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of <h1>Penalty under section 271(1)(c) deleted for failure to strike out inapplicable limb in long-term capital gains case</h1> <h3>Mr. Kaleem M. Khan Versus Income Tax Officer, Ward-22 (3) (2), Mumbai.</h3> ITAT MUMBAI - AT set aside penalty under section 271(1)(c) imposed for alleged failure to disclose long-term capital gains, holding the penalty order ... Levy of penalty u/s 271(1)(c) - as alleged assessee has furnished ‘inaccurate particulars of income’ - as per AO assessee had failed to furnish details of Long Term Capital Gains (LTCG) which the assessee had earned during the year under consideration - Assessee alleged as non specification of clear charge HELD THAT:- The issue is no longer res integra as it is covered by the decision of jurisdictional High Court in Mohd. Farhan A. Shaikh [2021 (3) TMI 608 - BOMBAY HIGH COURT (LB)] as well as State Bank of India [2024 (12) TMI 1282 - SC ORDER]. It has been, inter alia, held that non-striking of inapplicable limb would vitiate the order imposing penalty. A co-ordinate Bench of the Tribunal in Lyka Labs Ltd. [2024 (6) TMI 1444 - ITAT MUMBAI] placing reliance on the aforesaid decision had taken a similar view. We find that the impugned order cannot be sustained. The appeal is accordingly allowed. Assessee appealed concurrent orders confirming penalty under Section 271(1)(c) for allegedly furnishing 'inaccurate particulars of income' by initially not disclosing Long Term Capital Gains (LTCG) later offered during scrutiny. Challenge focused on the penalty notice which did not specifically identify the applicable limb (concealment or inaccurate particulars) and did not strike out the inapplicable portion. Reliance was placed on higher-court precedents including the Supreme Court and the jurisdictional High Court which hold that 'non-striking of inapplicable limb would vitiate the order imposing penalty.' A co-ordinate Tribunal decision applying the same rule was also cited. Applying that precedent, the impugned penalty order was held unsustainable and the Assessing Officer was directed to delete the penalty.
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