Gangadhara Shetty Vs ITO (ITAT Bangalore)
ITAT Bangalore held that penalty under section 271D of the Income Tax Act not leviable in terms of section 273B of the Income Tax Act since claim of exemption u/s. 54 is made in an open and bonafide manner.
Facts- Assessee is an individual and earning salary income. The assessee has not filed its return of income for the year under consideration.
During the course of assessment proceedings, the AO observed that the assessee has earned long term capital gain amounting to Rs.29,29,238/-. The assessee claimed exemption of the entire long term capital gain (LTCG) u/s 54 of the Act as he has utilized the amount of gain in construction of one residential house. Thereafter, the reassessment proceedings were completed at the returned income. However, it has been noticed by the AO that the assessee has received an amount of Rs.6 lakhs in cash while entering into the transaction of sale of property. Thus, AO levied a penalty of Rs.6 lakhs on assessee, alleging that the assessee has violated the provisions of section 269SS of the Act.
CIT(A) affirmed the order of AO levying penalty. Being aggrieved, the present appeal is filed.
Conclusion- Held that it is a case where the assessee has offered this amount and claimed exemption u/s 54 of the Act and this factual aspect has been accepted by the AO in reassessment proceedings. Therefore, it is a case where a claim has been made in an open and bonafide manner and hence in terms of provisions of section 273B of the Act, which specifically exclude the rigors of provisions of section 271D of the Act, we are of the view that penalty is not leviable in the present case.
