No Penalty For Inadvertent Excess Section 54F/54B Claim | ITAT

Case Details: Amol Vasant Deshmukh vs. ITO, Ward-6(2), Pune - [2025] 181 taxmann.com 763 (Pune - Trib.)

Judiciary and Counsel Details

• Vinay Bhamore, Judicial Member
• Dr. Manish Borad, Accountant Member
• Sarang Gudhate, CA for the Appellant.
• Manoj Tripathi, Addl.CIT for the Respondent.

Facts of the Case

Assessee-individual filed his return of income for the relevant assessment year. The case was selected for limited scrutiny, and a notice under section 143(2) was issued to the assessee. During the assessment, it was noticed that the assessee claimed excess deduction under sections 54B and 54F.

The Assessing Officer (AO) initiated penalty proceedings under section 271(1)(c) for furnishing inaccurate particulars of income.AO contended that the assessee claimed an excess deduction in the return of income. However, the assessee rectified the mistake immediately upon the issuance of the notice under section 143(2). The return was revised, and the assessee paid the due taxes.

Unsatisfied with the explanation, the AO levied the penalty, which was confirmed by the CIT(A). The matter then reached the Pune Tribunal.

Tribunal Held

The Tribunal held that the assessee furnished all the particulars of income properly in the income tax return and correctly reported the Long-Term Capital Gain (LTCG). It is also not the case of the Revenue that the claim of deduction was not as per the provisions of the Act, and that any of the conditions provided under section 54F/54B of the Act has not been fulfilled.

The only mistake pointed out by the AO was the incorrect claim of a higher deduction under sections 54F/54B of the Act. It is further an admitted fact that the assessee revised the computation of income during the assessment proceedings itself.

All these facts clearly demonstrate that the assessee committed an inadvertent mistake by making a wrong claim for deduction. However, it is not a case of concealment of particulars of income or furnishing inaccurate particulars. Therefore, the penalty under section 271(1)(c) cannot be levied.

List of Cases Reviewed

• CIT v. Reliance Petroproducts (P.) Ltd. [2010] 189 Taxman 322/322 ITR 158 (SC) (para 13) followed

List of Cases Referred to

• Inder Singh v. State of Madhya Pradesh [2025] INSC 382 (para 2), Collector, Land Acquisition v. Mst. Katiji 1987 taxmann.com 1072 (SC) (para 2)
• CIT v. Reliance Petroproducts (P.) Ltd. [2010] 189 Taxman 322/322 ITR 158 (SC) (para 8).