Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCHES (CAMP AT MEERUT
Before: SHRI N.S. SAINI & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER : The appellant, Shri Ram Kumar Gupta (hereinafter referred to as ‘the Assessee’) by filing the present appeal, sought to set aside the impugned order dated 30.05.2017 passed by Ld. CIT (Appeals), Meerut, by partly allowing the penalty order dated 29.09.2016 passed u/s 271(1)(c) of the Income-tax Act, 1961 (for short ‘the Act’), qua the assessment year 2013-14 on the grounds inter alia that :-
“1. That the ld. CIT (A) has erred in law as well as on the facts of the case by confirming the imposition of concealment penalty u/s 271(1)(c) of the Income Tax Act, 1961 to the extent of Rs.47,360/- allegedly holding that mistake was not bona fide and the revised computation of income filed by the appellant cannot be considered as suo-motu and the observation made by the ld. CIT (A) to the effect that revision of income was made after discovery of concealment on the part of the ld. AO is ill-founded and are devoid of supporting material on record.
2. That the ld. CIT (A) has erred on fact by not accepting the explanation given by the assessee that the claiming of long term capital loss was only a bonafide clerical mistake and no malafide intention was involved therein and also that there was no concealment of income on the part of the appellant and therefore the confirmation of penalty of Rs.47,360/- is totally unjust, unlawful & unwarranted and therefore the same deserves to be cancelled.”
Briefly stated the facts necessary for adjudication of the controversy at hand are : On the basis of completed assessment under section 143 (3) of the Income-tax Act, 1961, penalty proceedings were initiated u/s 271(1)(c) of the Act. Assessee in its original return filed along with computation of income has shown the capital loss of Rs.1,10,503/- under the long term capital gains and thereafter he has revised computation of income showing long term capital gain profit of Rs.2,29,870/-. AO reached the conclusion that the assessee by filing the original return has shown total income as long term capital gain profit of Rs.3,40,373 and thereby furnished the inaccurate particulars of his income.
Declining the contentions raised by the assessee that it was a bonafide mistake on the part of the assessee and that he has immediately revised the return even before issuance of the show- cause notice by the AO during assessment proceedings and penalty proceedings are not maintainable, AO proceeded to levy the penalty of Rs.71,000/- i.e. @ 100% on the concealed amount of Rs.3,40,373/- u/s 271(1)(c) of the Act.
Assessee carried the matter by way of an appeal before the ld. CIT (A) who has given part relief by restricting the penalty to Rs.47,360/- on the concealed income of Rs.2,29,873/- by partly allowing the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal.
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Undisputedly, the assessee has filed the original return with computation of income showing capital loss of Rs.1,10,503/- under long term capital gain which was later on revised by showing long term capital gain profit of Rs.2,29,870/-. It is also not in dispute that revised return along with computation of income filed by the assessee has been accepted by the Revenue.
In the backdrop of the aforesaid facts and circumstances of the case, order passed by the lower Revenue authorities and arguments addressed by the ld. AR to the parties, the sole question arises for determination in this case is:-
“as to whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income during assessment proceedings while interpreting the provisions contained u/s 271(1)(c) of the Act?”
The ld. AR for the assessee challenging impugned order contented that penalty levied by the AO and confirmed by ld. CIT (A) is not sustainable on the grounds inter alia that AO, at the time of passing the assessment order, has not made himself satisfied as to under which limb of section 271(1)(c) the penalty is sought to be levied; that when the revised return filed by the assessee has been accepted by the Revenue without any objection, the same is to be treated as bonafide and relied upon the decision rendered by the Hon’ble Madhya Pradesh High Court in case of CIT vs. Suresh Chand Mittal – (2001) 241 ITR 124 (MP), confirmed by the Hon’ble Apex Court cited as (2001) 251 ITR 9.
However, on the other hand, ld. DR for the Revenue to repel the arguments addressed by the ld. AR for the assessee contended that when the assessee has proved to have filed the return when cornered by the AO during assessment proceedings, the penalty has been rightly levied/confirmed and relied upon the decision rendered by the Hon’ble Apex Court in Mak Data (P.) Ltd. vs. CIT- 358 ITR 593.
