened, and the Assessing Officer (AO) restricted the Section 54 exemption to Rs.3,18,67,700/-, disallowing Rs.2,97,64,585/-. This disallowance formed the basis for initiating penalty proceedings.

What were the issues?

1. Whether the penalty of Rs.61,31,504/- levied under Section 271(1)(c) is sustainable, given that the exemption claimed under Section 54 was restricted by the AO to Rs.3,18,67,700/- when the total payment to the developer was Rs.6,16,32,285/-. Assessee's contentions: - The claim under Section 54 was based on actual payments made to the builder, and its disallowance was based on a single document, ignoring other facts. The assessee fully disclosed all relevant information. - There was no concealment of income or furnishing of inaccurate particulars, as a mere claim, even if not sustainable, does not amount to furnishing inaccurate particulars (relied on CIT v. Reliance Petroproducts Pvt. Ltd.). - Decisions in CIT v. Harshavardhan Chemicals & Minerals Ltd., CIT v. SSP (India) Ltd., and Shri R. Vasudevan v. The Dy. Commissioner of Income Tax support the argument that mere disallowance of a genuinely made claim does not attract penalty. Revenue's contentions: - The penalty is justified as the assessee furnished inaccurate particulars by making an unsubstantiated and inflated claim for exemption under Section 54.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 54,Section 139(1),Section 148,Section 143(2),Section 142(1),Section 194-IA,Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI ABY T VARKEY & SHRI S. R. RAGHUNATHA

For Respondent: Ms. Gouthami Manivasagam, JCIT
Hearing: 11.12.2025Pronounced: 09.03.2026

PER S.R.RAGHUNATHA, AM:

This appeal has been preferred by the Assessee against the order dated 18.07.2025 passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the “Id.CIT(A)”], which arises out of the penalty order dated 16.09.2022 passed u/s.271(1)(c) of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] passed by the Income Tax Officer, Non Co

The order continues below.

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