APPAYYA KAVEERAPPA KOTTARSHETTY,BELGAUM vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -1, BELAGAVI

Aggrieved by the penalty order, the assessee has filed an appeal before the CIT(A). In the appellate proceedings, the CIT(A) has considered the grounds of appeal, finding of the proceedings, submissions but has confirmed the penalty levied by the A.O and 5. At the time of hearing, the Ld.AR submitted that the CIT(A) has erred in confirming the action of the A.O in levying of penalty overlooking the facts and submissions that there is no under reporting of income and does not satisfy the conditions necessary for imposition of penalty. Further the Ld.AR emphasized that the assessee in response to notice under Section 270A of the Act dated 25-03-2021 has submitted the explanations along with the details on 09-04-2021 through E-Portal of the ITBA and the Assessing Officer has overlooked the submissions . The Ld.AR also submitted that the penalty provisions shall not be attracted as the tax liability due to Long term Capital gains of A.Y.2014-15 in this assessment year was discharged after receiving the refund amount determined by the A.O in the OGE. The Ld.AR mentioned that the assesse has claimed the exemption in the earlier year under a bonafide belief which was denied for non compliance of conditions and there is no under reporting of income. The Ld.AR Appayya Karveerappa Kottarshetty. - 5 - substantiated the submissions with factual paper book and judicial decisions and prayed for allowing the appeal. Per Contra, the Ld.DR relied on the order of the CIT(A).

We have considered the facts that the assesee is a super senior citizen and has paid the taxes on the income determined for A.Y.2017-18. The additional income taxed by the assessing officer relate to claim of long term capital gains pertaining to the A.Y. 2014-15 , which was taxed based on the directions of the appellate authorities as the assessee has not Appayya Karveerappa Kottarshetty. - 7 - fulfilled the conditions of purchase /construction of the house within the specified time limit. We are of the view that penalty cannot be automatic and every addition in the assessment proceedings cannot be gate way for levy of penalty and relay on the decision of Hon’ble Karnataka High Court in the case of the CIT Vs. Manjunatha Cotton and Ginning factory, [2013] 359 ITR 564 (Kar). Similarly the penalty cannot be levied in case of adhoc addition. Whereas the assessee has made a claim under the bona fide belief in the A.Y.2014-15 in respect of capital gains as allowable under the law and due to noncompliance of conditions, the claim was denied and was taxed in A.Y.2017-18 and relied on the ratio of decision of Hon’ble Supreme Court in the case of CIT Vs. Reliance Petroleum Products Ltd.322 ITR 158(SC). The Ld.AR submitted that the case does not fall under clause (b)and (c) of section 270A(10) of the Act. Whereas the long term capital gains could not be offered in the return of income of A.Y.2017-18, since the appeal for A.Y.2014-15 was pending before the CIT(A) at time of filling the return of income.Further there is no intention to under report the income or to avoid the Appayya Karveerappa Kottarshetty. - 8 - payment of taxes and the assessee has paid the entire tax liability, which is not disputed by the revenue. We considering the facts, circumstances, submissions and the ratio of the judicial decisions are of the opinion that the penalty cannot be sustained. Accordingly, we set aside the order of the CIT(A) and direct the assessing officer to delete the penalty. And we allow the grounds of appeal in favour of the assesse.

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

Draft proposed & placed before PS the second member 4. Draft discussed/approved by PS Second Member. 5. Approved Draft comes to the PS Sr.PS/PS 6. Kept for pronouncement on 7. File sent to the Bench Clerk 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order. 11. Dictation Pad is enclosed 1. Other Member… on