SHRI MUKESHBHAI KALIDAS PATEL,,AHMEDABAD vs. THE ASST.DIT.,(INTL.TAXN.),, AHMEDABAD

This appeal challenges learned CIT(A)’s order dated 03.02.2014 upholding penalty of Rs.1,37,996/-, under Section 271(1)(c) of the Income-tax Act, 1961, for the assessment year 2007-08.

The related quantum disallowance of Rs.5,70,000/- was in respect of reimbursement of expenses for levelling of land, construction of compound wall and related expenses in connection with sale of land. The disallowance was made for want of satisfactory supporting evidences, and has now attained finality. There is another related small addition of Rs.67,919/- in respect of interest credited in bank accounts. The Assessing Officer has imposed the impugned penalty by observing that had the case was not been picked up for scrutiny assessment, the income would have remained undetected. The assessee carried the matter in appeal before the CIT(A) but without any success. The assessee is now in second appeal before us.

We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position.

We find that the assessee is a non-resident and the present assessment is basically on account of sale of land in the relevant previous year. The expenses are also stated to have been incurred over a period of time and are claimed as cost of improvement. The fact of improvement however is stated in the sale deed and is not even disputed. The small interest credits to assessee’s account having been inadvertently left out cannot be straightaway rejected either. In view of these discussions, in our considered view, it was not a fit case for imposition of concealment penalty under Section 271(1)(c) of the Act. We, therefore, delete the same.

In the result, the appeal is allowed. Order pronounced in the open Court on this 27th of October, 2017.