ITAT Deletes Section 271(1)(c) Penalty for Withdrawn Loss Claim
The Income Tax Appellate Tribunal (ITAT), Mumbai, deleted a penalty under Section 271(1)(c), citing that the said penalty cannot be levied if the loss claim was withdrawn by the company.
The assessee company, Synergy Art Foundation Ltd, filed its income tax return (ITR), declaring a loss of Rs 34,84,139. It claimed a capital loss of Rs. 26.07 lakh from closing the Yatra Art Funds investment, seeking carry-forward of loss. During the assessment proceedings, the assessee withdrew the claim when the AO asked it to submit details and justify the claim.
The AO added the amount to the income of the assessee and also levied a penalty under section 271(1)(c) of the Income Tax Act for alleged concealment of income and furnishing inaccurate particulars of income. Therefore, the assessee challenged the imposition of penalty before the Income Tax Appellate Tribunal (ITAT), Mumbai, arguing that it had only sought for carry forward of loss.
The Tribunal also agreed with the contentions of the assessee company, observing that the company had returned a loss and had only claimed carry forward of the loss, which would have been used against future income. The ITAT held that since the loss was withdrawn and no benefit was availed by the assessee, the required condition for levying a penalty under Section 271(1)(c) was not satisfied.
Therefore, the tribunal deleted the penalty under section 271(1)(c) of the Act.
Case Citation: M/s. Synergy Art Foundation Ltd Vs DCIT (ITAT Mumbai); ITA No. 6598/Mum/2025; 05/01/2026; 2012-13
