Tribunal grants appeal for fresh review of suppressed STCG claim, potential penalty revocation

The Tribunal allowed the appeal for statistical purposes, directing a fresh review by the AO to verify the appellant's claim regarding suppressed Short Term Capital Gain (STCG) on the sale of property. If the appellant's factual position is proven, the penalty under Sec. 271(1)(c) will be revoked. The case was remanded to the AO due to insufficient evidence supporting the appellant's claim, emphasizing the need for further examination.

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Issues:
1. Penalty under Sec. 271(1)(c) for suppressed Short Term Capital Gain (STCG) on sale of property.
2. Justification for not disclosing STCG and challenging penalty imposition.
3. Relevance of Sec. 50 of the Income Tax Act in determining STCG.
4. Lack of supporting evidence for the claim regarding STCG calculation.

Issue 1: Penalty under Sec. 271(1)(c) for suppressed STCG:
The appeal was against the order imposing a penalty under Sec. 271(1)(c) for concealing STCG of Rs. 52,45,526 related to the sale of a gala. The AO imposed the penalty as the assessee did not disclose the sale transaction in the return of income. The CIT(A) upheld the penalty, leading to the appeal.

Issue 2: Justification for not disclosing STCG and challenging penalty imposition:
The appellant argued that no STCG arose from the sale of the gala as it did not exceed the aggregate WDV of the block of assets. Due to counsel's failure to substantiate this claim, the appellant faced a tax liability. The appellant contended that penalty proceedings are distinct from assessment proceedings and challenged the penalty imposition.

Issue 3: Relevance of Sec. 50 of the Income Tax Act in determining STCG:
The appellant relied on Sec. 50 of the Act to support the claim that no STCG arose from the sale of the gala. The appellant cited a High Court order to reinforce this argument. The Departmental Representative, however, supported the penalty imposition based on non-disclosure of the sale transaction.

Issue 4: Lack of supporting evidence for the claim regarding STCG calculation:
The appellant's claim regarding the non-existence of STCG was rejected by the CIT(A) due to insufficient evidence. The appellate authority noted the absence of supporting documentation, such as the balance sheet or fixed assets schedule. The absence of concrete evidence led to the penalty being upheld.

In the final judgment, the Tribunal allowed the appeal for statistical purposes, indicating that the matter required further review by the AO to ascertain the validity of the appellant's claim. If the factual position presented by the appellant is substantiated, the penalty under Sec. 271(1)(c) will be revoked. The case was restored to the AO for fresh adjudication based on the lack of supporting evidence for the claim made by the appellant.

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