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2011 (6) TMI 458 - ITAT, CHENNAIPenalty u/s 271(1)(c) r.w.s. 274 - modification of the computation u/s 54 after reducing the items of advocate fees, brokerage, tiles laying, white wash, electrical rewiring and wood work not proved by assessee - Held that:- The property was sold to the assessee on an as is where is condition. Thereafter the assessee spent money to improve the inhabitability in the property. That may be an essential expenditure. But it does not form part of acquisition cost. CIT(A) is justified in revising the assessment order to exclude the expenses from the acquisition cost of the property. But regarding the expenses relating to advocate fees and brokerage, CIT(A) has acted too technical as it is common knowledge that in the majority of transactions in house properties brokers are involved. Therefore, payment of Rs. 12,500 as brokerage cannot be considered as unwarranted. The only thing is that the assessee could not produce a formal piece of evidence. Generally such type of evidence may not be available as brokers are not a disciplined lot and not in the habit of reducing every action to a document. Therefore exclusion of brokerage and advocate fees from the cost of acquisition of the new property is not justified. That part of the order of the Commissioner of Income-tax is vacated. Penalty proceedings - since there is no penalty order subsisting at the time of passing of the revision order, it is not proper on the part of the CIT to initiate penalty proceedings through a revision order. On the merits the assessee has claimed those expenses as part of acquisition cost on a bona fide belief that law permits such a treatment. There is no question of furnishing any inaccurate particulars or any case of concealment of income, thus penalty deleted. Partly in favour of assessee.
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