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Issues involved: Appeal against penalty order u/s 271(1)(c) of the IT Act for Assessment Year 2001-02 based on discrepancy in date of purchase for indexation of cost of asset.
Summary: The assessee filed the return of income showing income from various sources, including long term capital loss based on the date of purchase of flats as November 1982. However, the Assessing Officer found that the flats were actually purchased in 1992 based on agreements filed with the return. The long term capital gain was computed accordingly, leading to penalty proceedings u/s 271(1)(c) and a penalty of &8377; 2,84,418 being levied. The assessee challenged the penalty before the Commissioner of Income Tax (Appeals) but was unsuccessful. The assessee argued that the discrepancy in the date of purchase was a bona fide mistake and not an attempt to conceal income. The Assessing Officer had the correct date of purchase from the documents filed by the assessee, indicating an inadvertent error. The computation of indexation cost based on payment date instead of purchase year was deemed a difference of opinion rather than intentional misrepresentation. Citing the decision in Commissioner of Income-tax v. Reliance Petroproducts Pvt. Ltd., the assessee contended that the penalty provisions should not apply. The Departmental Representative argued that the incorrect date of indexation led to underreporting of capital gain, emphasizing that intent is not relevant for penalty under section 271(1)(c). Relying on previous orders, the DR maintained that penalty was justified. After considering the contentions and evidence, the Tribunal noted the inadvertent mistake in the date of purchase, supported by documents filed by the assessee. The difference in indexation cost computation was viewed as a genuine disagreement rather than deliberate misstatement. Consequently, the penalty u/s 271(1)(c) was deleted, and the appeal by the assessee was allowed.
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