TaxTMI 
TaxTMI 
2019 (5) TMI 1445
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....Income Tax (A) has upheld the imposition of penalty of Rs. 8,95,256/- imposed u/s 271(1)( c) of the Income Tax Act, 1961 (hereinafter called 'the Act'). 2.0 Brief facts of the case are that during the year under consideration, the assessee company was engaged in the business of running of hotels in various locations spread all over the country. The return of income was filed declaring an income of Rs. 4,28,30,390/-. The assessment was completed at an income of Rs. 5,76,72,750/- after making the following additions/disallowances:- i) Addition on account of disallowance u/s 40(a)(ia) of the Act to the tune of Rs. 1,24,49,495/- ii) Addition on account of short term capital gain to the tune of Rs. 23,92,871/-. 2.....
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....diction and liable to be quashed. The CIT (A) has grossly erred in upholding the same. 3. That in the absence of any specific charge, the levying of penalty U/s 271(1)(C) is illegal, bad in law and is liable to be quashed. 4. That the AO had no jurisdiction and authority to pass the impugned penalty order and hence the penalty order is illegal, bad in law and without jurisdiction. 5. That the A.O. and CIT(A) have erred in law and on facts in not appreciating that this is a straight forward case of disallowance of expenses and hence penalty provisions are not attracted . 6. That the A.O. and CIT (A) have erred in law and on facts in not appreciating that on the given facts and circumstances the issues of n....
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.... in law and unwarranted and cannot be justified by any material on record. 14. That the appellant craves leave to add, amend, alter and or modify the grounds of appeal of the said appeal. All of the above grounds of appeal are without prejudice and are mutually exclusive to each other." 3.0 At the outset, the Ld. Authorised Representative (AR) submitted that since the quantum addition pertaining to the disallowance u/s 40(a)(ia) had been deleted totally by the ITAT, penalty could not survive on this addition. With respect to the other addition of Rs. 4,73,881/- pertaining to the short term capital gain, the Ld. AR submitted that the notice u/s 271 read with Sec 274 served on the assessee was vague as it did not specify ....
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....and and building mentioned in the report. 3.2 Reliance was placed on the judgment in the case of CIT vs. Bacardi Martini India Ltd reported in 288 ITR 585 wherein it was held that disallowance of claim cannot be a ground to impose penalty under section 271(l)(c). Reliance was also placed on the ITAT's decision in DCIT vs. JMD Advisors Pvt Ltd reported in 124 ITD 223 wherein it was held by the ITAT Delhi benches that no penalty can be levied on the addition made in the assessment on the basis of a valuation report of the DVO. 3.3 In response, the Ld. Senior Departmental Representative (Sr. DR) submitted that on page 40 and 42 of the assessment order, penalty u/s 271(1)(c) has been specifically initiated for furnishing inaccurate partic....
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....ssessee in this regard. 4.1 As far as the addition pertaining to short term capital gain is concerned, it is clear that in the instant case it cannot be said that the assessee had withheld any relevant information regarding the short term capital gains from the AO. The claim of the assessee was based on the valuation report of an architect which was partly accepted by the Ld. CIT (A) also. There is no factual finding by the AO that the assessee had furnished any inaccurate particulars while bifurcating the value between land and buildings while computing short term capital gains. 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 clai....