M. R. SIVAKUMAR,CHENNAI vs. ACIT, NON CORPORATE CIRCLE 7(1), CHENNAI

आयकर अपीलीय अिधकरण “बी” �ायपीठ चे�ई म�। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHENNAI माननीय �ी महावीर िसंह, उपा ! एवं माननीय �ी मनोज कुमार अ&वाल ,लेखा सद) के सम!। BEFORE HON’BLE SHRI MAHAVIR SINGH, VP AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ ITA No.963/Chny/2023 (िनधा*रण वष* / Assessment Year: 2016-17) Shri M.R. Sivakumar ACIT Old No.480 New No.3/480 Non-Corporate Circle-7(1) बनाम 2nd Avenue, 4th Sector, Chennai-34. / Vs. West Anna Nagar Extension, Chennai-600 101. �थायीलेखासं./जीआइआरसं./PAN/GIR No. AZHPS-2774-D (अपीलाथ�/Appellant) : (� थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Shri M. Karunakaran (Advocate)-Ld. AR � थ�कीओरसे/Respondent by : Shri D. Hema Bhupal (JCIT)- Ld. DR सुनवाईकीतारीख/Date of final Hearing : 29-01-2024 घोषणाकीतारीख /Date of Pronouncement : 29-01-2024 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member)

1.Aggrieved by confirmation of certain penalty u/s 271(1)(c) for Rs.12.51 Lacs for Assessment Year (AY) 2016-17, the assessee is in further appeal before us. The impugned order has been passed by learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] on 03-07-2023 in the matter of levy of penalty order passed by Ld. Assessing Officer (AO) u/s 271(1)(c) of the

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Act on 14-02-2022 allegedly for concealment of particulars of income by the assessee. 2. The Registry has noted delay of 10 days in the appeal, the condonation of which has been sought by the Ld.AR on the strength of condonation petition which is accompanied by affidavit of the assessee. The Ld. Sr. DR opposed the condonation of delay. However, considering the period of delay, we condone the delay and admit the appeal for adjudication on merits. Having heard rival submissions, our adjudication would be as under. 3. From the records, it emerges that the assessee was assessed u/s 143(3), wherein the assessee claimed legal charges for Rs.165 Lacs while computing capital gain on sale of certain portion of land. It was submitted by the assessee that there was dispute on land which went up-to Hon’ble Supreme Court for which the assessee had to incur huge legal expenses. The legal payments were made at various levels to lawyers and consultants and it was paid mostly by way of cash. The Ld. AO, after considering the facts of the case, accepted 60% of the legal charges incurred by the assessee but denied deduction of remaining 40% of expenses which worked out to be Rs.41.70 Lacs. The assessee accepted the disallowance. However, Ld. AO initiated penalty proceedings u/s. 271(1)(c) for concealment of income and issued notice u/s.274 r.w.s 271(1)(c) on 27-12-2019. Though the assessee assailed imposition of penalty, Ld.AO alleged that there was deliberate intention on the part of the assessee to conceal particulars of his income. Relying on the decision of the Hon’ble Madras High Court in A.V. Thomas & Co.(India) Ltd. Vs.CIT (1966) 59 ITR 499, Ld. AO held that there was

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deliberate intention on the part of the assessee to conceal his income as he had paid a majority portion of legal charges in cash. Accordingly, Ld.AO levied impugned penalty of Rs.12.51 Lacs which was confirmed by Ld. CIT(A) vide order dated 03-07-2023. Aggrieved, the assessee is in further appeal before us. 4. From the facts, it emerges that disallowance has been made only because of the fact the assessee has made payments in cash. The genuineness of the expenditure has nowhere been doubted by the Ld.AO in the assessment order and there is no finding to that effect. Further, disallowance is only an estimated disallowance. The Ld.AO has accepted that the assessee had incurred legal expenses but denied deduction of 40% of expenses on estimated basis. It could not be said that there was any concealment of income. Therefore, it is not a fit case for levy of penalty. The Hon'ble Supreme Court in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 has held that merely because the assessee had claimed expenditure which was not accepted by the revenue, the same by itself would not attract penalty u/s.271(1)(c) and the penalty is not automatic in nature. We concur with the submissions of Ld. AR that the disallowance of expenses per se on an estimated basis could not lead to a conclusion that the assessee had concealed his particulars of income. All the facts were duly disclosed by the assessee during the course of assessment proceedings. Therefore, by deleting the impugned penalty, we allow the appeal of the assessee.

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Order pronounced in open court on 29th January, 2024.

Sd/- Sd/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) उपा34 / VICE PRESIDENT लेखा सद6 / ACCOUNTANT MEMBER चे8ई Chennai; िदनांक Dated : 29-01-2024 DS आदेशकीDितिलिपअ&ेिषत/Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. � थ�/Respondent 3. आयकरआयु@/CIT 4. िवभागीय�ितिनिध/DR 5. गाडEफाईल/GF