2013 (7) TMI 410 - AT - Income Tax

Penalty u/s. 271(1)(c) - computation of Long term capital loss at Rs.1,62,52,952/- as against 3,36,50,113/- claimed by the assessee - CIT(A) deleted the levy holding that the assessee had rightly claimed LTCL of Rs.3,36,50,113/- holding that Explanation (iii) to section 48 has to be read to mean that the indexed cost of acquisition has to be computed by taking into account the period for which the asset was held by the previous owner - Held that - Without going into the controversy as to whether the disallowance was rightly or wrongly made by the AO in the assessment order, we are in agreement with the observation of the CIT(A) to the extent that where two views are possible and the assessee has taken one of the possible views but the AO has not agreed to that view that itself is not a ground for levy of penalty. The view taken by the assessee in this case is one of the possible views and the issue was also debatable hence, under such circumstances it cannot be said that the assessee had furnished inaccurate particulars of income to conceal her income. In favour of assessee.

Summary

Issues:
1. Penalty under section 271(1)(c) of the Income Tax Act for inaccurate particulars of income.

Analysis:
The appeal was filed by the revenue against the CIT(A)'s order deleting the penalty of Rs.39,03,923/- levied on the assessee under section 271(1)(c) of the Income Tax Act for the assessment year 2007-08. The assessee, an individual, sold a residential flat and claimed a long-term capital loss. The AO disagreed with the claim, leading to penalty proceedings against the assessee. The AO held that the assessee filed inaccurate particulars of income by wrongly computing the long-term capital loss. The CIT(A) observed that the assessee rightly claimed the loss based on the indexed cost of acquisition and cited various judgments supporting the assessee's claim. The CIT(A) emphasized that penalty cannot be levied solely because the AO disagrees with the assessee's view. He noted that the view adopted by the assessee was one of the possible views and not a ground for penalty.

The Tribunal agreed with the CIT(A) that where two views are possible, and the assessee has taken one view, it does not warrant a penalty if the AO disagrees. The Tribunal found the CIT(A)'s reasoning sound and supported by legal judgments. The appeal filed by the revenue was dismissed, upholding the CIT(A)'s decision to delete the penalty. The Tribunal concluded that the issue was debatable, and the assessee did not furnish inaccurate particulars of income to conceal her income. The order was pronounced on 8th May 2013.