The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has, recently in an appeal filed before it, held that income tax penalty shall not be imposed for disallowance of bonafide claim.
The aforesaid observation was made by the Tribunal when an appeal was preferred before it by an assessee named Jain Peripherals P. Ltd., as against the order dated 19.07.2019, passed by the learned Commissioner of Income-tax (Appeals)-5, New Delhi, u/s. 250 of the Income-tax Act, 1961, for the assessment year 2014-15.
With the assessee filling its return of income showing the loss of Rs.32,87,521/- towards capital loss, qua sale of property i.e. shop No. LG-24, South Point Mall, Gurgaon, on consideration of Rs. One 1,00,00,000/- which was purchased on consideration of Rs.1,32,87,521/-, the assessee was asked by the AO to furnish the sale and purchase deed of the property. And in response, the assessee by filling its reply had submitted that it has received advance sale price of Rs.1,10,00,000/- , for the said property during assessment year 2013-14 (Ledger Account of advance against property for year ending 31st March, 2013 is enclosed) and that by mistake, the assessee had in the assessment year 2014-15, entered Rs.1,00,00,000/- as advance against the said property ,transferring the difference of Rs.10,00,000/- to the next year (Ledger Account of advance against property for the year ending 31st March, 2014 is enclosed), which has resulted in capital loss of Rs.22,87,521/- instead of Rs.32,87,521/.
The Assessing Officer though considering the submissions of the assessee, but on the assessee’s failure to submit the proof/bills/vouchers in respect of expenses incurred, ultimately held that these expenses cannot be considered as purchase cost of the property and initiated penalty proceedings u/s. 271(1)(c) of the Act, qua the addition for filing inaccurate particulars of income.
And the assessee being aggrieved by the same, challenged the said penalty before the Commissioner, who by impugned order though deleted the penalty qua addition of Rs.4778/- on justifiable grounds, however, affirmed the penalty to the extent and on account of addition of Rs.78,95,407/, leaving the assesse with no other option but to prefer an appeal before the Tribunal.
Hearing the parties and perusing the material available on record, the Tribunal observed:
“The said documents go to show that almost all the relevant details, may not be in the form of documents specifically qua expenditures incurred, otherwise available before the Assessing Officer for consideration.”
“Even the Hon’ble Apex Court in the case of CIT Vs. Reliance Petro Products (P) Ltd. 322 ITR 158 (2010), had held that a mere making of the claim, which is not sustainable in law by itself will not amount to furnishing inaccurate particulars regarding the income of the assesse and hence that such claim made in the return cannot amount to inaccurate particulars.”, it added.
“Hence, considering the peculiar facts and circumstances, as the assessee had already closed down its business and therefore, could not file the part documents as required by the Assessing Officer, however, from the documents produced, it is apparently clear that required details with regard to the purchase price/value of the property was available before the authorities below and even also”, adding to its observation the bench further commented.
Thus, finally concluding its observation, the Tribunal ruled:
“we find the claim made by the assessee as bona fide and therefore cannot be termed as dishonest or mala fide. Hence, we are of the considered view that in facts and circumstances and the documents available on record as stated above, no penalty is leviable. And even otherwise we also do not find any material/reason or justification for levy of penalty and affirmation thereof. Consequently, the penalty under challenge is deleted.”
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