Loading judgment…
Facts
The AO levied a penalty of Rs. 2,50,750/- under Section 271(1)(c) for disallowing Long-Term Capital Gains (LTCG) of Rs. 8,11,490/-, considering it bogus. The assessee did not contest the quantum addition but challenged the penalty, arguing that all transaction details were duly disclosed.
Held
The ITAT held that since the assessee had disclosed all relevant material regarding the LTCG transaction in the return of income, there was no conscious or deliberate concealment or furnishing of inaccurate particulars. Relying on judicial precedents, the tribunal concluded that the penalty could not be levied and deleted the impugned penalty.
Key Issues
Whether a penalty under Section 271(1)(c) for concealment or furnishing inaccurate particulars of income is leviable when the assessee had disclosed all relevant details of the Long-Term Capital Gains transaction, even if the quantum addition was accepted.
Sections Cited
250, 271(1)(c), 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
M/s Gyanchand Poddar HUF, Room No. 330, 4, Ballav Das Street, Bara Bazar, Machua Bazar - 700007 [PAN: AABHG5275Q] ……..…...…………….... Appellant vs. ITO Ward 43(1), Kolkata, 3, Govt. Place (West), Kolkata – 700001 ................................ Respondent Appearances by: Assessee represented by : Sunil Surana, AR Department represented by : Sandip Sarkar, JCIT, Sr. DR Date of concluding the hearing : 01.09.2025 Date of pronouncing the order : 02.09.2025 O R D E R PER BENCH 1. This appeal arises from order dated 20.05.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”) by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereafter “the Ld. CIT(A)].
2 In this case, the Ld. AO levied a penalty of Rs. 2,50,750/- u/s 271(1)(c) of the Act. In the quantum matter the addition of Rs. 8,11,490/- made by disallowing the Long-Term Capital Gains (LTCG) claimed by the assessee was not contested in first appeal. However, the Ld. AO has levied the penalty on the reasoning that the LTCG was bogus and hence penalty was clearly leviable.
1.1 The assessee carried this matter in appeal where he could not M/s Gyanchand Poddar HUF succeed since the Ld. CIT(A) held that the share transaction giving rise to the LTCG was bogus and therefore, the impugned penalty was certainly leviable.
2. The assessee has approached the ITAT against the impugned order with the following grounds:
“1. For that the notice initiating penalty proceeding emanated from assessment is bad in law as neither the assessment order nor the notice it does not mention the specific charge on the basis of which the penalty proceedings has been initiated and therefore no proper opportunity of being heard was granted.
For that the penalty imposed is otherwise also bad in law for submissions of inaccurate particulars of income when the AO has given a finding that the assessee did not disclose the income. 3 For that the penalty order passed by is without the Faceless AO jurisdiction and therefore the penalty order is liable to be quashed. 4 For that the reassessment proceedings initiated and completed were invalid and bad in law and therefore the penalty proceedings initiated in the course of such proceedings are also bad in law. 5 For that even otherwise on merits the order was not justified the assessee placed all the materials and evidences on record to prove the genuineness of the transactions for which bonafide explanation was filed and the department failed to prove that the provisions of section 271(1)(c) were applicable. 6 For that the penalty imposed is otherwise bad in law since all details and evidences to prove the capital gain were filed, the transaction was bonafide and no material as brought on record that the explanation of the assesee was not acceptable.” 2.1 Before us, the Ld. AR argued on the legal ground that no specific indication was there regarding the charge on the basis of which the penalty was initiated and hence the said penalty was legally not tenable. On merit the Ld. AR stated that the LTCG was claimed on the basis of a genuine transaction but to buy peace and bring finality to proceedings the assessee chose not to agitate the quantum matter. The Ld. AR argued that there was neither any concealment nor furnishing of any inaccurate particulars since the assessee had duly disclosed the transaction in the return of income.
2.2 The Ld. DR relied on the orders of authorities below.
M/s Gyanchand Poddar HUF 3. We have carefully considered the rival submissions and have gone through the records before us. It is seen that the assessee simply accepted the Ld. AO’s contention that the LTCG was allegedly bogus. It is a matter of fact that the details regarding the said LTCG were duly presented in the return of income in the first round and also in the second round when proceedings u/s 147 of the Act were initiated. Thus, technically speaking this is not a case where the facts were hidden from the assessing authority. Thus, following the case of Balaji Vegetable Products (P) Ltd. reported in 290 ITR 172 (Kar), it deserves to be held that there was no conscious or deliberate concealment on the part of the assessee. Following the case of Hindustan Steel Ltd. reported in 83 ITR 26 (SC), it deserves to be held that penalty will not ordinarily be imposed until and unless the assessee either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. We may also draw strength from the case of Smifs Capital Markets Ltd. reported in 149 Taxmann.com 376 (Cal), to hold that since all relevant material was duly disclosed by the assessee hence penalty cannot be levied for concealment of income. In light of this discussion the impugned penalty is deleted.
3.1 Since, the assessee has got relief on merit hence the legal challenge to the penalty is not specifically adjudicated.
In result, appeal of the assessee is allowed.
Order pronounced on 02.09.2025