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2018 (10) TMI 723 - AT - Income TaxLevy of penalty u/s. 271(1)(c) - AO has assessed surplus from sale of property at Badlapur under the head Income from business as aginst assessee s admission under the head Income from long term capital gain - Held that - once addition on which penalty was imposed u/s 271(1)(c) has been deleted, then there is no reason to levy penalty for furnishing inaccurate particulars of income - No penalty - Decided against the revenue.
Issues:
1. Deletion of penalty u/s 271(1)(c) of the Income Tax Act, 1961. Analysis: The appeal was filed by the revenue against the order of the CIT(A)-33, Mumbai pertaining to AY 2010-11. The case involved the treatment of surplus from the sale of property at Badlapur under different heads of income. Initially, the AO assessed the surplus under 'Income from business' instead of 'Income from long term capital gain' as claimed by the assessee. This resulted in the initiation of penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961, leading to a penalty of ?84,49,044 being levied. The CIT(A) upheld the AO's action, but the ITAT, Mumbai Bench "G" in a separate order held that the surplus should be assessed under 'Income from long term capital gain' as claimed by the assessee. The assessee appealed against the penalty order before the CIT(A), presenting the ITAT's decision regarding the treatment of the surplus. The CIT(A), after reviewing the submissions and the ITAT's order, concluded that since the addition forming the basis of the penalty had been deleted, there was no ground for the penalty to stand. The CIT(A) emphasized the importance of the true nature of the transaction in determining taxability, disregarding mere accounting entries. The ITAT, in its order, directed the AO to treat the gains from the sale of Badlapur Land as LTCG instead of business income. During the hearing, the revenue did not appear, and the appeal was disposed of based on the available material. The ITAT upheld the CIT(A)'s decision to delete the penalty, as the addition on which the penalty was based had been removed. The ITAT found no error in the CIT(A)'s order and dismissed the appeal filed by the revenue. Consequently, the appeal by the revenue was dismissed on 5th October 2018.
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