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Income Tax Appellate Tribunal, DELHI BENCH ‘A’ : NEW DELHI
Before: SHRI J.S. REDDY & SHRI A.T. VARKEY
PER A.T. VARKEY, JUDICIAL MEMBER :
This appeal is preferred by the revenue against the order of the CIT (Appeals)- XXX, New Delhi dated 26.02.2013 for the assessment year 2006-07.
The sole issue that is before us is deletion of penalty of Rs.12,74,450/- levied by AO under section 271(1)(c) of the Income-tax Act, 1961 (hereinafter ‘the Act’) on account of undisclosed income from capital gains.
Brief facts of the case are that the assessee is a retired Brigadier of Indian Army and earns income under the head ‘salary’ (pension income). The assessee had filed return of income for AY 2006-07 declaring an income of Rs.1,68,420/-. The case of the assessee was picked up for scrutiny. The assessee participated in the scrutiny proceedings and produced the bank account details; and brought to the knowledge of the AO that his wife had sold 5,00,000 equity shares of M/s. Quantum Stocks Pvt. Ltd. for Rs.1,60,94,000/- crores. The assessee filed revised computation of income and deposited the tax payable of Rs.16,73,682/- with the department before the assessment was completed and later on, the AO after making some additions of short term capital gains raised a demand of Rs.59,027/- which was also paid by the assessee. The AO initiated penalty proceedings against the assessee. The assessee participated in the penalty proceedings and brought to the knowledge of the AO that the assessee was of the bonafide belief that income from long term/short term capital gains was exempt u/s 10 (38) of the Act, so it does not form part of the total income; and that the assessee did not had any intention to deliberately hide or conceal the income or has not filed any inaccurate particulars before the AO which would warrant penalty against the assessee. The assessee cited the cases of K.C. Builders vs. CIT – (2004) 135 taxman 461 (SC), CIT vs. Rahuljee & Co. (2001) 115 taxman – 0509 (Del.), CIT vs. Geo Sea Foods 244 ITR 44 (Ker.) to state that mere omission in the return of an item of receipt does neither amount to concealment nor deliberate furnishing of inaccurate particulars of income unless and until there is some evidence to show or some circumstances found from which it could be gathered that the omission was attributable to an intention or desire on the part of the assessee to hide or conceal the income so as to avoid the imposition of tax thereon. In order that penalty u/s 271(1)(c) is imposed, it has to be proved that the assessee has consciously made the concealment or furnished inaccurate particulars of its income, as held by Hon’ble Supreme Court in the case of K.C. Builders (supra). However, the AO was not 100% which comes to Rs.12,74,450/-.
Aggrieved by the said order of the AO, the assessee preferred an appeal before the ld. CIT (A) who was pleased to delete the penalty.
Aggrieved by the said decision of the CIT (A), the revenue is before us.
Ld. DR for the revenue contended that the assessee who was a retired Brigadier from Army ought to have reflected the long term capital gains and short term capital gains in his income and he only came out with the revelation of long term capital gains and short term capital gains of his wife during the relevant scrutiny proceedings only. Thus, according to the ld. DR, there was wilful concealment and there was a deliberate attempt on the part of the assessee to conceal the income. Therefore, the penalty was rightly initiated by the AO and the CIT (A) erred in deleting the same.
So, he wants us to reverse the order of the CIT (A) and uphold the order of the AO.
Since the assessee is not represented before us, we have gone through the records and carefully examined the facts of the case and the decisions of the Hon’ble Supreme Court relied by the ld. CIT (A) to adjudicate this issue. We find that the assessee was a retired Brigadier of the Army and he had a bank account bearing no.708890 with the ABN Amro Bank which stands in the joint name of Ashish Dube (assessee) and Mrs. Danise Dube (wife). During the scrutiny assessment proceedings, the assessee himself brought to the notice of the AO that the assessee had purchased 5,00,000 shares of M/s. Quantum Stocks Pvt. Ltd. in the year 2000 i.e. on 11.03.2000 and 29.05.2000 for a sum of Rs.50 lakhs and the said initial investment in shares of M/s. Quantum Stocks Pvt. Ltd. by his wife was out of the post retirement benefits and other income of the assessee. The assessee brought to the notice of the AO that he had sold these shares in the relevant assessment for Rs.1,60,94,000/- which included the return of share application money of Rs.6 lakhs. The assessee was of the bonafide belief that the income from long term/short term capitals gains is exempted u/s 10(38) of the Act and does not form part of the total income. The assessee had filed income- tax return u/s 139 of the Act and had pointed out that in the return of income, the receipt even if he wanted to disclose could not have been reflected because in the prescribed form of the return of income also, there was no column for exempt income and only deduction under Chapter VI-A is required to be disclosed and bonafidely believed that Chapter III income is exempt. The assessee also pointed out that the agricultural income though exempt is required to be reported because it is included for rate purpose under the Finance Act. We take note that the assessee had filed revised computation of self-assessment tax and paid Rs.16,73,682/-; and thereafter, an order u/s 143(3) was passed wherein additional demand of Rs.59,027/- was raised and the said demand was also paid by the assessee on 29.01.2009. The assessee had not preferred any appeal before the CIT (A) so the order of the AO became final in respect of quantum. The only question is whether the action of the assessee attracts section 271(1)(c) of the Act. We find that the assessee has participated in the scrutiny assessment; answered all questions and queries of the AO; also he did not conceal any facts before the AO; filed the revised computation of his income; and filed self- assessment tax also. The assessee’s explanation that he was of the bonafide belief that income from long term and short term capital gains is exempt u/s 10 (38) of the Act
AO is able to show that the explanation of the assessee is false or he has not been able to substantiate his explanation. We find that there is no deliberate attempt on the part of the assessee either to conceal income or to file inaccurate particulars of income. The assessee at the time of assessment proceedings has given all the details before the completion of the assessment proceedings. His explanation given to the AO has not been found to be false. Therefore, we concur with the CIT (A) that the long term/short term capital gains of the assessee’s wife on which assessee had filed the revised return and had offered the tax before the completion of the assessment proceedings and the omission reflected in the return of income, was due to bonafide mistake on the part of the assessee. So, we are inclined to uphold the decision of the CIT (A) and delete the penalty.
In the result, the appeal of the revenue is dismissed.
Order pronounced in open court on this 4th day of March, 2016.