Rajesh Parasram Nichani Vs ITO (ITAT Mumbai)
Summary: The appeal was filed by the assessee against the order dated 19.02.2026 passed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi under section 250 of the Income-tax Act, 1961 for Assessment Year 2014-15. The dispute concerned a penalty of Rs.5,25,923/- levied under section 271(1)(c) in relation to an exemption claimed under section 54.
The assessee had sold a residential house for Rs.1,35,00,000/- and computed long-term capital gain of Rs.72,19,588/-. He claimed exemption under section 54 for the entire long-term capital gain and filed his return under section 139(1). During scrutiny proceedings, the assessee explained that Rs.68,25,500/- had been invested with M/s Damodar Suruchi Developers in respect of a proposed residential project and Rs.10,00,000/- had been deposited in the Capital Gains Accounts Scheme maintained with the State Bank of India.
The project undertaken by M/s Damodar Suruchi Developers was subsequently stalled for reasons beyond the assessee’s control. The assessee entered into a compromise transaction and purchased another residential property for Rs.49,95,000/-. The resulting shortfall of Rs.24,40,579/- was admitted by the assessee as chargeable to tax. The Assessing Officer accordingly brought that amount to tax in AY 2014-15 and simultaneously levied penalty of Rs.5,25,923/-, being 100% of the tax sought to be evaded, under section 271(1)(c).
