The assessee is an individual that earned income from “Salary”. During the assessment proceeding, the AO disallowed the claim of House Rent Allowance u/s. 10(13A) as there is a failure to produce evidence in support of his claim. Further, the A.O. made other disallowance, i.e. account of depreciation, bank charges, repairs etc. The assessee did not challenge the assessment order in appeal. The AO applied penalty u/s. 271(1)(c) for furnishing inaccurate particulars of income, which was upheld by the CIT (A). Aggrieved by the decision, the assessee filed belayed appeal (delay of 229 days) before the Tribunal.

The Tribunal condoned the delay, as the assessee was diagnosed with cancer which provides for reasonable cause for failing to file an appeal in time. On the penalty, the Tribunal concluded that the AO had taken contrary stands in the assessment order and penalty proceedings. In the assessment order, it mentioned that the assessee failed to file any details, while penalty proceedings it mentioned furnished inaccurate particulars of income. The mere disallowance of claim does not entitle levy of penalty. (AY. 2013-14).