CHANDRASHEKHAR BAGADE,PUNE V. ITO WARD 5(1), PUNE

ITA 958/PUN/2025

AI Insights

The case revolves around the penalty levied on Chandrashekhar Bagade by the Assessing Officer, which was confirmed by the CIT(A) / NFAC, for discrepancies related to capital gains and the exemption under section 54F of the Income Tax Act, 1961. Initially, the Assessing Officer treated the gains from the sale of row houses as short-term capital gains and denied the exemption under section 54F, which was contested by Bagade through multiple appeals. The Tribunal had earlier ruled that the gains were long-term capital gains and restored the matter to the CIT(A) for re-adjudication on the exemption issue, which was subsequently allowed. Despite these rulings, a penalty was levied, which Bagade appealed against, leading to this Tribunal decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 713365 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2013-2014
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMNATH P MURKUNDE
• Assessee Lawyers: SHARAD A VAZE
• Keywords: Set aside; Reasonable cause; Bonafide belief; Capital Gains
• Section: 143(3); 271(1)(c); 54F

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.958/PUN/2025 Assessment year : 2013-14 Chandrashekhar Bagade F 5, Windmill Village, Opp Ambrosiya, Paud Road, Pune – 411021 Vs. ITO, Ward 5(1), Pune PAN: AMXPB8229M (Appellant) (Respondent) Assessee by : Shri Sharad A Vaze Department by : Shri Ramnath P Murkunde Date of hearing : 30-07-2025 Date of pronouncement : 31-07-2025 O R D E R PER R.K. PANDA, VP: This appeal filed by the assessee is directed against the order dated 24.07.2023 of the Ld. CIT(A) / NFAC, relating to assessment year 2013-14. 2. The only issue raised in the grounds of appeal by the assessee is the levy of penalty of Rs.22,19,120/- by the Assessing Officer u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) and confirmed by the Ld. CIT(A) / NFAC. 3. There is a delay of 609 days in filing of the appeal before the Tribunal for which the assessee has filed the condonation application along with an affidavit Printed from counselvise.com 2 ITA No.958/PUN/2025 requesting for condonation of delay. The contents of the affidavit filed along with the condonation application read as under: “1. That I am assessed to tax under PAN AMXPB8229M. I had purchased the one plot in 2001 and on which I started construction in 2010 of two row houses. The construction was completed in March 2012. I sold the row houses in August 2012. I invested the sale proceeds in new residential property on 19/01/2013 to claim exemption u/s 54F of the Income Tax Act 1961. 2. The Assessing Officer accepted the gain as long-term capital gains but denied exemption u/s 54/54F as the new residential property could not be completed within 3 years. 3. I filed appeal before the first appellate authority, CIT(A) held it to be a short term capital gain and as a consequence exemption u/s 54/54F was rejected. 4. Thereupon, I filed second appeal to the Income Tax Appellate Tribunal. The Hon'ble Tribunal held in its order dt 25/06/2018 that the capital gains is long term capital gains. However, it set aside the issue of exemption u/s 54F to CIT(A) for re-adjudication. The Ld CIT(A) allowed the appeal vide his order dt 08/07/2019. 5. AO had, in the meanwhile, levied penalty u/s 271(1)(c) of the Income Tax Act 1961 for Rs.22,19,120/-. Against the penalty, I had filed appeal before the first appellate authority-NFAC, Delhi. 6. In view of my submission in para 1 to 4 above, I was under genuine impression that the cause for levy of penalty does not survive and as such the penalty will be cancelled automatically. 7. NFAC Delhi had issued 12 notices in connection with the penalty appeal. However, all the notices were uploaded on ITBA Portal. Not a single notice was issued physically by which the fact of penalty proceedings would have come to my notice. 8. I came to know of the order only when I started getting the calls from Income Tax Dept for the payment of penalty. This I came to know in February 2025. 9. Whatever stated above is true and correct to the best of my knowledge and belief.” 4. Referring to the above, the Ld. Counsel for the assessee submitted that since the quantum addition was already deleted by the Ld. CIT(A) / NFAC after the Printed from counselvise.com 3 ITA No.958/PUN/2025 order of the Tribunal restoring the matter to him for adjudication of allowability of 54F deduction, the assessee was under the bonafide belief that the penalty proceedings have been dropped. However, only when he got calls from the income tax department that the penalty has been levied the assessee came to know of the fact that the Ld. CIT(A) / NFAC has confirmed the penalty. Thereafter, he took the necessary steps for filing of the appeal. He accordingly submitted that the delay in filing of the appeal before the Tribunal should be condoned and the penalty levied by the Assessing Officer and upheld by the Ld. CIT(A) / NFAC should be deleted. 