TaxTMI 
TaxTMI 
2019 (1) TMI 853
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....y the assessee. Against the disallowance, the assessee filed an appeal before the Ld. CIT (Appeals) who allowed partial relief to the assessee by allowing an amount of Rs. 3 crores out of total expenditure incurred by the assessee towards the construction of the residential house and confirmed an addition of Rs. 2,03,66,977/-. This amount pertained to basic interior work and was disallowed on the ground that the impugned amount was not spent within three years from the transfer of the capital asset. Thereafter, penalty u/s 271(1)(c) of the Act was imposed for furnishing inaccurate particulars of income thereby concealing two particulars of income. The penalty levied was Rs. 46,15,157/-. The assessee's appeal against the imposition of penalty was allowed by the Ld. CIT (Appeals) by holding that this was not a fit case for levy of penalty. Now the department is in appeal before the ITAT against the deletion of the penalty by the Ld. CIT (Appeals). 3. The Ld. Sr. Departmental Representative submitted that since the Ld. CIT (Appeals) had partially confirmed the disallowance made by the AO, therefore, the Ld. CIT (Appeals) was patently wrong in deleting the penalty because prima faci....
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....e to the conclusion that in order to have the benefit under section 54F of the Income-tax Act, the construction should have been completed." Thus, essentially, although, the assessee has accepted the quantum disallowance, it does not automatically qualify for the imposition of penalty. The Ld. CIT (Appeals) has, in any case, allowed an amount of Rs. 3.0 crore paid to the builder towards cost of the unit. The reason for not allowing the exemption on the balance is not that the claim of the assessee was false but because the amount was not actually spent by the developer within the stipulated time. The Ld. CIT (A), while partially upholding the disallowance, held that any residential unit became habitable only when the interiors got completed and in its absence the unit was not habitable. 6.1 Further, it is also a settled law that penalty is not automatically leviable in each and every case where the quantum addition has been confirmed. The Hon'ble Supreme Court, in the case of Hindustan Steel Ltd. v. State of Orissa 83 ITR 26, had laid down the position of law by holding that the Assessing Officer is not bound to levy penalty automatically simply because the quantum addition has ....
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....nished inaccurate particulars. Thus, under penalty proceedings assessee can discharge his burden by relying on the same material on the basis of which assessment is made by contending that all necessary disclosures were made and that on the basis of material disclosed there cannot be a case of concealment of income or furnishing inaccurate particulars of income. Further if there is any material or additional evidence which was not produced during assessment proceedings same can be produced in penalty proceedings as both assessment and penalty proceedings are distinct and separate. In CIT vs. M/s Sidhartha Enterprises (2009) 184 Taxman 460 (P & H)(HC) it was held that the judgment in Dharmendra Textile cannot be read as laying down that in every case where particulars of income are inaccurate, penalty must follow. Even so, the concept of penalty has not undergone change by virtue of the said judgment. Penalty is imposed only when there is some element of deliberate default. 6.2 At this juncture it may be apposite to refer to the decision of the Hon'ble Supreme Court in the case of CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322, wherein the court while i....
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....shown that the conditions under section 271(1)(c) must exist before the penalty is imposed. The court further observed that there can be no dispute that everything would depend upon the return filed because that is the only document, where the assessee can furnish the particulars of his income. With regard to the provisions of section 271(1)(c ) of the Act pertaining to penalty, the Hon'ble Apex Court has authoritatively laid down that making of a claim by the assessee which is not sustainable will not tantamount to furnishing inaccurate particulars. In CIT vs. Reliance Petroproducts Pvt. Ltd. 322 ITR 158 (SC), the Hon'ble Apex Court has held as follows: "A glance at this provision would suggest that in order to be covered, there has to be concealment of particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The present is not a case of concealment of income. That is not the case of the Revenue either. However, the Ld. Counsel for the revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of income. As per Law Lexicon, the meanin....