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TMI Blog2019 (8) TMI 1817X X X X Extracts X X X X X X X X Extracts X X X X ..... - HELD THAT:- Admittedly, the penalty was levied in respect of addition made on account long term capital gains on sale of immovable property and the addition on account of alleged bogus claim u/s.35(1)(iii) of the Act. In respect of assessment of capital gains, the assessee has claimed exemption of capital gains u/s.54 of the Act, but the assessee had failed to produce evidences in respect of construction of a new house. In the circumstances, the Assessing Officer had made an addition of capital gains. Thus, the addition was made by the Assessing Officer for failure to prove the claim. Similarly the addition u/s.35(1)(iii) of the Act was made by the Assessing Officer only for assessee s inability to produce necessary approval from CBDT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 passed u/s. 143(3) of the Income Tax Act, 1961 (for short the Act ) at total income of Rs. 44,10,950/-. Subsequently, when the Assessing Officer noticed that while computing the capital gains, the assessee had claimed a sum of Rs.5,50,381/- towards addition to the cost of improvement to the asset, which was incurred by the previous owner in the year 2001-02 whereas the property was settled in favour of assessee on 13.09.2012 by registered document, the value of property was declared at Rs.1,90,000/-. Based on this information, the Assessing Officer was of the opinion that the income of Rs.4,49,990/- had escaped from assessment and accordingly, issued notice u/s.148 of the Act on 17.03.2017. The assessee filed return of income on 24.06.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon ble Bombay High Court in the case of C.I.T Vs. MANJULA J. SHAH reported in [2012] 204 Taxman 691 (Bom) wherein it has been held as follows:- 22. The object of giving relief to an assessee by allowing indexation is with a view to offset the effect of inflation. As per the CBDT Circular No. 636 dated 31/8/1992 [see 198 ITR 1(St)] a fair method of allowing relief by way of indexation is to link it to the period of holding the asset. The said circular further provides that the cost of acquisition and the cost of improvement have to be inflated to arrive at the indexed cost of acquisition and the indexed cost of improvement and then deduct the same from the sale consideration to arrive at the long term capital gains. If indexation is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of the assessee is directed against the Commissioner of Income-tax (Appeals)-5, Chennai dated 02.02.2016 for assessment year 2010-11 confirming the penalty levied u/s.271(1)(c) of the Income Tax Act, 1961 (in short the Act ) by the Assessing Officer. 9. At the outset, it is noticed that the appeal has been filed with a delay of 897 days. The Assessee filed condonation petition, praying for condoning the delay by stating that the delay had occurred on account of fact that the Appellant is an aged person and suffering Chronic Renal Failure, Hypertension, Hypothyroidism, depression, etc. and therefore, they could not follow up the Auditor, who was entrusted with the job of filing the appeal and the delay had occurred on account of lapse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the appellant (a) It is well settled that the assessment and penalty proceedings are separate distinct and hence the findings given in the assessment are not relevant and penalty cannot be based on such findings and hence the order is void and nullity. In the penalty proceedings, the authorities must consider the matter a fresh as the question has to be considered from different angle. (see (Ashok Pai (SC) (b) The explanation is bona fide and hence penalty is not leviable. (c) The supreme court in the case of T. Ashok Pai vs. CIT (2007) 292 ITR 11 (SC) pointed that the penalty issue should be decided on a different angle. 4. Capital gains: The learned CIT (A) fundamentally failed to appreciate (a) hence the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble for deduction u/s.54 of the Act and therefore, it is submitted that it is not a fit case warranting levy of penalty u/s.271(1)(c) of the Act. However, the Assessing Officer rejected the said explanation vide order dated 24.09.2013 and imposed penalty of Rs.8,15,958/- u/s.271(1)(c) of the Act. Being aggrieved, an appeal was preferred before ld. CIT(A), who vide impugned order confirmed levy of penalty. Being aggrieved, the appellant is in appeal before us in the present appeal. 13. We have heard the rival contentions and perused the material available on record. Admittedly, the penalty was levied in respect of addition made on account long term capital gains on sale of immovable property and the addition on account of alleged bogus cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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