Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI SANDEEP SINGH KARHAIL & SHRI GAGAN GOYAL
The present appeal has been filed by the assessee challenging the impugned order dated 21/04/2022, passed under section 250 of the Income Tax Act, 1961 (‘the Act’) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [‘learned CIT(A)’], which in turn arose from the order passed under section 271(1)(c) of the Act, for the assessment year 2015–16.
The only grievance of the assessee is against the levy of penalty under section 271(1)(c) of the Act.
Shazia Ashley Misquitta ITA no.1759/Mum./2022
The brief facts of the case as emanating from the record are: The assessee is an individual and for the year under consideration filed her return of income on 06/08/2015, declaring a total income of Rs. 61,650. During the year, the assessee earned income from teaching and income from other sources. The return of income filed by the assessee was selected for scrutiny and statutory notices under the Act were issued. During the assessment proceedings, it was observed that the assessee has claimed long-term capital loss at Rs. 7,36,071, on the sale of residential property wherein she is holding a 50% share. It was further observed that the cost of acquisition of the property, sale consideration, date of acquisition, and accordingly rate of indexation has been wrongly considered by the assessee. On pointing out the discrepancy, the assessee submitted a revised statement of income wherein the long-term capital loss was re-calculated at Rs. 1,10,174. Accordingly, the loss claimed by the assessee in return of income was reduced from Rs.7,36,071 to Rs.1,10,174 and carried forward to future years for set-off. Subject to the above, the returned income of the assessee was accepted vide assessment order dated 21/11/2017 passed under section 143 (3) of the Act.
Meanwhile, the penalty proceedings vide notice issued under section 271(1)(c) r/w section 274 of the Act were initiated. The Assessing Officer (‘AO’) vide penalty order dated 25/05/2018, passed under section 271(1)(c) of the Act, levied a penalty of Rs.1,28,934, on the basis that the assessee had claimed excess long-term capital loss of Rs.6,25,897, in the original return and thus wilfully attempt to defraud the Revenue by not disclosing the true and correct income. Accordingly, the assessee has submitted inaccurate particulars
Shazia Ashley Misquitta ITA no.1759/Mum./2022 of income and thereby concealed the true income within the meaning of section 271(1)(c) of the Act.
The learned CIT(A) vide impugned order dismissed the appeal filed by the assessee. Being aggrieved, the assessee is in appeal before us.
During the hearing, the learned Authorised Representative (‘learned AR’) submitted that during the assessment proceedings the assessee filed a revised computation of long-term capital loss after considering the correct cost of acquisition, sale consideration, date of acquisition, and accordingly rate of indexation. Learned AR further submitted that the assessee was assessed at the return of income and thus there was no concealment of income or furnishing of inaccurate particular of income on part of the assessee.
On the other hand, learned Departmental Representative by vehemently relying upon the orders passed by the lower authorities submitted that the assessee did not properly disclose the long-term capital loss and therefore penalty under section 271(1)(c) of the Act has been correctly levied.
We have considered the rival submissions and perused the material available on record. As is evident from the record, the assessee initially claimed long-term capital loss of Rs.7,36,071 on the sale of residential property, wherein she is holding a 50% share. On pointing out the discrepancy during the assessment proceedings, the assessee filed a revised statement of income wherein the long-term capital loss was re-computed at Rs.1,10,174. It is not a case wherein due to incorrect computation of capital loss there was any impact on the taxable income for the year under consideration. However, Page | 3
Shazia Ashley Misquitta ITA no.1759/Mum./2022 only the loss claimed in the return, which was carried forward to future years for set-off was reduced. Further, it is also not a case wherein the assessee has disputed the computation of long-term capital loss without any substantial basis. Thus, once the discrepancy was pointed out, the assessee readily revised the statement of income and recomputed the long-term capital loss at Rs.1,10,174, which has also been accepted by the Revenue without any variation in the assessment order. Therefore we are of the considered opinion that the assessee made a bona fide mistake in the computation of a long-term capital loss in its original return of income, which was corrected by the assessee by filing the revised computation during the assessment proceedings.
We find that the Division Bench of the Tribunal in Kiritkumar Fakirchand Mehta vs ACIT, in ITA No. 349/Ahd./2019, vide order dated 31/05/2022, observed as under:
“9.4 Further, the phrase furnishing “inaccurate particular” of income has not been defined under the provision of the Act. However, we note that the Hon’ble Supreme Court in the case of CIT vs. Reliance Petroproducts Pvt Ltd reported in 189 taxman 322 has discussed the term inaccurate particular by as “the word 'particulars' must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous”. Thus, to arrive at the conclusion that, the assessee has furnished inaccurate particulars of income, it has to be tested whether the detail furnished in the return of income is incorrect or erroneous or falls. In other words the element of consciousness in furnishing inaccurate particulars of income coupled with circumstantial evidences should be present in the particular case. Unless, the characters of inaccurate particulars of income as discussed above are present in any particular case, the penalty provisions under section 271(1)(c) of the Act cannot be attracted. 9.5 Thus, in view above discussion and considering the facts in totality, in our considered view the provisions of 271(1)(c) of the Act cannot be attracted in the given facts and circumstances. Hence we set aside the finding of the learned CIT (A) and direct the AO to delete the penalty levied by him under section 271(1)(c) of the Act. Hence the ground of appeal of the assessee is allowed.”
Shazia Ashley Misquitta ITA no.1759/Mum./2022
Thus, in view of the aforesaid findings, we are of the considered view that this is not a fit case for the levy of penalty under section 271(1)(c) of the Act. Accordingly, the grounds raised in the present appeal are allowed and the AO is directed to delete the penalty, as affirmed by the learned CIT(A).
In the result, the appeal by the assessee is allowed. Order pronounced in the open Court on 03/01/2023