Case Law Details
Mahagun (India) Pvt. Ltd. Vs ACIT (ITAT Delhi)
Delhi ITAT Deletes Penalty on “Deemed Rent” Addition – Issue Held Debatable; No Concealment Penalty Sustainable
In a relief to the assessee, the Delhi ITAT deleted penalty levied u/s 271(1)(c) in the case of Mahagun (India) Pvt. Ltd. for AY 2013-14 relating to addition of deemed rental income. The Tribunal noted that the assessee relied upon the Delhi High Court ruling in PCIT vs. Ansal Properties and Infrastructure Ltd., wherein it was held that the issue was debatable at the relevant point of time. Since the underlying legal position itself was subject to differing interpretations, the Tribunal held that penalty for concealment or furnishing inaccurate particulars could not survive merely because an addition was made. Accordingly, the penalty imposed by the department was directed to be deleted.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal is preferred by the assessee against the order dated 16.08.2025 of the Ld. Commissioner of Income Tax (Appeals)-26 Delhi (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) DIN & Order No: ITBA/APL/S/250/2025-26/1079660369(1) arising out of the assessment order dated 19.03.2025 u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by DCIT, Central Circle – 13, Delhi for AY: 2013-14.
2. On hearing both sides we find that the issue involved is the levy of penalty on account of addition made on deemed rental income and ld. Counsel has relied the decision of Hon’ble Delhi High Court in the case of PCIT Vs. Ansal Properties and Infrastructure Ltd, reported as (2023) 152 taxmann.com 49/(2024) 460 ITR 341 (Delhi HC) wherein Hon’ble High Court has held that the issue involved was debatable at that point in time, thus, levy of penalty was deleted. The proposition of law squarely applies to the facts of case of assessee, accordingly, we allow the appeal and penalty levied is deleted.
Order pronounced in the open court on 22.05.2026
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