The Income Tax Appellate Tribunal ( ITAT ), Jaipur Bench, has recently, in an appeal filed before it, held that penalty u/s 271F cannot be levied, if there is “reasonable cause”.
The aforesaid observation was made by the Jaipur ITAT, when an appeal was filed before it by the assessee, as directed against the order of the CIT(A), dated 23-09-2022, National Faceless Appeal Centre, Delhi (NFAC), for the assessment year 2011-12.
The ground of the assessee’s appeal being that on the facts and in the circumstances of the case, the CIT(A) has erred in rejecting the claim of the assessee in respect of the indexed cost of an improvement on Rs.3,41,000/- base don valuation report of the registered valuer being construction, during the course of hearing, it was prayed by Shri C.P. Chawla, ITP, the AR of the assessee that the CIT(A) was not correct in observing that the assessee had submitted only valuation report from the approved valuer and not submitted any other documentary evidence like building plan approval, property tax receipt, if any, cost of improvement with its sources and bills and vouchers.
The AR further that written submission along with supporting documentary evidence in support of the claim of the assessee were submitted on 14-08-2019 before the CIT(A), NFAC Delhi and thereafter as required the same were resubmitted before the CIT(A), NFAC, Delhi on 17-01-2021, 11-03-2022 and 21-09-2022, but that despite these facts, no other supporting documentary evidence like building plan approval, property tax, if any, cost of improvement with sources and bills and vouchers were requisitioned by the CIT(A) during this period of three years.
He further submitted that no building plan approval was required for the construction area of 870 Sq Ft and that no property tax was leviable on the residential house property in question. He added that with regard to the cost of improvement with its source of cost of an improvement on Rs.3,41,000/-, the same was claimed before the CIT(A) for which the valuation report of the Registered Valuer was also filed before the CIT(A) but that he still did not allow the claim of the assessee notwithstanding the fact that he himself observed that ‘’on verification of documentary evidence and valuation report, the claim of the appellant appeared to be reasonable’’.
The AR of the assessee, as regards the non-submissions of bills and vouchers are concerned, submitted that the assessee got the construction work done through the contractor Shri Om Prakash Kumawat with material during the F.Y. 2000-2001 for which the Contractor had given an affidavit on judicial stamp paper and that it is in the paper book pages 32-33.
He contended that when the assessee made construction work on 870 Sq. Ft. mentioned in the Sale Deed and Map of the property, then, the assessee is eligible for benefit of indexed cost of improvement while computing the LTCG for which the AR had relied on the decision of ITAT Jaipur Bench dated 18-06-2020 in the case of ACIT vs Ijyaraj Singh and Shri Ijyaraj Singh vs ACIT, and that when the construction work is clearly mentioned in the sale deed and shown in the Map which is part of the sale deed and also supported by the valuation report of the Registered Valuer and the affidavit of the Contractor, then the l CIT(A) cannot be justified in rejecting the claim of the assessee as to indexed cost of improvement of Rs.3.41 lacs which should be allowed.
However, on the other hand, Smt. Monisha Choudhary, JCIT, the DR, strongly supported the order of the CIT(A).
The Delhi ITAT Bench, after hearing both parties and perusing the materials available on record, commented:
“We have noted from the order of the ld. CIT(A) wherein he mentioned that ‘’On verification of the documentary evidence and valuation report, the claim of the appellant is appeared to be reasonable’’ but rejected the claim of the assessee on the ground that the appellant has submitted only valuation report from the approved valuer and not submitted any other documentary evidence like building plan approval, property tax, if any, cost of improvement along with its sources and bills and vouchers.”
“From the arguments of the ld. AR of the assessee, it is observed that the assessee had resubmitted the desired documents on three occasions before the ld. CIT(A) on 17-01-2021, 11-03-2022 and lastly on 22-09- 2022 but the ld.CIT(A) had not asked for documents like building plan approval, property tax receipt if any, cost of improvement with sources and bills and vouchers during the period of three years.”, the ITAT added.
“The Bench has deeply considered the submissions of the ld. AR of the assessee and found that it does not suffer from any infirmity as no building approval is required for construction area of 870 Sq Ft and property tax was not leviable on the residential house property. The assessee has shown the investment of source like (i) Rs.1,80,000/- (given by the wife of the assessee out of her Istri Dhan (ii) Rs.90,000/- (given bythe father of the assessee in instalments) (iii) Rs.78,000/- (out of the funds available with the assessee) for which the assessee has filed an affidavit (PB 30-31). The assesse has also filed an affidavit of Contractor Shri Om Prakash Kumawat (PB 32-33). The Bench has also given its verdict in the assessee’s case in ITA No.95/JP//2022 dated 15-09-2022 for the assessment year 2011-12 on the issue of penalty u/s 271F of the Act.”, the ITAT Panel comprising of Sandeep Gosain, the Judicial Member, further observed.
Thus, allowing the assessee’s appeal the Jaipur ITAT held:
“In view of the above deliberation, the Bench does not concur with the findings of the ld. CIT(A). Hence, the appeal of the assessee is allowed.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
