2016 (8) TMI 1215 - AT - Income Tax

Levy of penalty under section 271(1)(c) - Held that - Since assessee disclosed complete facts in the return of income as well as at the assessment stage and all the transactions are carried out through D-Mat Account and banking channel, therefore, it may not a case of furnishing of inaccurate particulars of income so as to levy the penalty against the assessee. The decisions relied upon by ld. counsel for the assessee also support the case of the assessee that it is not a fit case of levy of penalty. AO in the assessment order initiated the penalty proceedings for concealment of income but in the penalty order, Assessing Officer levied the penalty for furnishing inaccurate particulars of income. Therefore, Assessing Officer was not definite in his conclusion and finding as to on which account penalty should be imposed against the assessee. May be the addition on merit have been confirmed considering the long term capital gain to be income from other sources, but the facts clearly disclose that it is not a fit case of levy of penalty under section 271(1)(c) of the Act for furnishing inaccurate particulars of income. - Decided in favour of assessee.

Summary

Issues:
Challenge against the levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 for assessment year 2003-04.

Analysis:
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-II, Ludhiana challenging the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. The assessee had declared a total income of &8377; 14,83,440/- with a Long Term Capital Gain on shares amounting to &8377; 10,76,250/-. The Assessing Officer, upon verifying the transactions, found discrepancies related to the sale of shares, specifically from a particular scrip named Country Credit Capital Ltd. Consequently, the amount shown as sale proceeds was taxed under section 68 of the Act, leading to the imposition of the penalty, which was upheld by the Commissioner of Income Tax (Appeals).

The learned counsel for the assessee argued that the penalty matter was similar to a case involving Shri Rajnish Thakur, where the penalty was canceled by the ITAT Chandigarh Bench. The counsel emphasized that the assessee had disclosed all relevant facts and details during the assessment, including providing purchase bills, sale bills, and broker account details. The transactions were conducted through a D-Mat Account and banking channels, with payments received by cheque. Referring to relevant case laws, it was contended that the penalty for furnishing inaccurate particulars of income was not justified in this case. The counsel pointed out inconsistencies in the Assessing Officer's approach, where penalty proceedings were initiated for concealment of income but imposed for furnishing inaccurate particulars. Citing precedents, it was argued that the penalty should be canceled due to the full disclosure of facts by the assessee.

Upon review, the ITAT Chandigarh Bench noted that a similar case involving Shri Rajnish Thakur had the penalty canceled, leading to the decision to set aside the penalty imposed on the assessee. The Tribunal found that the assessee had disclosed all relevant details and conducted transactions transparently through authorized channels, indicating that the penalty under section 271(1)(c) was not warranted. Consequently, the penalty was canceled, and the appeal of the assessee was allowed.

In conclusion, the ITAT Chandigarh Bench, following the precedent set in a related case, canceled the penalty imposed on the assessee for assessment year 2003-04. The Tribunal found that the assessee had provided complete information and conducted transactions legitimately, leading to the decision to set aside the penalty.