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2020 (5) TMI 50 - AT - Income TaxLevy of penalty u/s 271 (1)(c) - long term capital gain as well as interest disallowance made - omission to declare long term capital gain in the return of income - HELD THAT - There was inadvertent omission on the part of the assessee to declare the long term capital gain in his return of income since the sale consideration received on sale of land was shown as sundry creditors in the books of account - assessee has voluntarily declared the fact of omission to declare long term capital gain in the return of income before the AO during the course of asst. proceedings. Hence the ld CIT(A) has correctly taken the view that penalty is not leviable on the long term capital gain declared by the assessee. Disallowance of interest expenditure - said disallowance was made only for want of proof. In our view the decision rendered by Hon ble Supreme Court in the case of Price Water House Coopers Pvt. Ltd. 2012 (9) TMI 775 - SUPREME COURT would support the case of the assessee in respect of long term capital gain and the decision rendered by Hon ble Supreme Court in the case of Reliance Petro Products Ltd 2010 (3) TMI 80 - SUPREME COURT would support the case of the assessee in the case of interest disallowance. The decision in the case of MAK Data Pvt. Ltd. 2013 (11) TMI 14 - SUPREME COURT in our view was rendered by Hon ble Supreme Court in the context of amounts surrendered during the course of survey proceedings and hence the said decision is not applicable to the facts of the present case. In view of the above we do not any infirmity in the decision taken by the ld CIT(A) in deleting the penalty levied u/s 271(1)(c) - Decided in favour of assessee.
Issues:
1. Penalty under section 271(1)(c) for concealment of income. 2. Disallowance of interest expenditure deduction. Issue 1: Penalty under section 271(1)(c) for concealment of income: The case involved an appeal by the Revenue against the deletion of a penalty of Rs. 71,55,205 levied by the Assessing Officer (AO) under section 271(1)(c) of the Income Tax Act. The assessee, an individual and a doctor, had initially declared a total income of Rs. 23.74 lakhs but later admitted to earning long-term capital gains on the sale of a plot, which was not included in the return of income. The AO disallowed certain deductions claimed by the assessee, resulting in a higher taxable capital gain. The AO initiated penalty proceedings, but the Commissioner of Income Tax (Appeals) (CIT(A)) deleted the penalty. The Revenue contended that the assessee's actions amounted to concealment of income. However, it was argued that the omission was inadvertent, and the assessee voluntarily disclosed the error during the assessment proceedings. The CIT(A) found no escapement of income and ruled in favor of the assessee. The Tribunal upheld the CIT(A)'s decision, emphasizing the voluntary disclosure and lack of intentional concealment. The Tribunal also noted that the disallowance of interest expenditure was due to lack of proof, not deliberate concealment. Issue 2: Disallowance of interest expenditure deduction: The disallowance of interest expenditure deduction amounting to Rs. 1.50 lakhs was a point of contention in the case. The AO had disallowed the claim due to lack of documentary proof. The assessee argued that this disallowance did not warrant a penalty as it was not a deliberate act of concealment. The Tribunal referenced relevant Supreme Court decisions to support the assessee's position, highlighting that the disallowance was based on insufficient proof rather than intentional concealment. The Tribunal found no fault in the CIT(A)'s decision to delete the penalty, as there was no deliberate attempt to furnish inaccurate particulars of income in this regard. In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s order to delete the penalty under section 271(1)(c) for concealment of income and emphasizing the lack of intentional wrongdoing in both the concealment of income and the disallowance of interest expenditure deduction.
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