2020 (12) TMI 390 - AT - Income Tax

Tribunal upholds deletion of penalty due to unjustified basis in Assessment Year 2012-13

ACIT – 31 (2), Mumbai Versus Smt Jayati S. Chakraborty

The Tribunal dismissed the Revenue's appeal against the deletion of the penalty under section 271(1)(c) for Assessment Year 2012-13. The penalty was ... Penalty u/s 271(1)(c) - treated the gains on sale of residential flat of the assessee as short term capital gain as against the claim of the assessee that it should be assessed as long term capital gain - HELD THAT:- Addition the consequential penalty u/s. 271(1)(c) of the Act has no legs to stand. In the circumstances we do not find any infirmity in the order passed in deleting the penalty since the very basis for levy of penalty i.e. addition made in the assessment proceedings was deleted by the Tribunal and in which case penalty will not survive. Thus, we confirm the order of the Ld.CIT(A) in deleting the penalty. Ground raised by the Revenue is rejected Issues:- Appeal against deletion of penalty under section 271(1)(c) by Ld.CIT(A) for Assessment Year 2012-13.Analysis:1. The Revenue filed an appeal against the Ld.CIT(A)'s order deleting the penalty under section 271(1)(c) for the Assessment Year 2012-13. The Revenue's grievance was that the penalty was deleted based on the quantum additions/disallowances being deleted by the Hon'ble ITAT in a previous order.2. Despite the absence of the Assessee during the proceedings, the Tribunal proceeded to hear the Department's representative. The Department argued that the Tribunal had previously deleted the additions/disallowances made by the Assessing Officer, and the Revenue had appealed this decision to the High Court. Consequently, the Department requested the Ld.CIT(A)'s order to be set aside.3. The Ld.CIT(A) had deleted the penalty based on the Tribunal's decision to delete the additions/disallowances in the quantum proceedings. The Ld.CIT(A) observed that since the Tribunal had already deleted the additions, the basis for levying the penalty under section 271(1)(c) no longer existed.4. Upon reviewing the Tribunal's order in the quantum proceedings, it was found that the dispute centered on whether gains from the sale of a residential flat should be treated as short term or long term capital gain. The Tribunal allowed the Assessee's claim, considering the details of the purchase agreement and the payment schedule linked to the construction progress.5. Various legal references were cited, including CBDT circulars and High Court judgments, to support the Tribunal's decision that the gain should be taxed as Long Term Capital Gain. The Tribunal's decision was in line with the CBDT Circulars and judicial precedents, establishing the holding period from the date of the allotment letter for determining the nature of capital gains.6. As the Tribunal had accepted the Assessee's claim and deleted the additions in the quantum proceedings, the penalty under section 271(1)(c) was deemed unjustified. The Tribunal upheld the Ld.CIT(A)'s decision to delete the penalty, as the basis for the penalty no longer existed due to the Tribunal's decision on the additions. Consequently, the Revenue's appeal was dismissed.7. The Tribunal confirmed the Ld.CIT(A)'s order in deleting the penalty under section 271(1)(c), as the additions forming the basis for the penalty were already deleted by the Tribunal in the quantum proceedings. The Tribunal found no infirmity in the Ld.CIT(A)'s decision and rejected the Revenue's appeal.8. In conclusion, the appeal of the Revenue against the deletion of the penalty under section 271(1)(c) for the Assessment Year 2012-13 was dismissed by the Tribunal. The order was pronounced in accordance with ITAT Rules.