2010 (4) TMI 750 - AT - Income Tax

Penalty - The long-term capital loss was adjusted against short-term capital gain of Rs. 17,33,475 earned by the assessee - whether the assessee has concealed any facts with regard to her income or furnished inaccurate particulars about any part of her income - The assessee could be under bona fide belief that one can be set off against the other in the same year - The assessee could be under bona fide belief that one can be set off against the other in the same year - In absence of proving falsity in the details regarding computation of income, we are of the view that she cannot be charged with the penalty - Appeal is allowed

Summary

Issues Involved:
1. Confirmation of penalty under section 271(1)(c) of the Income-tax Act, 1961.
2. Validity of the appeal fees paid by the assessee.
3. Determination of whether the assessee's claim was a bona fide mistake or an act of furnishing inaccurate particulars of income.

Issue-wise Detailed Analysis:

1. Confirmation of Penalty under Section 271(1)(c):

The primary issue in this appeal is whether the penalty of Rs. 28,082 under section 271(1)(c) of the Income-tax Act, 1961, was rightly confirmed by the CIT(Appeals). The assessee had filed a return declaring a total income of Rs. 15,27,130, which included a long-term capital loss of Rs. 82,844 and a short-term capital gain of Rs. 17,33,475. The long-term capital loss was initially adjusted against the short-term capital gain, but this claim was withdrawn during the assessment proceedings after the issuance of a notice under section 143(2). The Assessing Officer (AO) did not find the assessee's explanation of the adjustment being a mistake satisfactory and imposed the penalty, which was upheld by the CIT(Appeals).

The CIT(Appeals) relied on the decision in the case of Naresh Kumar Verma v. Dy. CIT, where the Tribunal upheld the penalty for making a false claim under section 10B. The Tribunal in the present case examined whether the assessee's act constituted furnishing inaccurate particulars of income or concealment. The Tribunal noted that all facts regarding the computation of losses and gains were disclosed by the assessee, and there was no finding of a mala fide claim by the AO. Thus, the Tribunal concluded that the penalty was not justified as the claim was a bona fide mistake, not a deliberate act of furnishing inaccurate particulars.

2. Validity of the Appeal Fees Paid:

The registry issued a notice to the assessee stating that the appeal fees paid were short by Rs. 9,500. The assessee's counsel relied on the decision of the Hon'ble Patna High Court in the case of Dr. Ajith Kumar Pandey v. ITAT, which held that for penalty appeals under section 271, a fee of Rs. 500 is sufficient and not based on the assessed income. The Tribunal agreed with this judgment and held that the fees paid by the assessee were in order, allowing the appeal to proceed on merits.

3. Determination of Bona Fide Mistake:

The Tribunal analyzed whether the claim of set-off of long-term capital loss against short-term capital gains was a bona fide mistake. The assessee argued that the mistake was inadvertent, and all particulars were correctly furnished. The Tribunal considered several precedents, including the Supreme Court's decisions in the cases of Concord of India Insurance Co. Ltd. v. Smt. Nirmala Devi, Dilip N. Shroff v. Jt. CIT, and CIT v. Reliance Petroproducts (P.) Ltd. These cases emphasized that mere omission or negligence would not constitute a deliberate act warranting penalty and that the bona fide nature of the mistake should be considered.

The Tribunal distinguished the present case from Naresh Kumar Verma, where the facts were inaccurately presented. Here, the computation of income was accepted by the AO, and the only issue was the incorrect set-off, which the assessee claimed was a bona fide mistake. The Tribunal concluded that the assessee's act did not amount to furnishing inaccurate particulars of income, and the penalty should not have been levied.

Conclusion:

The Tribunal allowed the appeal, holding that the penalty under section 271(1)(c) was not justified as the assessee's claim was a bona fide mistake. The fees paid for the appeal were deemed appropriate, and the detailed analysis of relevant case laws supported the assessee's contention.