Sureshkumar Prabhulal Thakkar Vs DCIT (ITAT Ahmedabad)
AO Failed to Disprove Evidence- Penalty Not Automatic on Disallowance of Expense Claim- ITAT Ahmedabad Cancels 271(1)(c) Penalty –
The appeal was filed by Assessee against the order of CIT(A), NFAC, confirming penalty u/s 271(1)(c).
Assessee had filed return declaring income of Rs.34.40 lakh, including LTCG of Rs.35.59 lakh on sale of land. In assessment, AO disallowed Rs.7.96 lakh claimed towards cost of improvement & transfer expenses, holding that since Assessee was only 1/7th co-owner & no other co-owners claimed such expenses, the claim was not genuine. Addition was made & penalty proceedings u/s 271(1)(c) were initiated. AO imposed penalty of Rs.1.38 lakh for furnishing inaccurate particulars.
CIT(A) upheld penalty, observing that Assessee had accepted addition by not filing appeal in quantum proceedings.
Before Tribunal, Assessee argued that penalty was unjustified as Assessee had produced vouchers for improvement & details of commission paid, which were not disproved by AO. Merely because other co-owners did not claim expenses could not make Assessee’s claim inaccurate. Penalty cannot be automatic merely due to disallowance.
Tribunal held that AO had disallowed claim only on circumstantial ground that other co-owners did not claim expenses. However, AO had not disproved vouchers or evidence produced. In absence of proof that Assessee furnished inaccurate particulars, penalty u/s 271(1)(c) was unsustainable. Accordingly, Tribunal cancelled penalty & allowed appeal.
