Capital Gain from Sale of Immovable Property below Taxable Limit: ITAT deletes Penalty [Read Order]

The Income Tax Appellate Tribunal (ITAT), Jaipur Bench deleted penalty as the Capital gain from sale of immovable property below taxable limit.

The solitary ground of the assessee, Kanhaiya Lal Lalwani challenging the order of the lCIT(A), NFAC, New Delhi in confirming the penalty of Rs.5,000 levied by the AO under section 271F of the income tax Act. Brief facts of the case are that while completing the assessment ex-parte u/s 144 or 147 of the Act on 25-10-2018, the AO initiated penalty proceedings u/s 271F of the Act for not filing the return of income for the year under considerations.

Subsequently, the AO vide order levied penalty of Rs.5,000 u/s 271F of the Act on the ground that the assessee was having income from long term capital gain at Rs.6,50l,313 on sale of residential house whereas it was submitted before that the AO was not justified in imposing penalty u/s 271F as the assessee did not file the return of income for the year under consideration on the ground that his income was below taxable limit.

However, the AO while completing the assessment exparte worked out the long term capital gain at Rs.6,50,313 on the sale of residential house property without giving any benefit of indexed cost of acquisition and indexed cost of improvement being the assessment was completed ex-parte u/s 144 or 147 of the Act. Based on the assessment order of the AO, imposed penalty vide order amounting to Rs. 5,000 u/s 271F.

A Single Bench of the Tribunal consisting of Sandeep Gosain, Judicial Member held that “ It is also noted from the record that the assessee is not having any taxable income and the AO has not given the benefit of indexed cost of acquisition and indexed cost of improvement on the immovable property in question and thus in that eventuality the capital gain arose on the sale of immovable property would have been below taxable limit. While giving benefit of the same, the Bench deletes the penalty levied by the AO of Rs.5,000/-u/s 271F of the Act.”

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