Bare perusal of the assessment order passed u/s 143 (3) of the Act goes to prove that at the time of completing the assessment, AO has not satisfied himself as to whether assessee has “concealed particulars of income” or has furnished “inaccurate particulars of such income” during the assessment proceedings rather recorded general satisfaction that “penalty proceedings u/s 271(1)(c) of the Act has been initiated separately”. So, when at the time of completing the assessment order, the AO was not sure enough as to under which limb of section 271(1)(c) of the Act he sought to initiated the penalty proceedings, the subsequent penalty proceedings are not sustainable in the eyes of law.
Moreover, AO while passing the order under section 271(1)(c) of the Act proceeded to initiate the penalty proceedings, as is evident in para 2 of the penalty order, on the premise that the assessee had concealed particulars of income, however, AO while recording his finding in para 3 page 3 of the penalty order proceeded to hold that the assessee has furnished inaccurate particulars of income. So, on the one hand, AO is initiating the penalty proceedings for concealment of particulars of income but levied the penalty for furnishing the inaccurate particulars of income. All these facts go to prove that the AO has not recorded satisfaction by applying his mind to initiate the penalty proceedings as required u/s 271(1)(c) but on the whims and fancies levied the penalty as per his subjective satisfaction. So, when AO himself is not sure as to under which limb of section 271(1)(c) he is going to impose the penalty, the entire penalty proceedings stand vitiated and as such penalty is liable to be deleted on this score only.
Furthermore, when Revenue without any objection has accepted the revised return filed by the assessee claiming long term capital gain profit of Rs.2,29,870/- which was on account of the fact that the assessee has recorded the full cost of the land whereas he has purchased half share of the land in question to claim the long term capital gain. This mistake on the part of the assessee appears to be bonafide particularly in the face of the fact that the revised return has been accepted by the Revenue without any objection.
Hon’ble Madhya Pradesh High Court in case cited as Suresh Chand Mittal (supra) later on confirmed by Hon’ble Supreme Court held that once the revised return along with explanation has been accepted by the Revenue without any objection the same could be treated as bonafide one by returning following findings :-
It is well settled that under s. 271(1)(c), initial burden lies on the Revenue to establish that assessee had concealed the income or had furnished inaccurate particulars of such income. The burden shifts to the assessee only if he fails to offer any explanation for the undisclosed income or offers explanation which is found to be false by the assessing authority. However, proviso to Expln. 1 provides for shifting of this burden again where the explanation offered by the assessee is found to be bona fide. In the present case, though it is true that assessee had not surrendered at all and that he had done so on the persistent queries made by AO but once the revised assessment was regularized by the Revenue and once the assessing authority had failed to take any objection in the matter, the declaration of income made by the assessee in his revised returns and his explanation that he had done so to buy peace with the Department and to come out of vexed litigation could be treated as bona fide in the facts and circumstances of the case. Therefore, Tribunal was justified in cancelling the penalty levied by AO and affirmed by CIT (A) in the facts and circumstances of the case.
Moreover, merely claiming exemption from the capital gain tax by disclosing the transaction which is subject matter of the capital gain tax does not attract the penalty u/s 271(1)(c) of the Act.
So, filing an incorrect claim would not amount to furnishing of inaccurate particulars of income when the entire transaction of purchase and sale of land has been brought on record by the assessee. Hon’ble Supreme Court in case cited as CIT vs. Reliance Petro Products Pvt. Ltd. – 322 ITR 158 (SC) decided the identical issue by returning following findings :-
“A glance at the provisions of section 271(1)(c) of the I.T. Act, 1961 suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word “particulars” used in section 271(1)(c) would embrace the detail of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous.
Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars.”
In view of what has been discussed above, the case law relied upon by the ld. DR for the Revenue i.e. Mak Data (P.) Ltd. (supra) is not applicable to the facts and circumstances of the case because in that case numerous queries have been raised by the AO during assessment proceedings and during assessment proceedings, the assessee has filed inaccurate particulars of income. But in the instant case, before the issuance of notice u/s 143 (2), assessee in order to rectify his mistake filed revised return with explanation that instead of claiming half of the cost of the land in question he has claimed full cost of the land due to inadvertence and oversight which appears to be a bonafide mistake and as such, penalty proceedings u/s 271(1)(c) of the Act are not attracted.
In view of what has been discussed above, we are of the considered view that penalty levied by the AO and confirmed by ld. CIT (A) is not sustainable in the eyes of law, hence ordered to be deleted. Consequently, appeal filed by the assessee is allowed. Order pronounced in open court on this 16th day of January, 2019.