SH. YASHPAL,NEW DELHI vs. ITO, NEW DELHI

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ITA 3053/DEL/2014Status: DisposedITAT Delhi21 June 2016AY 2009-104 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that depositing the capital gains in an ordinary savings account, while not fulfilling the technical requirement for exemption, was a bona fide mistake. It did not indicate concealment of income or furnishing of wrong particulars.

What were the facts?

The assessee sold two house properties and claimed exemption under Section 54 for the long-term capital gains. The AO disallowed the exemption because the capital gains were deposited in an ordinary savings account instead of a designated one.

What were the issues?

Whether a bona fide mistake in depositing capital gains in an ordinary savings account instead of a designated account can lead to the imposition of penalty under Section 271(1)(c) for concealment of income.

Which sections of the Income-tax Act were involved?

Section 54,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES : SMC-II : NEW DELHI

Before: SHRI R.S. SYAL

For Appellant: Shri Amandeep Singh Siyar, Advocate
For Respondent: Shri Deepak Garg, Sr. DR
Hearing: 20.06.2016Pronounced: 21.06.2016

ORDER This appeal filed by the assessee is directed against the order passed by the CIT(A) on 10.01.2014 upholding the penalty of Rs.4,30,000/- imposed by the AO u/s 271(1)(c) of the Income-tax Act, 1961 in relation to the assessment year 2009-10.

2.

Briefly stated, the facts of the case are that the assessee sold two house properties for consideration of Rs.17.95 lac and Rs.8.97 lac and odd during the year relevant to the assessment year under consideration.

In the calculation of capital gains, the assessee deducted indexed cost of acquisition of both the properties and declared long-term capital gain at Rs.17,72,953/-. This resultant amount was claimed as exempt u/s 54 of the Act. On being called upon to substantiate the claim u/s 54, the assessee submitted that the amount was deposited in bank account for purchase of another residential house property. The AO observed that the amount of long-term capital gain was deposited in an ordinary saving bank account and not the designated bank entitling the assessee to exemption and, hence, the benefit u/s 54 was not available. He computed long-term capital gain at Rs.17.72 lac. Thereafter, penalty was imposed u/s 271(1)(c) of the Act on this computation of capital gain, which came to be confirmed in the first appeal.

3.

I have heard the rival submissions and perused the relevant material available on record. There is no dispute on the fact that the penalty has been imposed in respect of computation of capital gain amounting to Rs.17,72,953/-. This computation of capital gain resulted due to the deposit of the amount of long-term capital gain in an ordinary saving bank account instead of the designated saving bank account entailing exemption u/s 54 of the Act. It is not disputed that the assessee did deposit this amount in his bank account. Though the substantial requirement for claiming exemption u/s 54 is to deposit the amount in a designated bank account, but in view of the fact that the assessee did deposit the amount in an ordinary saving bank account within the stipulated time, goes to show that it was a mere bona fide mistake on the part of the assessee in not correctly appreciating the implications of his action. It may be a good reason to make addition, but no concealment of income or furnishing of wrong particulars can be inferred from this inadvertent mistake, which, in my considered opinion, cannot lead to imposition or confirmation of the penalty. I, therefore, order for the deletion of penalty.

4.

In the result, the appeal is allowed.

The order pronounced in the open court on 21.06.2016.

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