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Income Tax Appellate Tribunal, DELHI BENCH ‘A’ : NEW DELHI
Before: SHRI N.K. SAINI & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER :
Appellant, M/s. B.K. Concast Pvt. Ltd. (hereinafter referred to as ‘the assessee’), by filing the present appeal sought to set aside the impugned order dated 14.11.2014 passed by CIT (A)-V, New Delhi qua the Assessment Year 2008-08 on the grounds inter alia that:-
“1. That the Short Term Capital Gain declared at Rs.10,70,72,206/- in the original return based on clerical error was subsequently revised at Rs.10,87,22,146/- by filing revised return voluntarily and suo moto. On facts and in law it was not a case of furnishing of inaccurate particulars of income warranting application of penal provisions u/s 271(1)(c) of I.T. Act.
That on facts and in law the initiation of Penal provisions and resultant levy of penalty of Rs.5,60,790 based on various grounds and reasoning assigned by the Ld. Assessing Officer was void, illegal, erroneous and without jurisdiction.
3. That the levy of penalty u/s 271(1)(c) sustained by the Ld. CIT(Appeals) for concealment of income and furnishing inaccurate particulars of income based on various grounds and reasoning recorded in the vide Appellate order dated 14.11.2014 deserves to be quashed and cancelled being void, illegal and without jurisdiction.”
2. Briefly stated, the facts of this case are : during the scrutiny of the return of income filed by the assessee declaring income of Rs.10,65,22,280/- qua the assessment year 2008-09 addition of Rs.16,49,870/- has been made on the ground that the assessee company has accepted that it has taken cost of acquisition at Rs.3,49,88,474/- instead of Rs.3,33,38,604/- and as such addition of Rs.16,49,870/- is made to the short term capital gain on sale of land, on account of excess cost of acquisition claim of the assessee.
The AO on the basis of addition of Rs.16,49,870/- sough to initiate penalty proceedings u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter ‘the Act’).
Penalty proceedings were initiated and despite issuance of a notice, assessee has not preferred to contest the same and consequently, the AO passed the penalty order as under :-
“7. In the case of the assessee company, penalty notice was issued to assessee fixing the penalty proceedings U/S 271 (1)( c) for hearing on 22.12.2010. No response to this notice was made by the assessee. Another notice dated 01.06.2011 was issued to the assessee fixing the case for hearing on 08.06.2011. On this date no body attended the proceedings nor any written submission was filed by the assessee. Sufficient opportunity have been given by the assessee has failed to avail them. Since the assessee fails to offer an explanation in this regard, therefore, the case of the assessee is covered by the deeming provision of clause A of explanation 1 of Section 271 (1)(c) and the addition of Rs.16,49,870/- deemed to represent the income in respect of which particulars have been concealed. It is also pertinent to mention here that assessee has not filed appeal before the Ld.CIT(A) against the assessment order. This reflects that assessee has accepted the addition in principle. Keeping in view of the above facts and circumstance of the case and in the light of above discussion, it is established that the assessee has concealed the particular of income and furnished inaccurate particular of income and liable to penalty u/s 271(1) (c) of the 1.T. Act, 1961 in respect of addition of Rs.16,49,870/- made in the returned income of the assessee company.
In view of the above, in terms of section 271 (1) (c) the penalty is calculated as under: (Amount. in Rs.) • Income in respect of which assessee has 16,49,870/- furnished inaccurate particulars of income for which tax has been sought to be evaded • Income Tax, surcharge & Edu. Cess thereon 5,60,790/- • Amount of Tax Sought to be Evaded 5,60,790/- • Minimum Penalty (100% of x 5,60,790/-) 5,60,790/- • Maximum Penalty (300% of x 5,60,790/-) 16,82,370/- Considering the facts & circumstances of the case, I hereby levy a penalty of Rs.5,60,790/- on the assessee.”
The assessee carried the matter before the ld. CIT (A) who has dismissed 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.
The ld. Counsel for the assessee challenging the impugned order contended that by filing the return of income qua AY 2008- 09, the assessee has not concealed income nor has furnished inaccurate particulars rather due to inadvertent mistake, he has wrongly calculated the cost of acquisition of the land and relied upon the judgment cited as CIT vs. Reliance Petroproducts Pvt. Ltd. – 322 ITR 158 (SC). However, on the other hand, the ld. DR for the relevant relied upon the order passed by the CIT (A).
Undisputedly, the assessee has admitted during the scrutiny proceedings that he has enhanced the cost of the acquisition of land, but due to inadvertence, for the purpose of calculating the short term capital gain on sale of land. It is also not disputed that assessee has himself revised the computation of income and paid the balance tax payable. 8. In the backdrop of the aforesaid facts and circumstances of the case, the sole question for determination in this case is “as to whether the assessee has concealed its income and has furnished inaccurate particulars of income.” 9. Bare perusal of the provisions contained u/s 271(1)(c) of the Act goes to prove that to impose penalty upon the assessee under the relevant provisions of the Act, two conditions are required to be fulfilled one: that the assessee must have furnished inaccurate particulars of income and two: the assessee must have concealed particulars of income from the tax authorities.
The issue in controversy has been dealt with by the Hon’ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. (supra). The operative part of which is reproduced for ready reference as under :-
“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.”
By applying the ratio of the judgment (supra), we are of the considered view that in this case, the assessee has neither furnished inaccurate particulars of income nor he has concealed the particulars of income from tax authorities, because the assessee has merely enhanced the cost of acquisition of the land for the purpose of computation of income stated to be due to inadvertent mistake, which he has subsequently revised and paid the tax on the remaining amount. In our view, this is a case of mere clerical mistake which was to be examined by the AO at the very outset to take into account the actual cost of the acquisition of the land to assess the short term capital gain.
Moreover, the cost of acquisition of the land was already in the notice of the tax authorities, the assessee being a tax payee. So, making incorrect claim does not amount to furnishing of inaccurate particulars. Moreover, in the penalty order, it is nowhere recorded that the details submitted by the assessee in its return are found to be incorrect or erroneous or false and in these circumstances, penalty u/s 271(1)(c) of the Act is not sustainable. 12. In view of what has been discussed above, we hereby allow the present appeal filed by the assessee and the impugned order passed by the ld. CIT (A) confirming the penalty order dated 24.06.2011 is hereby set aside. Order pronounced in open court on this 29th day of April, 2016. Sd/- sd/- (N.K. SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated the 29th day of April, 2016/TS