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Income Tax Appellate Tribunal, ‘’ C’’ BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED
आदेश/O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-5, Ahmedabad, dated 25/01/2019 arising in the matter of penalty order passed under s. 271(1)(c) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2015-2016.
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The only issue raised by the assessee is that the learned CIT-A erred in confirming the penalty levied by the AO for Rs. 14,25,383/- under the provisions of section 271(1)(c) of the Act on account of furnishing inaccurate particulars of income.
The facts in brief are that the assessee in the present case is an individual and engaged in the activity of consultancy services. The assessee in the year under consideration has filed his return of income dated 25th of March 2016 declaring an income of 59,38,480/- which was subsequently revised dated 18th October 2016 by enhancing the total income at Rs. 1,28,95,558/- on account of the income under the head capital gain. However, the AO found that the assessee has filed his return of income dated 25th of March 2016 under the provisions of section 139(3) of the Act being a belated return of income. Accordingly the AO held that there is no provision under the Act for revising the belated return of income. Therefore the AO rejected the revised return filed by the assessee and framed assessment under section 143(3) of the Act based on the income declared in the original return of income filed dated 25th March 2016 and assessed the income at Rs. 1,33,75,470/- after making an addition of Rs. 69,19,339/- representing the capital gain on the transfer of capital asset. The AO in the assessment also initiated the penalty proceedings under section 274 read with section 271(1)(c) of the Act.
3.1 The assessee in the penalty proceedings contended that he has voluntary disclosed the income under the capital gain on the transfer of the property in the revised return dated 18th October 2016 and paid entire taxes thereon. According to the assessee, all the materials facts relating to the capital gain were duly disclosed by filing the revised return/ computations of income. Accordingly, the question of furnishing inaccurate particulars of income does not arise. Therefore there cannot be any penalty to be levied under section 271(1)(c) of the Act on the assessee on account of furnishing inaccurate particulars of income.
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However, the AO rejected the contention of the assessee by holding that the revised return filed by the assessee was invalid and therefore no credence could be given to such return of income. According to the AO, the particulars furnished by the assessee in the original return of income were not true but erroneous. Thus the assessee has furnished inaccurate particulars of income with respect to the capital gain added to the total income of the assessee. Thus the AO levied the penalty for ₹ 14,25,383/- being hundred percent of the amount of tax sought to evaded by the assessee under the provisions of section 271(1)(c) of the Act on account of furnishing inaccurate particulars of income.
Aggrieved assessee preferred an appeal to the learned CIT-A, who also confirmed the order of the AO.
Being aggrieved by the order of the learned CIT-A, the assessee is in appeal before us.
The learned AR before us filed a paper book running from pages 1 to 29 and contended that the assessee has made voluntary disclosure of the capital gain income before the detection by the Income Tax Department. According to the assessee, there was no notice issued upon the assessee under section 142(1) of the Act till the time the income disclosed by the assessee with respect to the capital gain in the revised return. Thus, there cannot be said that assessee has furnished any inaccurate particulars of income. Accordingly, the provisions of section 271(1)(c) cannot be invoked.
On the other hand the learned DR vehemently supported the order of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. In the present case, the assessee omitted to disclose the full amount of capital gain in original return of income filed under section 139(3)
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of the Act. However the assessee revised the return and disclosed correct amount of capital and paid due taxes. But the same was not accepted by the Revenue on reasoning that original return of income was filed belatedly. Accordingly the assessment was framed under section 143(3) of the Act based on the original return of income filed and additional capital gain disclosed in the revised return of income was added to the total income of the assessee. Accordingly, the AO held that capital gain disclosed in the original return of income was not as per the truth which amounts to furnishing inaccurate particulars of income and levied the penalty of Rs. 14,25,383/- being 100% of the amount of tax sought to be evaded under the provisions of section 271(1)(c) of the Act which came to be confirmed by the learned CIT-A.
9.1 The case of the learned AR for the assessee before us is that the assessee has not furnished any inaccurate of particular of income. As such the assessee voluntary before any detection or show cause notice to be issued by the Revenue disclosed correct amount of the capital gain by revising the return of income or by furnishing the revised computation of income. Thus the assessee disclosed all the material facts with regard to the capital gain.
9.2 We are in agreement with contention of the learned AR that assessee has revised the computation of income voluntary dated 18th October 2016, though case of the assessee at that time was selected for the limited scrutiny vide notice dated 13th September 2016 but there was not issued any notices under section 142(1) of the Act by the Revenue. The revenue authority was not even reached to the any prima facie conclusion that the amount of capital gain was not fully offered in the return of income. But the assessee voluntary revised the computation of income when issue came to his notice and paid the due taxes. Therefore it is assumed that, though the assessee in original return committed mistake in furnishing inaccurate amount of capital gain but the same is bona-fide mistake which was done away filing revised computation. We also note that AO in assessment framed under section 143(3) made the addition of capital based on the particular furnished in the
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revised return. Therefore in the given fact and circumstances it cannot be held that the assessee has concealed the income or furnished inaccurate particular of income.
9.3 At this juncture we find pertinent to refer the finding of this tribunal in case of Shreenath Share Consultancy vs. DCIT reported in 1 SOT 544 where, the assessee in the assessment proceeding was asked to establish the genuineness of amount credited in the books of account and to produce the party from whom amount was credited. The assessee instead of producing creditor accepted the amount credited as its income by filing revised computation of income. Accordingly the assessment was concluded on higher amount of income and penalty under section 271(1)(c) was imposed. On appeal the coordinate bench of this tribunal held the amount of income was voluntary offered by the assessee before detection of the same by the AO. Thus, the penalty cannot be levied. The relevant finding of the coordinate bench reads as under: The Commissioner (Appeals) after having held that the assessee’s case was not covered by Explanation 3 to section271(1)(c), was not justified in proceeding to upheld the levy of penalty on the basis of disclosed income Firstly, the Assessing Officer had not imposed penalty by considering the disclosure by the assessee as having been made after detection of any concealment by the Assessing Officer, and secondly the disclosure made by the assessee was voluntary and there was no detection of any concealment or undisclosed income by the Assessing Officer because simply asking the assessee to produce the creditor could not be termed as detection of undisclosed or concealed income. [Para 7]
9.4 Further, the phrase furnishing “inaccurate particular” of incomer 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
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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.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the Court on 31/05/2022 at Ahmedabad.
Sd/- Sd/- (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 31/05/2022 Manish