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TMI Blog2022 (3) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... subject to levy of penalty under section 271(1)(c). Thus, we direct the AO to delete the entire penalty. - Decided in favour of assessee. - ITA No. 152/SRT/2021 - - - Dated:- 16-2-2022 - Shri Pawan Singh, Judicial Member And Dr. Arjun Lal Saini, Accountant Member For the Assessee : Shri Hiren M. Diwan, C.A For the Revenue : Shri Sita Ram Meena Sr-DR ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of National Faceless Appeal Centre ( NFAC in short), Delhi, hereinafter called as CIT(A) ,dated 17.09.2021, which in turn arises penalty levied under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) dated 30.03.2018 for assessment year (AY) 2012-13.The assessee has raised following grounds of appeal:- 1)The ld. CIT(A) has erred in law and on facts in confirming the action of the ld. A.O of levying penalty u/s 271(1)(c) of the Act on the basis of invalid and improper show cause notice issued under section 274 read with section 271 of the Act. 2)The ld. CIT(A) has erred in law and on facts in confirming the action of the ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee contended that one of the property in Aashirwad Flat is occupied for commercial purposes, the property in Avadh Lake City is under-construction copy of the photographs were furnished, the property at 43, Mahadev Nagar Society is jointly owned by assessee and his wife, for Muktanand Co.Op. Housing Society, the assessee submitted that this is one residential property which is owned by assessee on the date of sale of the land and the assessee purchased one more residential housein Raj Abhishek on which capital gains was claimed. The Assessing Officer disallowed the LTCG in respect of Raj Abhishek flat by taking view that assessee having more than one residential house. The assessee further stated that the order of Ld. NFAC/CIT(A) in quantum assessment was upheld by Tribunal and furnished the copy thereof. The assessee stated that the Aashirwad Flat was being used for business purposes and the Tribunal rejected the claim only on the ground that assessee has not furnished any documentary evidence that the said flat was not used for business purposes. 4. The assessee also raised additional ground of appeal before ld CIT(A) by raising legal ground that notice under section 271 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther the Assessing Officer intends to proceed against the assessee on the ground that assessee concealed his income or furnished inaccurate particulars of income. To support his submission, Ld. AR of the assessee relied on the decision of Hon'ble apex court in the case of Dilip N Shroff vs. JCIT (2007) 161 Taxman 218 (SC), wherein the Hon'ble court held that standard proforma used by Assessing Officer in issuing a notice, despite the fact that the same performa that inappropriate word and paragraph-3 to be deleted, the same postulates that inappropriate words and paragraphs were to be deleted, the same had not been done. Thus, the Assessing Officer was not sure as to whether he had proceeded on the basis that assessee concealed his income or he had furnished inaccurate particulars. It was further held that Revenue while placing the order of assessment laid emphasis that he had dealt with both the situations. Hon'ble Apex Court held that the order of penalty suffers from non-application of mind and allow the appeal of assessee. The Ld. AR of the assessee also relied upon the decision of Hon'ble Karnataka High Court in the case of Commissioner of Income-tax vs. Manjun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is eligible for exemption and disclosed all material facts in his return of income, the assessee has not concealed any particulars of income and furnished complete facts for appreciation by AO. Merely the claim of assessee was not found to be admissible under the law which cannot lead to levy of penalty as the assessee acted on bona fide advice. On the basis of aforesaid submission, the Ld. AR of the assessee prayed for deleting the entire penalty. 9. On the other hand, Ld. Sr.DR for the Revenue supported the orders of authorities below. The Ld. Sr.DR for the Revenue submits that at the time of assessment, assessee was very well aware about the disallowance of capital gains under section 54B. The Assessing Officer while passing assessment order has clearly held that penalty notice under section 271(1)(c) issued for furnishing inaccurate particulars of income thereby concealing the income. The penalty notice is not independent of assessment order. Initially, the Assessing Officer initiated the penalty on disallowance of deduction under section 54EC 54F. However, the Ld. CIT(A) deleted the penalty on disallowance of deduction under section 54EC. Thus, the assessee from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessee, the assessee owned more than one residential flat. It is further matter of recorded that disallowance of capital gains was upheld by Ld. CIT(A) and on further appeal again upheld by Hon'ble Tribunal. Before us, the Ld. AR of the assessee, besides the other submissions, submits before us that assessee computed LTCG after due deliberation and on legal advice and the same is not accepted by the Revenue authorities, the assessee cannot subject to levy of penalty under section 271(1)(c), we find merit in the submission of Ld. AR of the assessee. The assessee acted in bona fide belief and made the claim is not acceptable due to any reason and was disallowed the same cannot be subject to levy of penalty under section 271(1)(c) of the Act. Considering the aforesaid factual legal discussion, we are of the constrained view that if the claim of assessee for deduction of LTCG was not found admissible for deduction under section 54F, the assessee cannot be subject to levy of penalty under section 271(1)(c). Thus, we direct the AO to delete the entire penalty of ₹ 3,08,738/-. 13. Considering the fact that we have allowed the appeal of assessee on merit by accepting one o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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