T.L. SRITHARAN,CHENNAI V. ACIT, NCC-14, CHENNAI

ITA 2634/CHNY/2025

AI Insights

The case involves T.L. Sritharan, who filed an appeal against the penalty imposed by the Assistant Commissioner of Income Tax for alleged furnishing of inaccurate particulars of income related to the computation of Long-Term Capital Gains (LTCG) on the exchange of plots. The Assessing Officer had re-computed the capital gains applying Section 50C of the Income-tax Act, 1961, which led to a higher tax liability than claimed by the assessee. The Tribunal considered the arguments that the issue was debatable and that a mere unsustainable claim does not amount to inaccurate furnishing of particulars. The Tribunal's decision was influenced by similar cases where penalties were not upheld under comparable circumstances.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 792491 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 25-09-2025
• Other Referred Cases: CIT v. Nayan Builders & Developers [2015] 56 taxmann.com 335 (Bom.), PCIT v. Harsh International (P.) Ltd. [2021] 128 taxmann.com 88 (Del.), CIT v. Reliance Petroproducts Pvt. Ltd. (2010) 22 ITR 158 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. RAGHUPATHY
• Assessee Lawyers: R. SIVARAMAN
• Keywords: Question of law; Sale consideration of property below Jantri Value; Capital Gains
• Section: 143(3); 271(1)(c); 50C

