NARESH KUKREJA,MUMBAI vs. ITO 25(3)(1), MUMBAI

This is an appeal filed by the assessee against the order of CIT(A) - 45, Mumbai dated 22/02/2016 for A.Y.2009-10, in the matter of imposition of penalty u/s.271(1)(c) of the IT Act.

At the outset learned AR placed on record the order of the Tribunal in quantum appeal dated 13/09/2017 in wherein quantum was deleted by the Tribunal. It was contended by learned AR that since quantum has been deleted the penalty so imposed has no legs to stand.

We have considered rival contentions and found that penalty u/s. 271(1)(c) was imposed with respect to decline of capital gain so offered Shri Naresh Kukreja by the assessee. We found that in the quantum appeal decided by the Tribunal vide order dated 13/09/201, assessee’s claim of long term capital gain was accepted and AO’s contention for treating the same as short term capital gain was declined.

We found that penalty has been levied by the AO with respect to such treatment of short term capital gain and assessee’s contention has been accepted by the Tribunal at para 6,7 and 8.

Learned DR fairly agreed that quantum addition has been deleted by the Tribunal.

The conclusion of Tribunal is contained at para 8 which reads as under:- 8. In view of the above facts and circumstances, we are of the view from the intend and purpose of the agreement to sell deed 19-07- 2004 and subsequent cancellation dated 03-12-2008 that the parties never acted on the agreement and sale was never completed. Accordingly, we are of the view that the subsequent transfer effected by the assessee vide agreement dated 03-12-2008 for a sum of Rs. 75 lacs is to be considered as long term capital gain. In view of the above, we direct the AO to assess the capital gain as long term capital gain instead of short term capital gain for the entire property which is under dispute. We direct the AO accordingly. The appeal of the assessee is allowed.

As the quantum itself has been deleted, the penalty so imposed has no legs to stand.