COMMISSIONER OF INCOME TAX, GANDHINGAR vs. NIMABEN PARMODKUMAR PATEL

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TAXAP/442/2018HC GujaratGJHC24024931201805 May 2018Author: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, upholding the Tribunal's decision to delete the penalty. The Court noted that the issue pertained to penalty under Section 271(1)(c) of the Act. The assessee had initially failed to offer capital gains from the sale of agricultural land but subsequently corrected their position and offered the income for taxation. The Tribunal had accepted the assessee's defense that they acted under a bona fide impression that such income was not assessable to capital gains, having been guided by their Chartered Accountant. The Court found the explanation reasonable, considering the attendant circumstances, including the prompt correction by other co-owners. The Court concluded that no question of law arose from the Tribunal's order, and therefore, the appeal was dismissed.

What were the facts?

The Revenue is in appeal against an order of the Income Tax Appellate Tribunal (Tribunal) dated July 31, 2017. The appeal concerns a penalty of Rs. 29,68,908 levied by the Assessing Officer (AO) under Section 271(1)(c) of the Income-tax Act, 1961. The penalty was deleted by the Commissioner of Income Tax (Appeals) and subsequently by the Tribunal. The Tribunal relied on its prior decisions in similar cases involving other members of the same family. The High Court had previously dismissed a similar appeal by the Revenue in Tax Appeal No. 1051 of 2017 on February 12, 2018.

What were the issues?

1. Whether the Appellate Tribunal has erred in law and on facts of the case in deleting the penalty of Rs. 29,68,908/= levied by the AO under Section 271(1)(c) of the Income-tax Act? Assessee's Contention: The assessee argued that the penalty was wrongly levied. The assessee had initially not offered to tax capital gains arising from the sale of agricultural land, believing it was not assessable. The assessee claimed to have been guided by their Chartered Accountant and acted under a bona fide impression. Upon noticing the omission, the assessee unconditionally offered to pay tax on the income, and other co-owners also promptly corrected their positions. Revenue's Contention: The Revenue's contention is implicit in the question of law raised, which challenges the deletion of the penalty by the Tribunal. The Revenue likely argued that the initial non-disclosure constituted concealment of income or furnishing of inaccurate particulars, warranting the penalty.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
C/TAXAP/442/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL No. 442 of 2018 ============================================================= COMMISSIONER OF INCOME TAX, GANDHINGAR Versus NIMABEN PARMODKUMAR PATEL ============================================================= Appearance : Mrs MAUNA M BHATT, Advocate for the PETITIONER for the RESPONDENT(s) No. 1 ============================================================= CORAM: HONOURABLE Mr. JUSTICE AKIL KURESHI and HONOURABLE Mr. JUSTICE B.N. KARIA 5th May 2018 ORAL ORDER (PER : HONOURABLE Mr. JUSTICE AKIL KURESHI) Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal, Ahmedabad [“Tribunal” for short] dated 31st July 2017, raising following question for our consideration : “Whether the Appellate Tribunal has erred in law and on facts of the case in deleting the penalty of Rs. 29,68,908/= levied by the AO under Section 271 [1] (c) of the Income-tax Act ?” Page 1 of 3

The issue pertains to penalty under Section 271 [1](c) of the Income-tax Act, 1961 which the Assessing Officer imposed, but CIT [A] and the Tribunal deleted, relying on the Tribunal’s order in similar cases of an assessee of the same family. Against such judgment, Tax Appeal No. 1051 of 2017 filed by the Revenue came to be dismissed by an order dated 12th February 2018, making following observations :

“2. The issue pertains to penalty under section 271(1)(c) of the Act. The assessee had filed the return of income, in which, he had not offered to tax capital gain arising out of sale of agricultural land. When this was noticed by the Assessing Officer, the assessee corrected his position and unconditionally offered to pay tax on such income. Simultaneously, other co- owners of the land who had similarly not disclosed the income in their returns, also paid their taxes.

3.

In the penalty proceedings, the defense of the assessee was that he was under bona-fide impression that such income was not assessable to capital gain since it was arose out of sale of agricultural land. He claimed that he was guided by his Chartered Accountant and carried such mistake and belief. This defense was accepted by the Tribunal and penalty was dropped. C/TAXAP/442/2018 ORDER

4.

The explanation of the assessee was thus found reasonable and accepted by the Tribunal and viewed from attendant circumstances including the fact that the other co-owners also promptly corrected their position vis-a-vis taxability of income.

5.

No question of law arises. Tax Appeal is dismissed.” In the result, this Tax Appeal is also dismissed. [Akil Kureshi, J.] [B.N Karia, J.] Prakash

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