2021 (6) TMI 256 - AT - Income Tax

Penalty u/s 271(1 )(c) - disallowances of claimed expenses in the LTCG - AO has denied certain expenditure, which were claimed to have been incurred in connection with the acquisition of the flat for claiming deduction u/s 54 - HELD THAT - We find that on the facts and circumstances of the cse the claim of the assessee is not ex-facie bogus. In these circumstances, assesee cannot be is said to have been guilty of contumacious conduct or that assessee was guilty of furnishing inaccurate particulars of income or concealment of income. This proposition is duly supported by the decision of Hon ble Supreme Court in the case of CIT vs Reliancepetro Products Pvt.Ltd. 2010 (3) TMI 80 - SUPREME COURT . In this case, it was duly expounded that if certain claim of the assessee is denied the same cannot ipso fact lead to the conclusion that the assessee is guilty of concealment or furnishing of inaccurate particulars of income. Furthermore, Hon ble Supreme Court in the case of Hindustan Steel Ltd. vs State of Orissa 1969 (8) TMI 31 - SUPREME COURT has also expounded that if the conduct of the assesee is not found to be contumacious the authority may not levy penalty. Thus assessee does not deserve to be visited with the rigors of penalty u/s 271(1)(c). Ld.CIT(A) has completely erred in observing that penalty has to be levied merely because certain tax has to be found to be further payable. - Decided in favour of assessee.

Summary

Issues Involved:
Penalty under section 271(1)(c) for furnishing inaccurate particulars of income.

Detailed Analysis:

Issue 1:
The assessing officer disallowed certain expenses claimed by the assessee in connection with the acquisition of a flat for deduction under section 54 of the Income Tax Act.

Analysis:
The assessing officer denied a portion of the claimed expenditure, including expenses related to property transfer and cost of improvement, as the assessee failed to provide adequate evidence. The disallowed amount was based on lack of supporting documentation, leading to the disallowance of claimed expenses.

Issue 2:
Penalty proceedings were initiated based on the disallowed expenses, alleging furnishing of inaccurate particulars of income by the assessee.

Analysis:
The penalty was initiated as the assessing officer believed that inaccurate particulars of income were furnished by the assessee due to the disallowances made during the assessment. The penalty was upheld by the Commissioner of Income Tax (Appeals), who emphasized that the inaccurate particulars were sufficient grounds for levying the penalty.

Issue 3:
The appellate tribunal reviewed the penalty imposition under section 271(1)(c) to determine if the assessee was guilty of concealment or furnishing inaccurate particulars of income.

Analysis:
The tribunal found that the disallowed expenses did not render the assessee's claim as ex-facie bogus. Citing legal precedents, including the decision in CIT vs. Reliance Petro Products Pvt. Ltd., the tribunal concluded that mere denial of a claim does not automatically imply concealment or furnishing of inaccurate particulars of income. The tribunal held that the assessee did not exhibit contumacious conduct, leading to the deletion of the penalty.

Conclusion:
The appellate tribunal set aside the orders of the lower authorities and deleted the penalty imposed under section 271(1)(c) on the assessee. The tribunal's decision was based on the finding that the disallowed expenses did not amount to furnishing inaccurate particulars of income, as the claim was not deemed ex-facie bogus.