Judgement Text

"आयकर अपीलीय अिधकरण, ‘डी’ \u0011ा यपीठ, चे\u0016ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH: CHENNAI \u0019ी एबी टी. वक , \u0011ा ियक सद\" एवं \u0019ी जगदीश, लेखा सद\" क े सम) BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2634/Chny/2025 िनधा;रण वष; /Assessment Year: 2014-15 T.L. Sritharan, New No.13, Old No.1, Swaminathan Street, West mambalam, Chennai – 600 033. PAN: AEPPS 6766J Vs. The Asst. Commissioner of Income Tax, Non corporate circle-14, Chennai. (अपीलाथ\u0007/Appellant) (\b यथ\u0007/Respondent) अपीलाथ की ओर से/ Appellant by : Shri R. Sivaraman, Advocate IJथ की ओर से /Respondent by : Shri R.Raghupathy, Addl.CIT सुनवाई की तारीख/Date of Hearing : 20.11.2025 घोषणा की तारीख /Date of Pronouncement : 04.12.2025 आदेश / O R D E R PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2014-15 arises out of the order of Learned Commissioner of Income Tax (NFAC), Delhi [hereinafter “CIT(A)”] dated 20.06.2025 in the matter of assessment framed by the Assessing Officer [AO] u/s. 143(3) of the Income-tax Act,1961 (hereinafter “the Act”) dated 26.12.2016. Printed from counselvise.com ITA No.2634/Chny/2025 TL Sritharan :- 2 -: 2. There is a delay of 25 days in filing the appeal by the assessee. The assessee has filed condonation petition/affidavit stating the reasons for delay in filing the appeal. We have considered the petition/affidavit of delay in filing the appeal and satisfied that there was sufficient cause for not filing the appeal within the prescribed time limit. Hence, the delay is hereby condoned. 3. The assessee is an individual and has filed return of income declaring total income of Rs. 1,50,03,250/-. The assessee has claimed capital loss of Rs. 83,06,380/-, which was set off against the Long- Term Capital Gain (LTCG). The capital loss was computed on the exchange of plots. The Assessing Officer (A.O.) re-computed the capital gains on the exchange of plots by applying the provisions of Section 50C of the Act at Rs. 2,43,68,627/-. The A.O. levied penalty of Rs. 4,04,156/- u/s 271(1)(c) of the Act for furnishing inaccurate particulars of income in the computation of LTCG, after the addition was confirmed by the Ld. CIT(A). On appeal, the Ld. CIT(A) further confirmed the penalty. Printed from counselvise.com ITA No.2634/Chny/2025 TL Sritharan :- 3 -: 4. At the outset, the Learned Authorized Representative (Ld. A.R.) submitted that the A.O. has not recorded any satisfaction before initiating penalty proceedings u/s 271(1)(c) of the Act in the assessment order. The Ld. A.R. further submitted that the A.O. has not specified under which limb of Section 271(1)(c) of the Act, the penalty has been initiated whether for furnishing inaccurate particulars of income or for concealment of income. He also argued that the penalty has been levied merely on the re-computation of capital gains on exchange of plots, where the assessee had computed capital gain on the basis of net consideration, whereas the A.O. recomputed the value by applying the provisions of Section 50C of the Act. The Ld. A.R. contended that mere making of a claim which is not sustainable in law by itself does not amount to furnishing inaccurate particulars of income. He further submitted that the issue is debatable, as the substantial question of law arising from the quantum addition has been admitted by the Hon’ble Madras High Court in TCA No. 201 of 2023 dated 18.04.2023, and therefore penalty is not leviable. 5. The Ld. Departmental Representative (DR), on the other hand, relied upon the orders of the lower authorities. Printed from counselvise.com ITA No.2634/Chny/2025 TL Sritharan :- 4 -: 6. We have heard the rival submissions and perused the materials available on record. The A.O. has levied penalty u/s 271(1)(c) of the Act for furnishing inaccurate particulars of income based on the re- computation of capital gains. The assessee computed the capital gains on the exchange of plots based on the net sale consideration, whereas the A.O. invoked Section 50C of the Act in respect of such exchange and held that the assessee had furnished inaccurate particulars of income. The addition has been sustained by the ITAT, and the assessee has filed an appeal before the Hon’ble Madras High Court, which has been admitted the appeal on the following substantial questions of law: 1. “Whether, in the facts and circumstances of the case, the Tribunal is right in law in holding that the computation of capital gains for exchange of lands ought to consider both legs of the transaction and that it is only the net value arising out of such exchange, after considering the market value of both properties exchanged, that the provisions of Section 45 of the Act are to be applied?” 2. “Whether, in the facts and circumstances of the case, the Tribunal is right in law in rejecting the additional grounds filed by the Appellant, without appreciating that the grounds sought to be raised go to the root of the matter and involve a legal issue which can be raised at any stage?” 7. The Ld. A.R. has argued that since the issue is debatable, and merely because the assessee has made a claim which is not Printed from counselvise.com ITA No.2634/Chny/2025 TL Sritharan :- 5 -: sustainable in law does not amount to furnishing inaccurate particulars of income, penalty cannot be sustained. The Ld. A.R. has relied on the decision of the Hon’ble Bombay High Court in CIT v. Nayan Builders & Developers [2015] 56 taxmann.com 335 (Bom.) and the decision of the Hon’ble Delhi High Court in PCIT v. Harsh International (P.) Ltd. [2021] 128 taxmann.com 88 (Del.), wherein it was held that when a substantial question of law has been admitted in quantum proceedings on the very issue forming the basis of penalty, the penalty is not sustainable. 8. The Hon’ble Supreme Court in the case of CIT v. Reliance Petroproducts Pvt. Ltd. (2010) 22 ITR 158 (SC) has held that merely because a claim made by an assessee is not accepted by the revenue, it does not automatically mean a penalty is leviable. There must be proof of either the concealment of income or the furnishing of inaccurate particulars of income. A claim that is not allowed, even if incorrect, is not necessarily evidence of concealment or furnishing inaccurate particulars, especially if the primary facts were disclosed. Printed from counselvise.com ITA No.2634/Chny/2025 TL Sritharan :- 6 -: We, accordingly, reverse the order of the Ld. CIT(A) and cancel the penalty levied by the A.O. 8. In the result, the appeal filed by the assessee is allowed. Order pronounced on 04th day of December, 2025 at Chennai. Sd/- Sd/- (एबी टी. वक ) (ABY. T. Varkey) \u0011ाियक सद\" / Judicial Member (जगदीश) (Jagadish) लेखा सद\" /Accountant Member चे\u0010नई/Chennai, \u0013दनांक/Dated: 04th December, 2025. EDN, Sr. P.S आदेश क\u0016 \bितिल\u0019प अ\u001aे\u0019षत/Copy to: 1. अपीलाथ\b/Appellant 2. थ\b/Respondent 3. आयकर आयु\u0010/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय ितिनिध/DR 5. गाड\u0019 फाईल/GF Printed from counselvise.com "