2010 (11) TMI 855 - AT - Income Tax

Summary

Issues Involved:
1. Confirmation of penalty levied under Section 271(1)(c) of the Income-tax Act, 1961.
2. Voluntary disclosure and its implications on penalty under Section 271(1)(c).
3. The role of application under Section 273A of the Income-tax Act in penalty proceedings.

Issue-wise Detailed Analysis:

1. Confirmation of Penalty Levied under Section 271(1)(c):
The primary issue in these appeals is the confirmation of penalties levied by the Assessing Officer (AO) under Section 271(1)(c) of the Income-tax Act, 1961. The penalties were confirmed by the Commissioner of Income-tax (Appeals) [CIT(A)] based on the AO's findings that the assessee failed to disclose long-term capital gains (LTCG) from land transactions in the original returns filed for the assessment years 2002-03 to 2005-06. The AO initiated penalty proceedings for furnishing inaccurate particulars of income and concealment of income, concluding that the assessee's actions were deliberate and not bona fide.

2. Voluntary Disclosure and Its Implications on Penalty:
The assessee argued that the disclosure of LTCG was voluntary and made in good faith through an application under Section 273A of the Act. The assessee contended that this voluntary offer should preclude the imposition of penalties. The Tribunal noted that the disclosure was made before any inquiry or investigation by the Department, and the AO accepted the computation of LTCG without any modifications. The Tribunal emphasized that the voluntary disclosure was motivated by a desire to clean up affairs and was made without any pending investigation or inquiry, thus qualifying as bona fide and in good faith.

3. The Role of Application under Section 273A in Penalty Proceedings:
The assessee filed an application under Section 273A, seeking waiver of penalties for the assessment years 2002-03 to 2005-06. The Tribunal examined the application and noted that the CIT, Surat, forwarded the information to the AO without deciding on the application. The Tribunal referenced case law, including the Hon'ble Madhya Pradesh High Court's decision in Addl. CIT v. Kanhaiyalal Jessaram, which held that disclosures made under Section 273A should be treated as voluntary and in good faith if no inquiry or investigation was pending. The Tribunal concluded that the assessee's disclosure met these criteria and that the penalty under Section 271(1)(c) should not be levied in such circumstances.

Conclusion:
The Tribunal held that the assessee's voluntary disclosure of LTCG was made in good faith and without any pending inquiry or investigation. The disclosure was accepted by the AO without any modifications, and the assessee paid the due taxes and cooperated fully. Consequently, the Tribunal deleted the penalties levied under Section 271(1)(c) and allowed the assessee's appeals. The order was pronounced in open court on 30/11/2010.