5. The Ld. DR on the other hand strongly objected to the arguments advanced by the Ld. Counsel for the assessee for condonation of delay. 6. After hearing both sides and considering the contents of the condonation application filed along with the affidavit, we are satisfied that there was a reasonable cause on the part of the assessee for the said delay in filing of the appeal. We, therefore, condone the delay and the appeal is admitted for adjudication. 7. Facts of the case, in brief, are that the assessee filed his return of income on 28.06.2013 declaring total income of Rs.5,96,090/-. The Assessing Officer completed the assessment u/s 143(3) of the Act on 10.02.2016 by making the Printed from counselvise.com 4 ITA No.958/PUN/2025 addition on account of long term capital gain at Rs.92,58,014/-. In appeal, the Ld. CIT(A) confirmed the order of the Assessing Officer in making the addition on account of long term capital gain of Rs.92,58,014/-. In this case, the assessee had transferred the land and row houses thereon giving rise to capital gain. The assessee had purchased a plot of land in the year 2001 on which two row houses were constructed in March, 2012. The assessee transferred the row houses on 14.08.2012 giving rise to long term capital gain qua the land and short term capital gain in respect of construction i.e. row houses superstructure. The assessee claimed exemption u/s 54F of the Act in respect of long term capital gain. The Assessing Officer completed the assessment u/s 143(3) of the Act on 10.02.2016 accepting the long term capital gain qua the land. However, he rejected the claim of exemption u/s 54F of the Act as the new residential property was not complete within three years from the date of transfer. The assessee filed an appeal before the CIT(A) who treated the entire capital gain arising from row houses as short term capital gain only. He, therefore, did not allow the claim of exemption u/s 54F of the Act. 8. The assessee filed second appeal before the Tribunal and the Tribunal vide order dated 29.06.2018 in ITA No.46/PUN/2017 allowed the assessee’s appeal holding that the capital gain arising from the sale of land is long term capital gain. However, the Tribunal restored the appeal to the file of the CIT(A) only on the issue of allowability of exemption u/s 54F of the Act. The CIT(A) vide order dated 08.07.2019 allowed the claim of exemption u/s 54F of the Act. Printed from counselvise.com 5 ITA No.958/PUN/2025 9. In the meantime, the Assessing Officer had levied the penalty u/s 271(1)(c) of the Acton 31.03.2018 for Rs.28,19,120/- which was confirmed by the CIT(A) on 24.07.2023. A perusal of the order of the CIT(A) shows that despite 12 opportunities granted by him, there was no response from the side of the assessee for which he decided the appeal ex-parte and confirmed the penalty so levied by the Assessing Officer. 10. Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal. 11. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. It is an admitted fact that the penalty was levied by the Assessing Officer on account of rejection of long term capital gain on sale of land and denial of exemption u/s 54F of the Act. However, a perusal of the order of the Tribunal shows that the Tribunal vide order dated 29.06.2018 in ITA No.46/PUN/2017, copy of which is placed at pages 4 to 12 of the paper book has allowed the assessee’s appeal holding that the capital gain arising from the sale of land is long term capital gain. However, the Tribunal restored the issue of alloowability of exemption u/s 54F of the Act to the file of the CIT(A) and the CIT(A) vide order dated 08.07.2019, copy of which is placed at 13 to 21 of the paper book, has Printed from counselvise.com 6 ITA No.958/PUN/2025 allowed the exemption u/s 54F of the Act. Thus, there is nothing left for levy of penalty u/s 271(1)(c) of the Act since the addition has already been deleted by the order of the Tribunal and subsequently by the CIT(A). We, therefore, set aside the order of the Ld. CIT(A) / NFAC and direct the Assessing Officer to cancel the penalty. The grounds raised by the assessee are accordingly allowed. 12. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 31st July, 2025. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 31st July, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘A’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune Printed from counselvise.com 7 ITA No.958/PUN/2025 S.No. Details Date Initials Designation 1 Draft dictated on 30.07.2025 Sr. PS/PS 2 Draft placed before author 31.07.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order Printed from counselvise.com "