SHALLU BANSAL,,AHMEDABAD vs. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(3),, AHMEDABAD

Solitary grievance of the assessee is that the ld.CIT(A) has erred in confirming penalty of Rs.3,15,000/- which was imposed by the AO under section 271(1)(c) of the Income Tax Act, 1961.

Brief facts of the case are that the assessee has filed her return of income for the Asstt.Year 2008-09 on 30.7.2008 declaring total income at Rs.13,94,510/-. In this return of income the assessee has included a sum

The AO has initiated penalty proceedings under section 271(1)(c) of the Act for furnishing inaccurate particulars of income. He ultimately imposed penalty of Rs.3,15,000/- on this addition. Appeal to the CIT(A) did not bring any relief to the assessee.

In principle, the ld.counsel for the assessee did not dispute for visiting the assessee with penalty, but contended that as per sub-clause (iii) of section 271(1)(c) of the Act, penalty would be computed on the amount which is added to the income of the assessee. The assessee has already included a sum of Rs.10,19,405/- under different head i.e. “short term capital gain”. The AO has only changed the head from short term capital to unexplained cash credit. Now, how this total amount on which the assessee has already paid taxes under the head short term capital gain can be considered for visiting the assessee with penalty. He submitted that if there is any variation in the taxes on this addition, only to that extent penalty could be computed. In support of his contentions, he relied upon the following decisions:

On the other hand, the ld.DR relied upon the orders of the Revenue authorities.

We have duly considered rival submissions and gone through the record carefully. Sub-clause (iii) of section 271(1)(c) of the Act has direct bearing on the controversy. Therefore, we deem it appropriate to take note of this clause, which reads as under; "271. Failure to furnish returns, comply with notices, concealment of income, etc. ** ** ** ** ** ** ** ** ** (iii) in the cases referred to in Clause (c) or Clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefit the furnishing of inaccurate particulars of such income or fringe benefits:

A bare perusal of this clause would indicate that it provides a mechanism for computation of penalty. It contemplates that penalty will be computed either equivalent to the tax or three times of such taxes which sought to be evaded by an assessee by reason of concealment of income or furnishing of accurate particulars of income. In other words, the tax on the addition made to the income of an assessee are to be considered as sought to be evaded by reason of concealment or furnishing of inaccurate particulars, the penalty equivalent to that taxes or three time of that tax is to be computed against an assessee. In the present case, the assessee has offered short term capital gain on the

In the result, appeal of the assessee is partly allowed. Pronounced in the Open Court on 30th April, 2019.