2015 (1) TMI 1235 - AT - Income Tax

Penalty u/s 271(1)(c) - difference in Long term Capital gains between the revised return and the original return - Held that - In the instant case, the revised return of income was filed within the time prescribed u/s 139(5) of the Act. Even though the assessed filed the revised return of income after the receipt of notice u/s 143(2) of the Act, yet the admitted fact remains that the assessing officer did not seek any type of particulars in that notice. Hence the mistake in the Long term Capital gain could not have come to the notice of the AO at that point of time, meaning thereby, it should be construed that the assessee has declared the higher amount of Long term capital gain voluntarily upon its detection. Hence, we are unable to agree with the view of the tax authorities that the revised return of income was not voluntary one, but the assessee was constrined to enhance the Long term capital gain only upon the receipt of notice u/s 143(2) of the Act. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the assessing officer to delete the penalty levied on the enhanced Capital gain amount. - Decided in favour of assessee. With regard to the addition of ₹ 1,40,373/- made in the assessment order, we notice that the assessee has omitted to declare the same in the revised return of income also and no convincing explanation was given for the same. Hence we confirm the penalty levied on the above said amount. With regard to the balance amount, we have already noticed that the AO has failed to give the details of the same. Hence we restore the same to his file with the direction to reconsider the same after giving necessary details to the assessee.

Summary

Issues:
Challenge to penalty under section 271(1)(c) of the Act for assessment year 2004-05.

Analysis:
The appellant contested the penalty imposed by the Assessing Officer (AO) and confirmed by the Ld CIT(A) under section 271(1)(c) of the Act. The penalty was levied due to discrepancies in the original and revised returns of income. The AO held that the revised return, filed after initiation of scrutiny, was not voluntary, leading to the penalty. The Ld CIT(A) upheld the penalty based on the non-voluntary nature of the revised return and questionable claims made by the assessee.

Upon review, the Tribunal observed that while the AO determined concealed income at a higher amount, the actual additions in the assessment order were significantly lower. The AO failed to provide details justifying the penalty amount. The key issue revolved around the treatment of the enhanced Long Term Capital Gain in the revised return. The tax authorities considered it as concealed income, as the revision occurred post the notice under section 143(2), indicating non-voluntary action by the assessee.

The appellant argued that the revised return was voluntary, filed within the prescribed timeframe, and without any specific request for details by the AO during the initial notice. Citing a precedent, the appellant contended that disclosure of additional income in a revised return, even post notice, did not constitute concealment. The Tribunal noted that the AO's lack of inquiry during the notice period implied that the assessee voluntarily declared the higher income upon self-detection.

The Tribunal differentiated this case from the precedent where a revised return was filed beyond the prescribed time. In this instance, the revised return was timely, and the AO's failure to seek particulars negated the charge of non-voluntary disclosure. Consequently, the Tribunal set aside the penalty related to the enhanced Capital Gain amount, emphasizing the voluntary nature of the disclosure.

Regarding another addition in the assessment order that was omitted in the revised return without a satisfactory explanation, the Tribunal upheld the penalty. However, due to the lack of details provided by the AO for a balance amount, the Tribunal directed a reconsideration with necessary explanations to the assessee.

In conclusion, the Tribunal partially allowed the appeal, overturning the penalty on the enhanced Capital Gain amount while confirming the penalty on the omitted income. The case highlighted the importance of voluntary disclosure and the necessity for detailed justifications in penalty determinations.