DCIT Vs Sahil Vachani (ITAT Delhi)
New Delhi: The Income Tax Appellate Tribunal (ITAT) Delhi has recently considered an appeal filed by the Income Tax Department against an order from the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The core issue revolves around the deletion of a penalty amounting to Rs. 1,45,59,592/- levied under Section 271(1)(c) of the Income Tax Act, 1961. This penalty was initially imposed on Sahil Vachani (the assessee) for allegedly furnishing inaccurate particulars of income related to a deduction claimed under Section 54F of the Act for the Assessment Year 2016-17.
The dispute arose after the assessee, who had reported significant long-term capital gains of over Rs. 9 crore from the sale of shares, claimed an exemption of Rs. 7 crore under Section 54F, asserting an investment in a residential house. During the assessment proceedings, the Assessing Officer (AO) found that the new asset, the residential house, had not materialized within the stipulated time frame as per Section 54F. The assessee had only provided an agreement for construction dated July 29, 2016. When confronted, the assessee conceded the claim and offered the amount to tax. Consequently, the AO initiated penalty proceedings, arguing that the incorrect claim constituted furnishing inaccurate particulars of income.
Conflicting Interpretations of Law and Facts
The CIT(A) later deleted the penalty, primarily on the grounds that the assessee had not further litigated the addition and had paid the taxes due. Before the CIT(A), the assessee had additionally claimed that the construction delay was beyond their control, a plea not raised during the initial assessment or penalty proceedings. The Revenue, represented by Senior DR Anuj Garg, argued that this new plea was an afterthought and that the original incorrect claim justified the penalty.
