2013 (9) TMI 1141 - AT - Income Tax

Penalty under s. 271(l)(c) - Held that - Penalty under s. 271(l)(c) of the Act was not leviable on account of wrong claim made by the assessee in his original return of income which was corrected in the return of income filed under s. 153A of the Act. - Decided in favour of assessee

Summary

Issues Involved:
1. Confirmation of penalty levied under section 271(1)(c) of the IT Act, 1961.
2. Concealment of particulars of income.
3. Furnishing inaccurate particulars of income.
4. Voluntary disclosure of income under section 153A.
5. Applicability of Explanation 5 to section 271(1)(c).

Detailed Analysis:

1. Confirmation of Penalty under Section 271(1)(c):
The primary issue in the appeal is the confirmation of a penalty of Rs. 2,00,000 levied by the Assessing Officer (AO) under section 271(1)(c) of the IT Act for concealing particulars of income. The assessee originally filed a return declaring an income of Rs. 1,36,317. A search operation under section 132 led to the discovery of incriminating documents, resulting in a revised return under section 153A declaring an income of Rs. 7,18,027. The AO completed the assessment at Rs. 7,68,030 and initiated penalty proceedings for concealing income related to short-term capital gains and unexplained cash creditors.

2. Concealment of Particulars of Income:
The AO argued that the assessee willfully concealed income by not declaring short-term capital gains and unexplained cash creditors in the original return. The penalty was levied based on the discrepancy between the original and revised returns. The assessee contended that the additional income was voluntarily disclosed in the revised return to avoid litigation and maintain peace. The AO, however, held that the concealment was deliberate and imposed the penalty.

3. Furnishing Inaccurate Particulars of Income:
The assessee argued that there was no concealment or furnishing of inaccurate particulars. The revised return under section 153A included sundry creditors of Rs. 95,000 and short-term capital gains of Rs. 2,86,589 and Rs. 2,81,965, which were not shown in the original return due to clerical mistakes. The assessee cited various judicial precedents to support the claim that mere disallowance of expenses or wrong claims does not amount to concealment or furnishing inaccurate particulars.

4. Voluntary Disclosure of Income under Section 153A:
The assessee maintained that the disclosure of additional income in the revised return was voluntary and not due to any detection by the Department. The AO and CIT(A) disagreed, stating that the revised return was filed due to the search operation and the incriminating documents found, making the disclosure non-voluntary. The CIT(A) confirmed the penalty, distinguishing the case from the precedents cited by the assessee.

5. Applicability of Explanation 5 to Section 271(1)(c):
The CIT(A) observed that Explanation 5 to section 271(1)(c) was not applicable as the additions were not related to "any money, bullion, jewellery or other valuable article or thing." The assessee argued that the explanation was not relevant to the facts of the case and that the penalty was unjustified. The Tribunal noted that the assessment was based on the revised return under section 153A, not the original return. The Tribunal found that the assessee had declared the income twice, once in the original return of the subsequent year and again in the revised return, indicating no concealment or furnishing of inaccurate particulars.

Conclusion:
The Tribunal concluded that the penalty under section 271(1)(c) was not justified. The income declared in the revised return under section 153A was the same as assessed by the AO, except for an addition of Rs. 50,000 on an estimated basis. The Tribunal held that making an incorrect claim does not amount to furnishing inaccurate particulars, as per the Supreme Court's judgment in CIT v. Reliance Petroproducts (P) Ltd. The penalty was deleted, and the appeal was allowed.

Judgment:
The appeal filed by the assessee was allowed, and the penalty levied under section 271(1)(c) was deleted.