ITAT Delhi deletes penalty for assessment year 2006-07 under sec 271(1)(c)

The Appellate Tribunal ITAT Delhi deleted the penalty u/s 271(1)(c) for the assessment year 2006-07. The penalty was not imposed due to the inadvertent nature of the mistake in claiming a loss against capital gains, which was rectified by filing a revised return offering the amount for taxation. The tribunal considered the absence of inaccurate particulars or concealment of facts, supported by the acceptance of audited books of account and the involvement of an income-tax consultant in preparing the return.

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Issues Involved: Confirmation of penalty u/s 271(1)(c) of the Income-tax Act for the assessment year 2006-07.

Issue 1: Disallowance of Loss and Imposition of Penalty
- The Assessing Officer disallowed a loss claimed by the assessee on the sale of a portal site against capital gains, initiating and levying a penalty for concealment u/s 271(1)(c).
- Assessee's contention: The mistake in claiming the loss was inadvertent, rectified by filing a revised return offering the amount for taxation, with no inaccurate particulars or facts concealed.
- Assessee's argument supported by the acceptance of audited books of account and the involvement of an income-tax consultant in preparing the return.
- Assessee relied on precedents where penalties were not imposed for inadvertent errors.
- Conclusion: The penalty was not imposable due to the inadvertent nature of the mistake and the absence of inaccurate particulars.

Issue 2: Justification for Penalty Imposition
- Revenue's stance: Penalty imposition justified based on the inadmissible claim of set off of loss against capital gains, as per section 50(2), with reference to legal precedents.
- Assessee's rebuttal citing a Delhi High Court judgment that penalties should not be imposed for inadvertent errors.
- Conclusion: The penalty was deleted considering the inadvertent error, the low tax amount involved, and the explanations provided by the tax consultant.

Conclusion: The penalty u/s 271(1)(c) for the assessment year 2006-07 was deleted by the Appellate Tribunal ITAT Delhi, emphasizing the inadvertent nature of the error and the absence of inaccurate particulars or concealment of facts.

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