Tribunal cancels penalty under Income Tax Act for assessee's disagreement with assessing officer

The Tribunal upheld the CIT(A)'s decision to delete the penalty imposed on the assessee under section 271(1)(c) of the Income Tax Act. The Tribunal emphasized that penalty cannot be levied solely due to a disagreement between the assessee and the assessing officer when two views are possible. It concluded that the assessee did not provide inaccurate particulars of income to conceal income, and the penalty was unwarranted. The revenue's appeal was dismissed, and the penalty of Rs.39,03,923/- was deleted.

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Issues:
1. Penalty under section 271(1)(c) of the Income Tax Act for inaccurate particulars of income.

Analysis:
The appeal was filed by the revenue against the CIT(A)'s order deleting the penalty of Rs.39,03,923/- levied on the assessee under section 271(1)(c) of the Income Tax Act for the assessment year 2007-08. The assessee, an individual, sold a residential flat and claimed a long-term capital loss. The AO disagreed with the claim, leading to penalty proceedings against the assessee. The AO held that the assessee filed inaccurate particulars of income by wrongly computing the long-term capital loss. The CIT(A) observed that the assessee rightly claimed the loss based on the indexed cost of acquisition and cited various judgments supporting the assessee's claim. The CIT(A) emphasized that penalty cannot be levied solely because the AO disagrees with the assessee's view. He noted that the view adopted by the assessee was one of the possible views and not a ground for penalty.

The Tribunal agreed with the CIT(A) that where two views are possible, and the assessee has taken one view, it does not warrant a penalty if the AO disagrees. The Tribunal found the CIT(A)'s reasoning sound and supported by legal judgments. The appeal filed by the revenue was dismissed, upholding the CIT(A)'s decision to delete the penalty. The Tribunal concluded that the issue was debatable, and the assessee did not furnish inaccurate particulars of income to conceal her income. The order was pronounced on 8th May 2013.

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