Synergy Art Foundation Ltd. Vs DCIT (ITAT Mumbai)
Penalty u/s 271(1)(c) Deleted Where Loss Claim Withdrawn and No Tax Benefit Availed
The Mumbai ITAT (G Bench) allowed the appeal of Synergy Art Foundation Ltd. for AY 2012-13 and deleted the penalty of ₹8.44 lakh levied under section 271(1)(c), holding that the case did not warrant imposition of concealment penalty.
The Tribunal held that:
- The assessee had originally claimed a capital loss of ₹26.06 lakh, which was subsequently withdrawn during assessment proceedings when called upon to justify the claim.
- The returned income for the year was a loss, and the impugned claim related only to carry forward of loss.
- No tax advantage or benefit was ultimately derived or availed by the assessee, as the loss was neither set off nor carried forward.
- In the absence of any actual revenue loss to the Department, the essential conditions for invoking section 271(1)(c)—concealment of income or furnishing of inaccurate particulars—were not satisfied.
- A revenue-neutral claim, voluntarily withdrawn before any benefit accrues, cannot be the basis for penalty.
Accordingly, the ITAT set aside the NFAC order and deleted the penalty in full, allowing the assessee’s appeal.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This is an appeal by the assessee against order dated 13.08.2025, passed by National Faceless Appeal Centre (‘NFAC’ for short), confirming the penalty imposed of Rs.8,44,632/- u/s. 271(1)(c) of the Income Tax Act, 1961 (‘the Act’ for short) for the assessment year (A.Y.) 2012-13.
