2023 (8) TMI 33 - AT - Income Tax

Penalty u/s 270A for mis-reporting of income - misrepresentation or suppression of facts - property under consideration was purchased by late husband of the assessee who expired intestate, and entire investment was made by the husband, however, the property was registered in the name of wife assessee - AO disputed the deduction claimed by the assessee for each of the son and daughter - HELD THAT - Assessee s husband purchased a property from his own funds. However, the property was purchased in the name of the assessee who do not have any independent sources of income. The husband died intestate leaving behind the assessee, a son and a daughter. The assessee has sold the said property and declared full sale consideration in the computation of income. Apparently, the assessee has paid a sum of Rs. 5 Lacs each to son and a daughter to settle the respective claim in the said property. The sum so paid was claimed as deduction which was denied by Ld. AO. The assessee accepted the same and paid due taxes thereupon. AO imposed impugned penalty by holding that there was misrepresentation or suppression of facts. It could not be said that the assessee misrepresented or suppressed any material facts, All the computations were disclosed in the return of income and the same was furnished to Ld. AO also during the course of assessment proceedings. The assessee s claim that the amount so paid was to be considered as sum paid towards perfecting the title could not be said to be without any basis. Merely because the claim so made by the assessee was not accepted would not lead to automatic levy of penalty. It is settled law that levy of penalty is not automatic. To fall under, 270A(9)(a), essentially there has to be misrepresentation of suppression of facts. The same, in our considered opinion, was not a case here and it was not a fit case for imposition of penalty. Therefore, we delete the impugned penalty. Assessee appeal stand allowed.

Summary

Issues involved:
The judgment deals with the confirmation of penalty u/s 270A for misreporting of income for Assessment Year (AY) 2016-17.

Summary:
1. The assessee appealed against the penalty imposed under section 270A for misreporting income related to Long Term Capital Gains (LTCG) claimed after deduction for share of daughter and son. The property was purchased by the late husband of the assessee, but registered in her name. The Assessing Officer (AO) disputed the deduction claimed by the assessee for the children, leading to the penalty imposition.

2. The AO initiated penalty proceedings based on the disallowed deduction claimed by the assessee for the son and daughter's share in the property. The AO held that there was misreporting of income, despite the full declaration of LTCG and the claimed deductions. The penalty was imposed under section 270A for misrepresentation or suppression of facts.

3. The Tribunal found that the assessee had disclosed all computations and facts regarding the property sale and deductions. The claim that the amount paid to the children was to perfect the title was considered valid. The Tribunal concluded that there was no misrepresentation or suppression of facts by the assessee, and the penalty was not justified. Therefore, the penalty imposed under section 270A was deleted, and the appeal was allowed.

Separate Judgement:
No separate judgment was delivered by the judges in this case.