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2021 (3) TMI 949 - AT - Income TaxPenalty levied u/s 271(1)(c) - Defective notice - non specification of charge - loss on account of forfeiture of advance for land disallowed on the ground that the loss was in the nature of capital loss and not an item of revenue expenditure - HELD THAT - The notice has not given the specific limb under which penalty has been imposed. Thus, the decision of the Hon'ble Supreme Court in case of SSA s Emerald 2016 (8) TMI 1145 - SC ORDER is applicable in assessee s case. Further, on merit also the contention of the assessee that the claims of the assessee were genuine and there are two opinions about the allowability of those claims found some force. The decision of the Hon'ble Supreme Court in Price Waterhouse Coopers Pvt. Ltd 2012 (9) TMI 775 - SUPREME COURT is as the bonafide mistake is always allowable mistake and the absence of due care, in a case such as the present, does not mean that the assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income. Thus, invoking penalty u/s 271(1)(c) of the Act is not just and proper. Therefore, the assessee succeeds in his legal plea as well as on merit and penalty does not sustain. Appeal of the assessee is allowed.
Issues Involved:
- Penalty under section 271(1)(c) of the Income Tax Act for claiming deduction of ?10,00,000 in the Profit & Loss Account. - Disallowance of wealth-tax liability claimed by the assessee. - Imposition of penalty by the Assessing Officer. - Appeal filed by the assessee before the CIT(A) against the penalty order. - Legal arguments presented by the Ld. AR in defense of the assessee. - Case laws relied upon by the Ld. DR. - Decision of the ITAT Delhi on the appeal. Analysis: 1. Penalty under Section 271(1)(c): The assessee claimed a deduction of ?10,00,000 in the Profit & Loss Account, which was disallowed by the Assessing Officer on the grounds of being a capital loss. The Assessing Officer imposed a penalty of ?4,00,000 under section 271(1)(c) for allegedly furnishing inaccurate particulars of income. The CIT(A) upheld the penalty. The Ld. AR argued that the claim was made in good faith and supported by relevant documents. The Ld. AR referred to judicial precedents to support the contention that the penalty was unjustified. The ITAT Delhi held that the penalty was not justified as the claim was genuine and there were differing opinions on its allowability. The decision emphasized that a bonafide mistake does not amount to concealing income or furnishing inaccurate particulars. 2. Disallowance of Wealth-Tax Liability: The Assessing Officer disallowed the wealth-tax liability claimed by the assessee, which was added to the total income. The Ld. AR argued that this disallowance was due to a bonafide error and cited legal precedents to support the claim that inadvertent mistakes do not warrant penalties. The ITAT Delhi agreed with the Ld. AR's arguments, stating that the disallowance was a genuine mistake and not an attempt to conceal income. 3. Imposition of Penalty: The Assessing Officer imposed a penalty without specifying the exact charge in the notice dated 28/06/2012. The ITAT Delhi noted that the absence of a specific limb under which the penalty was imposed rendered it unjust. Citing the Hon'ble Supreme Court's decision, the ITAT Delhi ruled that the penalty could not be sustained due to the lack of clarity in the penalty notice. 4. Legal Arguments and Case Laws: The Ld. AR presented legal arguments based on judicial precedents to challenge the penalty imposition. References were made to various judgments highlighting that a bonafide mistake does not amount to intentional concealment of income. The Ld. DR relied on specific case laws to support the penalty imposition, but the ITAT Delhi found these references inapplicable to the present case. 5. Decision of the ITAT Delhi: After considering the arguments presented by both parties and examining the record, the ITAT Delhi held in favor of the assessee. The ITAT Delhi found merit in the assessee's contention that the claims were genuine and that there were differing opinions on their allowability. The decision emphasized that a bonafide mistake does not constitute intentional concealment of income. Consequently, the appeal of the assessee was allowed, and the penalty was not sustained. This detailed analysis covers the issues involved in the legal judgment delivered by the ITAT Delhi regarding the penalty imposition under section 271(1)(c) of the Income Tax Act for the claimed deduction and the disallowance of wealth-tax liability.
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