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2020 (9) TMI 462 - AT - Income TaxPenalty u/s 271 (1) ( C ) - deduction u/s 24 (a) was disallowed - CIT-A deleted the penalty on the above sum for the reason that the rental income is shown by the assessee, the tax deduction at source is allowed to the assessee, the remittance of the sum to the charitable trust is also demonstrated, therefore, the disallowance of the statutory deduction u/s 24 (a) is a simple disallowance and does not involve any element of concealment of income or furnishing of inaccurate particulars - HELD THAT - Though DR could not point out the reason that mere disallowance of the statutory claim when the assessee has been taxed under the head income from house property will result into penalty u/s 271 (1) (C) - for the reason that the penalty notice does not show any of the twin charges, on which the penalty has been levied by the learned assessing officer, as none of them has been struck off, on this ground, we do not find any infirmity in the order of the learned Commissioner of is in deleting the penalty on above disallowance. Disallowance of provisions for gratuity u/s 43B - Commissioner - A deleted the penalty on the above sum holding that the assessee has furnished the details in the income tax return, in the books of account, in the work in progress - HELD THAT - The penalty on this sum was deleted. DR could not show us any reason that penalty on the above sum is leviable. Further, it is also not free from doubt whether such disallowance can be made u/s 43B of the income tax act or not when the assessee itself is not claim the above deduction in the computation of total income. Merely because the disallowance has been confirmed by the higher forum, it cannot automatically result into penalty. Further for the reasons given by us, relying upon the decision of the jurisdictional High Court in case of principal Commissioner of income tax versus Sahara India life insurance Co Ltd 2019 (8) TMI 409 - DELHI HIGH COURT we do not find any infirmity in the order of the learned some is CIT A in deleting the penalty on the above disallowance. No infirmity in the order of the learned CIT A in cancelling the penalty levied u/s 271 (1) (C) of the act. - Decided in favour of assessee.
Issues Involved:
1. Deletion of penalty imposed under Section 271(1)(C) of the Income Tax Act, 1961. 2. Assessment of various additions and disallowances made by the Assessing Officer (AO) and their subsequent status after appeals. Detailed Analysis: 1. Deletion of Penalty Imposed under Section 271(1)(C) of the Income Tax Act, 1961: The appeal was filed by the Assistant Commissioner of Income Tax against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] which deleted the penalty amounting to ?554,621,230 imposed under Section 271(1)(C) of the Income Tax Act, 1961. - Facts and Background: - The assessee, engaged in real estate development, filed a return declaring an income of ?3,406,422,522 for the assessment year 2006-07. - An assessment was made adding ?1,159,967,581, resulting in a total income of ?1356,63,90,103. - The assessee appealed to the CIT(A), who allowed relief on substantial additions but confirmed disallowances amounting to ?1,647,716,066. - The AO initiated penalty proceedings under Section 271(1)(C) and issued a show-cause notice. - Assessee's Arguments: - The assessee argued that substantial additions were deleted by the CIT(A) and further relief was expected from the ITAT. - The assessee claimed no concealment of income or furnishing of inaccurate particulars, attributing the disallowances to a difference of opinion. - It was contended that mere disallowance of expenditure does not automatically result in penalty. - AO's Stand: - The AO contended that the disallowances were the result of detailed investigations and special audits, indicating that the assessee furnished inaccurate particulars to evade taxes. - Consequently, a penalty of ?554,621,230 was levied. - CIT(A)’s Decision: - The CIT(A) reviewed each disallowance and concluded that the assessee did not furnish inaccurate particulars of income, leading to the cancellation of the penalty. 2. Assessment of Various Additions and Disallowances: - Stale Cheque Amount (?3,67,27,062): - Deleted by the coordinate bench. - Revenue Recognition Method (?5,41,75,304): - Deleted by the coordinate bench; pending before the Delhi High Court. - Addition in Respect of Magnolia and Summit Projects (?78,77,80,921): - Set aside for further verification; subsequently deleted by the AO. - Capitalization of Interest Expenditure as per AS-16 (?27,45,00,000): - Deleted by the coordinate bench; pending before the Delhi High Court. - Brokerage Paid for AMEX Building (?64,39,262): - Assessee’s appeal dismissed by the coordinate bench. - Addition on Account of Enhancement of Revenue from Constructed Properties (?42,86,06,986): - Set aside for verification; subsequently deleted by the AO. - Withdrawal of Claim of Deduction u/s 24 of 30% Deduction (?35,09,870): - Not pressed by the assessee; appeal dismissed by the coordinate bench. - Disallowance of Provision of Gratuity u/s 40A(7) (?14,49,123): - Not pressed by the assessee; appeal dismissed by the coordinate bench. - Capitalization of Revenue Expenditure (?84,12,762): - Part addition deleted; ?1,50,000 confirmed. - Addition on Account of Closing Credit Balance of Refundable Security Deposits (?3,12,41,768): - Deleted by the coordinate bench. - Expenses Disallowed Not Related to the Business (?1,47,70,222): - Deleted by the coordinate bench. - Disallowance of Expenditure u/s 40A(3) (?1,02,786): - Set aside for fresh decision. Conclusion: - Penalty Deletion: - The tribunal upheld the CIT(A)’s decision to delete the penalty, noting that the AO’s penalty notice did not specify the exact charge (concealment of income or furnishing inaccurate particulars). - The tribunal relied on jurisdictional High Court decisions, emphasizing that a non-specific penalty notice is bad in law. - Final Decision: - The tribunal dismissed the AO’s appeal, affirming the deletion of the penalty under Section 271(1)(C). Order Pronounced: - The order was pronounced in the open court on 10-09-2020.
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