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2021 (5) TMI 758 - AT - Income Tax


Issues:
Confirmation of penalty under section 271(1)(c) for Assessment Year 2014-15.

Analysis:
In this case, the assessee appealed against the penalty of ?8,35,565 imposed under section 271(1)(c) for the Assessment Year 2014-15. The penalty was confirmed by the Commissioner of Income-Tax (Appeals) and was challenged before the Appellate Tribunal. The assessee argued against the penalty on legal grounds and merits. The counsel for the assessee contended that the inadmissible claim in the return of income was due to wrong advice from a tax consultant who was the purchaser of the assessee's property. The assessee claimed that the Assessing Officer failed to frame specific charges, making the penalty unsustainable. On the other hand, the Revenue argued that the penalty was justified as the claim made by the assessee was not admissible.

The facts leading to the penalty imposition revealed that the assessee sold a flat in Mumbai but did not declare the capital gains in the income tax return. During assessment proceedings, the mistake was acknowledged, and the revised income computation included the short-term capital gains, additional interest income, and withdrawal of loss claim from House Property. The penalty proceedings were initiated under section 271(1)(c) based on the discrepancy. The assessee explained that the error was due to professional advice received, which was later found to be incorrect. Despite the plea to drop the penalty, the Assessing Officer imposed a penalty of ?8.35 Lacs, which was upheld by the Commissioner of Income-Tax (Appeals) leading to the appeal before the Tribunal.

The Appellate Tribunal considered the arguments presented by the parties. The assessee claimed that the mistake in the return was due to erroneous advice from an individual who misrepresented himself as a Chartered Accountant. The assessee had made investments in a new residential flat, which would have qualified for deduction under section 54 if the sold property was a long-term capital asset. Documentary evidence and a letter from the advisor admitting the mistake supported the assessee's claim of bona fide error. Referring to the decision in Price Waterhouse Coopers Pvt. Ltd. v. CIT, the Tribunal concluded that since the explanation provided was bona fide, no penalty should be levied. Consequently, the Tribunal decided to delete the penalty, considering the circumstances and the legal precedent cited.

In conclusion, the appeal was partly allowed by the Appellate Tribunal, and the penalty under section 271(1)(c) for the Assessment Year 2014-15 was deleted based on the finding of a bona fide mistake in the claim made by the assessee.

 

 

 

 

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