Merely claiming exemption which was not acceptable to department cannot entail levy of penalty u/s 271(1)(c)

Raj Kumar Bhutani Vs ITO (ITAT Delhi)

ITAT Delhi held that merely making a claim which is not sustainable in law will not amount to furnishing inaccurate particulars entailing levy of penalty under section 271(1)(c) of the Income Tax Act automatically.

Facts-

The assessee had declared Long-term Capital Gain (LTCG) as “nil” qua sale of two plots of land at Gurgaon having made investments towards construction of residential house at New Friends Colony, Delhi. Assessee claimed exemption u/s. 54F of the Act.

AO finally determined the capital gain to the tune of Rs.12,14,077/- and consequently, added the difference of Rs.12,14,077/- between the LTCG which was declared at “nil” and the LTCG determined by AO, in the total income of the Assessee. Subsequently, penalty proceedings u/s. 271(1)(c) of the Act for furnishing inaccurate particulars of income were also initiated, which resulted into issuance of notice dated 23- 07-2013 u/s. 271(1)(c) of the Act.

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