PRADIPTA KUMAR GUHA,NEW DELHI V. DCIT CIRCLE 28(1), NEW DELHI

ITA 2326/DEL/2023

AI Insights

The case involves Pradipta Kumar Guha, who appealed against the penalty imposed by the National Faceless Assessment Centre (NFAC) under section 270A of the Income-tax Act, 1961, for the Assessment Year 2017-18. The penalty was related to the underreporting of income due to the alleged misreporting of the indexed cost of acquisition and improvement claimed on the transfer of a property share to M/s. JMSW Infracom Pvt. Ltd. The Assessing Officer (AO) had restricted the claimed costs to 45% of the total, corresponding to the actual share transferred, leading to an addition to the long-term capital gains and subsequent penalty. The Tribunal, referencing a decision by the Hon'ble Jurisdictional High Court, found the penalty imposition to be arbitrary as the specific limb of section 270A under which the penalty was applied was not clearly specified in the notice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34838 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2017-2018
• Other Referred Cases: Schneider Electric Sought East Asia (HQ) PTE Ltd Vs. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARPREET KAUR HANSRA
• Assessee Lawyers: VIKASH JAIN
• Keywords: Cost of acquisition; Capital Gains
• Section: 143(3)

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER ITA No. 2326/Del/2023 (Assessment Year: 2017-18) Pradipta Kumar Guha, A-12/2, Vasant Vihar, New Delhi Vs. National Faceless Assessment Centre, New Delhi (Appellant) (Respondent) PAN:AGTPG1303M Assessee by : Shri Vikash Jain, Adv Ms. Shrawasni, Adv Revenue by: Ms. Harpreet Kaur Hansra, Sr DR Date of Hearing 01/01/2025 Date of pronouncement 13/03/2025 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.2326/Del/2023 for AY 2017-18, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as „ld. NFAC‟, in short] in Appeal No. ITBA/NFAC/S/250/2023 24/1054186582(1) dated 06.07.2023 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 02.12.2019and penalty order passed u/s 270A of the Act dated 04.12.2021 by the National Faceless Assessment Centre, Delhi Assessing Officer, DCIT, Circle-16 (2), New Delhi (hereinafter referred to as „ld. AO‟). ITA No. 2326/Del/2023 Pradipta Kumar Guha Page | 2 2. Though the assessee has raised several grounds, the only effective issue to be decided in this appeal is as to whether the ld CIT(A) was justified in confirming the levy of penalty u/s 270A of the Act in the facts and circumstances of the instant case. 3. We have heard the rival submissions and perused the material available on record. The assessee furnished the return of income for AY 2017-18 on 27.07.2017 declaring total income of Rs. 10,91,33,380/-. During the year, the assessee declared long term capital gain of Rs. 10,67,49,040/- on transfer of portion of land and building to M/s. JMSW Infracom Pvt. Ltd under a collaboration agreement in respect of property at Vasant Nagar, New Delhi. The assessee received consideration of Rs. 14 crores and Rs. 2.75 crores as value of construction cost of floors for the ownership of the assessee. The assessee claimed indexed cost of acquisition of Rs. 3,17,81,250/- and cost of improvement of Rs. 11,65,926/- being free hold conversion charges of the property and Rs. 69,985/- being a conveyancing charges for the period on which indexation benefits were applied to claim deduction of Rs. 14,69,710/-. During the course of assessment proceedings, the ld AO perused the collaboration agreement and found that the share of the property transferred to the builder was only 45% and the balance 55% of the property had been handed over to the builder only for the purpose of construction of the classified shares in the property. Accordingly, the ld AO proceeded to restrict the indexed cost of acquisition and improvement at 45% share as against 100% share claimed by the assessee, which resulted in an addition of Rs. 1,82,88,028/- to the long term capital gains. Penalty u/s 270A of the Act stood initiated for under reporting income in consequence of misreporting of income in terms of Section 270A(9) of the Act and show cause notice was issued for the same. But in the said show cause notice, ITA No. 2326/Del/2023 Pradipta Kumar Guha Page | 3 the ld AO did not specify under which limb or which of Section 270A(9) of the Act, the case of the assessee falls. The assessee gave a detailed reply to the show cause notice and ultimately penalty stood levied u/s 270A(9) of the Act @200% in the sum of Rs. 86,64,868/- with regard to excess claim of indexed cost of acquisition . This action of the ld AO was upheld by the ld CIT(A). 4. At the outset, the assessee had made complete disclosure of the entire share of transfer of property in the computation of income itself. Even in the ITR at page 134 of the Paper Book, the assessee had claimed ownership only for basement, 1st and 2nd floor. This goes to prove that the assessee had disclosed clearly his share alone in the ITR with regard to the ownership but had erroneously claimed excess indexed cost of acquisition and improvement only for the computation of long term capital gains. There was absolutely no underreporting income in consequence of misreporting of income in the instant case. The ld AO says that assessee case falls u/s 270A(9)(a) of the Act which talks about misreporting or suppression of facts, which is absolutely not applicable in the instant case. Hence, it is clear case where the ld AO had directly applied the higher penalty percentage provided in Section 270A(9) of the Act without mentioning under which clause thereon the case of the assessee falls. Non mentioning of the specific clause clearly specifying offences committed by the assessee, would become fatal to the penalty proceedings per se. Reliance in this regard is placed on the decision of the Hon‟ble Jurisdictional High Court in the case of Schneider Electric Sought East Asia (HQ) PTE Ltd Vs. CIT reported in 443 ITR 186(Del) wherein, it was held as under:- “6. Having perused the impugned order dated March 9, 2022, this court is of the view that the respondents' action of denying the benefit of immunity on the ground that the penalty was initiated under section 270A ITA No. 2326/Del/2023 Pradipta Kumar Guha Page | 4 of the Act for misreporting of income is not only erroneous but also arbitrary and bereft of any reason as in the penalty notice the respondents have failed to specify the limb \"under-reporting\" or \"misreporting\" of income, under which the penalty proceedings had been initiated. 7. This court also finds that there is not even a whisper as to which limb of section 270A of the Act is attracted and how the ingredients of sub- section (9) of section 270A is satisfied. In the absence of such particulars, the mere reference to the word \"misreporting\" by the respondents in the assessment order to deny immunity from imposition of penalty and prosecution makes the impugned order manifestly arbitrary.” 5. Further, we hold that there is no misreporting or underreporting of income as the entire details relevant for computation of income are already placed on record in ITR itself. Hence, this is not a fit case for levy of penalty u/s 270A of the Act. Accordingly, grounds raised by the assessee are allowed. 6. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 13/03/2025. -Sd/- -Sd/- (YOGESH KUMAR U.S.) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 13/03/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "