Case Law Details
Ushaben Chauhan Vs ITO (ITAT Ahmedabad)
Introduction: In a recent case before the Income Tax Appellate Tribunal (ITAT) in Ahmedabad, the penalty imposed under Section 271(1)(c) of the Income Tax Act was deleted. The case involves Ushaben Chauhan, who did not initially file her income tax return for the Assessment Year 2009-10 and faced penalty proceedings due to her non-awareness of tax liability on the sale of land.
Detailed Analysis:
1. Background of the ITAT Case: The case involves an appeal filed by the assessee, Ushaben Chauhan, against the order of the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated December 19, 2022. The appeal was made under Section 250 of the Income Tax Act, 1961, concerning the Assessment Year (AY) 2009-10.
2. Effective Grounds Raised by the Assessee: The primary grounds raised by the assessee in her appeal were related to the penalty imposed under Section 271(1)(c) of the Income Tax Act. Specifically, the issues raised were regarding the confirmation of the penalty order and the imposition of the penalty amounting to Rs. 2,81,034.
3. Background of the Case: The assessee, Ushaben Chauhan, did not file her income tax return for AY 2009-10 initially. The assessment under Section 144 read with Section 147 of the Income Tax Act, 1961, was eventually completed on January 17, 2014. During the assessment, it was found that the assessee, along with her mother, brother, and two sisters, had jointly sold land for a total consideration of Rs. 1,33,00,000. The assessee admitted to receiving Rs. 26,60,000 as sales consideration via cheques but had not filed her income tax return or paid capital gain tax on the sale of the property.
4. Initiation of Penalty Proceedings: The Assessing Officer initiated penalty proceedings under Section 271(1)(c) for both the additions. While the penalty proceedings were ongoing, the assessee filed submissions explaining her position. The Assessing Officer eventually imposed a penalty of Rs. 2,81,034 under Section 271(1)(c) of the Income Tax Act, 1961.
5. Appeal to CIT(A): The assessee, dissatisfied with the penalty order, appealed to the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC). However, her appeal was dismissed.
6. Arguments of the Assessee: The assessee’s argument revolved around her belief that no tax was payable on the sale of “agricultural land.” She stated that she was not educated and was unaware of the provisions of the income tax law, which led to her not paying the taxes. The assessee contended that an addition made during the assessment proceedings alone should not be sufficient to initiate, let alone conclude, penalty proceedings under Section 271(1)(c) of the Act. Her position was that there was no willful concealment of income or furnishing of inaccurate particulars.
7. Decision of ITAT: The Income Tax Appellate Tribunal (ITAT) in Ahmedabad considered the delay in filing the appeal and condoned it. The tribunal noted that the assessee had not filed her income tax return and appeared genuinely unaware of the tax liability on the sale of the land. The ITAT found no willful concealment of income or furnishing of inaccurate particulars, especially as the assessee paid the taxes on capital gains after the CIT(A)’s order. The decision of the Hon’ble Gujarat High Court in the case of Pr. CIT vs. Sun on Peak Hotel (P.) Ltd. was cited, supporting the assessee’s genuine lack of awareness about tax payment.
Conclusion: In the case of Ushaben Chauhan, the Income Tax Appellate Tribunal (ITAT) in Ahmedabad deleted the penalty imposed under Section 271(1)(c) of the Income Tax Act. This decision underscores the importance of genuine cases where individuals may not be fully aware of their tax obligations. In such situations, the imposition of penalties may not be justifiable, as was determined in this case.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal filed by the assessee is directed against the order of the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)” for short] dated 19.12.2022 passed under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act” for short] for the Assessment Year (AY) 2009-10.
2. The effective grounds raised by the assessee in her appeal are as follows:-
“1. The learned CIT(A) erred in law and on facts in confirming the penalty order u/s 271(1)(c) of IT Act, 1961 which is requested to be quashed.
2. The learned CIT(A) erred in imposing the penalty of Rs.2,81,034/- u/s 271 (1)(c) of the IT Act, 1961 which is requested to be quashed.”
3. The assessee did not file the return of income for A.Y. 2009-10 originally and the assessment under Section 144 r.w.s. 147 of the Income Tax Act, 1961 was finalized on 17.01.2014 determining the total income of Rs. 26,64,227/-. The Assessing Officer observed that the assessee, her mother, brother and two sisters (total five persons) have jointly sold the land for the consideration of Rs. 1,33,00,000/-. The assessee confirmed before the Stamp Duty Authority that she received Rs. 26,60,000/- as sales consideration through cheques. However, the assessee did not file the return of income and not paid the capital gain tax on the sale of immovable property. The Assessing Officer estimated the long term capital gain at Rs. 26,60,000/- as well as the bank interest of Rs. 4,227/- which was not offered to tax. Penalty proceedings u/s 271(1)(c) were initiated for both the additions. In the meanwhile, the assessee preferred appeal before the CIT(A) in quantum proceedings, but the same was dismissed by the CIT(A) vide order dated 16.07.2015. During the course of penalty proceedings, the assessee filed its submissions which was considered and thereafter the Assessing Officer imposed the penalty of Rs. 2,81,034/- u/s 271(1)(c) of the Income Tax Act, 1961.
4. Being aggrieved by the Penalty order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
5. The Ld. AR submitted that the CIT(A) in quantum proceedings directed the Assessing Officer to calculate the long term capital gain after considering the share of the assessee in total sale consideration and accordingly, the assessee agreed for the The assessee also paid capital gain tax as applicable. The assessee has not paid any taxes earlier as she was under bonafide belief that no tax is payable on sale of “agriculture land” since the assessee being uneducated and is not aware of the provisions of income tax which resulted into not paying the taxes. The Ld. AR submitted that an addition made during the course of assessment proceedings by itself cannot be enough to initiate, leave aside conclude, penalty proceedings under Section 271(1)(c) of the Act. The Ld. AR submitted that there is no wilful concealment of income or furnishing of inaccurate particulars of income. The Ld. AR relied upon the decision of the Hon’ble Gujarat High Court in case of Pr. CIT vs. Sun on Peak Hotel (P.) Ltd. (2018) 95 taxmann.com320.
6. The Ld. DR relied upon the assessment order, penalty order and the order of the CIT(A).
7. Heard both the parties and perused all the relevant material available on There is a delay of 117 days in filing the present appeal for which the assessee has given the reasons by filing condonation of delay application. It appears that the delay is genuine and hence, the same is condoned. It is pertinent to note that the assessee has not filed return of income and it appears that the assessee being not aware about the tax on sale consideration of the land is genuine. At no point of time assessee concealed the particulars of income or furnished inaccurate particulars of income as the assessee after the order of the CIT(A) has paid the taxes on capital gain. This fact is not disputed by the Ld. DR. The decision of Hon’ble Gujarat High Court in case of Sun on Peak Hotel (P.) Ltd. (supra) is applicable in the present case as the assessee herein has a genuine case of not aware of tax payment. Thus, the penalty imposed u/s 271(1)(c) of the Act is not justifiable.
8. In result, appeal of the assessee is allowed.
Order pronounced in the open Court on this 11th day of October, 2023.
