2022 (2) TMI 875 - AT - Income Tax

Penalty u/s 271(1)(c) - LTCG computation - delay in filing of appeal before CIT-A - adopting the Stamp Duty Valuation as sale consideration by invoking the provisions of Section 50C and recomputed the Long Term Capital Gain - HELD THAT - As from the copy of Form No.35 filed by the assessee before the learned CIT(A) that the relevant notice of demand for penalty imposed under Section 271(1)(c) of the Act was served on the assessee on 21.03.2016. As per the specific provision contained in sub-section (2)(b) of Section 249 of the Act, the assessee was required to file the appeal before the learned CIT(A) against the order of penalty under Section 271(1)(c) of the Act within 30 days from the date of service of the notice of demand relating to the penalty. The impugned order of the learned CIT(A) that the appeal was filed by the assessee only on 20.06.2016, i.e. beyond the period prescribed in sub-section 2 of Section 249 - As rightly contended by the learned Departmental Representative, the learned CIT(A), however, failed to take note of this delay and proceeded to dispose of the appeal of the assessee vide his impugned order on merit without passing any order on the issue of condonation of delay. We, therefore, find merit in Ground No.1 of the Revenue s appeal and remit the matter back to the learned CIT(A) for considering the issue of delay on the part of the assessee in filing the appeal and passing the order on this preliminary issue, in accordance with law, after giving the assessee an opportunity of being heard.

Summary

Issues:
1. Penalty cancellation under Section 271(1)(c) of the Income-tax Act, 1961.

Analysis:
The appeal was filed by the Revenue against the cancellation of a penalty of ?56,56,420 imposed by the Assessing Officer under Section 271(1)(c) of the Income-tax Act, 1961. The assessee, an individual deriving income from investments, had filed a return declaring total income of ?18,04,070, including Long Term Capital Gain of ?17,14,940 from the sale of immovable properties. The Assessing Officer, disagreeing with the sale consideration declared by the assessee, invoked Section 50C of the Act and recomputed the Long Term Capital Gain, resulting in an addition of ?1,83,05,579 to the total income. Subsequently, a penalty was imposed under Section 271(1)(c) as the explanation offered by the assessee was deemed unacceptable. The Commissioner of Income-tax (Appeals) canceled the penalty, stating that the assessee's acceptance of the valuation did not absolve her from culpability, but the Revenue failed to establish concealment or furnishing of inaccurate particulars of income.

The Commissioner's order was challenged by the Revenue before the Tribunal, raising concerns about the delay in filing the appeal and the deletion of the penalty. The Tribunal noted the delay issue and remitted it back to the Commissioner for consideration. As the delay issue was remitted, the Tribunal did not delve into the merits of the penalty deletion. The Tribunal partially allowed the Revenue's appeal for statistical purposes, without adjudicating on the penalty levy under Section 271(1)(c) on its merits.

In conclusion, the Tribunal's decision focused on procedural aspects, remitting the matter back to the Commissioner to address the delay in filing the appeal. The Tribunal refrained from discussing the substantive issues related to the penalty cancellation, leaving those matters for future consideration once the delay issue was resolved.