Penalty u/s 271(1)(c) not sustainable in the absence of Concealment or Furnishing of inaccurate particulars of Income: ITAT [Read Order]

Penalty  u/s 271(1)(c) of the Income Tax Act,1961 is not sustainable in the absence of concealment or furnishing of inaccurate particulars of income, the Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held as above.

The assessee, Shri S. Manoharan stated that a penalty could not be levied on estimated additions of rental income. The revenue controverted the same and stated that the additions are admitted additions which are based on seized documents which indicated receipt of rental income by the assessee.

The assessee was subjected to an assessment u/s 153C under search action in the case of M/s Grambles Consultancy Services Pvt. Ltd. In the seized documents, rent receipts for financial years 2018-19 and 2019-20 were found in loose sheets which shows that the assessee had purchased two properties in the name of her wife in earlier years which were reflected in the return of income but the rental income received from the property was not admitted while filing the return of income.

The assessee admitted a yearly rental income of Rs.2.40 Lacs as unaccounted rental income for this year and the same was added to the assessee’s income. Penalty proceedings were initiated u/s 271(1)(c) for filing inaccurate particulars of income which was defended by the assessee on the ground that no rental income was received for financial years 2013-14 since the premise was kept vacant for renovation.

It was viewed that the loose sheet which has led to the addition in the hands of the assessee pertains to the period from 07.04.2016 to 14.04.2019 only and there was no document evidencing receipt of rental payment by the assessee.

A Coram of Shri Manoj Kumar Aggarwal, AM and Shri Sonjoy Sarma, J M observed that there was no case of concealment or furnishing of inaccurate particulars of income that could be made out against the assessee and held that estimated additions do not call for levy of penalty.

While allowing the appeal filed by the assessee, the Tribunal deleted the impugned penalties for all the years. The assessee was represented by Shri N. Arjunraj (C.A) for Shri S. Sridhar, (Advocate) and the revenue was represented by Shri Guru Bashyam (CIT).

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates