ARUN KUMAR GUPTA (HUF),DELHI vs. ACIT, NEW DELHI

The grounds of appeal are as under:-

The assessee filed online return declaring income of Rs.25,46,504/-. The return was selected for scrutiny with notice u/s 143(2) dated 28.09.2011. In response to the notice the assessee initially filed reply submitting computation of income, audited balance sheets and tax audit report, etc. in paper form. Other notices u/s 142(1) dt.10.01.2012 and dt.31.12.2012, were issued. In response to these notices assessee filed a rectification application to rectify the intimation of assessed income u/s 143(1) by way of including long term capital gain of Rs. 19,45,055/- which was left out from inclusion in the original computation and return of income. The rectification letter was filed since, the time limit for filing revised return under the provisions of section 139(5), had expired. The amount of capital gain was already included in the balance sheet submitted earlier, but was left out from computation of capital gain while preparing return of income. During assessment proceedings another error in capital gain to the tune of Rs 1,78,144/- was discovered which was also offered for taxation. The assessee paid capital gain tax with interest suo moto and submitted the receipted challans before commencement of scrutiny assessment. The Capital Gain as computed by the assessee and offered for taxation were accepted by the Assessing Officer without pointing out any discrepancy. The Assessing Officer initiated penalty proceedings u/s 271(1)(c) of Income Tax Act and imposed penalty of Rs.4,37,379/-.

Being aggrieved by the assessee, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

The Ld. AR submitted that it is a genuine case of omission and bona fide mistake of not including the capital gains at the time of preparing computation and return of income, although the amounts were disclosed in the Balance Sheet, prepared in support of Return. The assessee rectified the mistake of non inclusion of Capital Gain in Computation by surrendering the Capital Gain and deposited the tax with interest before the Commencement of Scrutiny assessment. The Ld. AR relied upon the following case laws: i. The Assistant Commissioner of Income Tax v. Ashok Raj Nath [2012] 19 ITR (Trib) (ITAT [Del] ii. The Commissioner of Income Tax v. Bhavinkumar M. Dagli [2015] 377 ITR 389 (Guj).

The Ld. DR submitted that the Assessing Officer rightly levied the penalty and the CIT(A) rightly sustained the penalty u/s 271(1) (c) of the Act, 1961.

We have heard both the parties and perused all relevant material available on record. It is pertinent to note that the assessee after receiving the notice u/s 143(2) filed revised computation after coming to the knowledge that the assessee has not included the capital gains at the time of calculating computation and filing return of income, although the amounts were disclosed in the balance sheet prepared in support of return. Thus, the assessee has admitted the mistake before the Assessing Officer could detect such omission. Thus, it is not a case of furnishing of inaccurate particulars or concealment of income before the Assessing Officer. Section 271 of the Act comes into picture when there is a failure to furnish returns or there is concealment of income or furnishing of inaccurate particulars before the Assessing Officer. But in the present case before the Assessing Officer, all the relevant facts were already available and the mistake has been rectified by the assessee prior to the mistake pointed out by the Assessing Officer to the assessee during the assessment proceedings. Therefore, the order of the CIT(A) is not correct, as there is no concealment of income or furnishing of inaccurate particulars. The penalty levied u/s 271(1)(c) of the Act is therefore quashed. The appeal of the assessee is allowed.

In result, the appeal of the assessee is allowed.