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Facts
The assessee's appeal was against a penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. The penalty was based on quantum additions related to short-term capital gains, unexplained investment, and other sources. The assessee did not appear for the hearing, and the case proceeded ex-parte.
Held
The Tribunal held that the first two quantum additions, which were the difference between sale/purchase consideration and stamp valuation, were wrongly treated as inaccurate particulars. The Tribunal also noted that for the third quantum addition of unexplained investment, the assessee did not provide a substantive explanation. However, it was held that additions in assessment proceedings do not automatically attract penalty.
Key Issues
Whether the penalty under section 271(1)(c) was rightly imposed based on the additions made in the assessment proceedings, particularly concerning capital gains, unexplained investment, and other sources.
Sections Cited
271(1)(c), 50C, 56(2)(vii), 69C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Mumbai “D” Bench, Mumbai.
Before: Shri Satbeer Singh Godara (JM) & Shri Girish Agrawal (AM)
This assessee’s appeal for A.Y. 2014-15, arises against the National Faceless Appeal Centre, “NFAC” Delhi’s Din and order No. ITBA/NFAC/S/250/2023-24/1057075127(1) dated 16.10.2023 in proceedings under section 271(1)(c) of the Income Tax Act 1961; in short “the Act”. Case called twice. None appears at assessee’s behest. We accordingly proceeds ex-parte against him.
It emerges during the course of hearing that with the able assistance coming from the Revenue side that both the learned lower authorities have imposed section 271(1)(c) penalty amounting to Rs. 986,941 pertaining to assessee’s corresponding ‘quantum’ additions of short term capital gains, section 56(2)(vii) and section 69C unexplained investment involving Rs. 21,72,253/-, Rs. 11,28,405, Rs. 460,000/- respectively, made in the course
2 Mohd. Imtiyaz Fakir Mohd Shaikh of assessment dated 26.12.2016. The said assessment appears to have finality since there is no material contrary to this effect in the case file.
Mrs. Nair vehemently supported the impugned penalty and submitted that both the learned lower authorities have rightly treated the above three quantum addition(s) as an instance of furnishing of inaccurate particulars of income under section 271(1)(c) of the Act.
We notice in this factual backdrop that the formal twin quantum additions herein additions represent the difference between actual sale/purchase considerations vis-à-vis stamp valuation thereof, wherein latter amount(s) stand adopted for computing capital gains and income from ‘other’ sources; under section 50C and section 56(2)(vii) of the Act, respectively. There is no material in the case file which could suggest that the assessee had either received or paid anything over and above the former actual sale/purchase price stated in the relevant agreements. It is thus a case wherein learned lower authorities have wrongly treated the stamp valuation rate of the correspondence between sale and purchase transaction as inaccurate particulars submitted by the assessee.
The factual position is hardly any different qua the third quantum addition of unexplained investment wherein the assessee could not substantive his explanation proving sources thereof in the assessment proceedings. It is in these peculiar facts that we deem it appropriate to quote CIT Vs. Reliance Petroproducts P. Ltd. (2010)322 ITR 158 (SC) that quantum and penalty are parallel proceedings wherein each and every disallowance/addition made in course of the former does not ipso facto attract the latter provision, to delete the impugned penalty in very terms. Ordered accordingly.
3 Mohd. Imtiyaz Fakir Mohd Shaikh
This assessee’s appeal is allowed.
Order pronounced in the open court on 10th July, 2024.