2012 (7) TMI 240 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - AO disallowed the loss as claimed by assessee on redeeming the units on 26- 03-2004, purchased back on 26-12-2003 - invoking provisions of section 94(7)- Held that - As the basis of dispute is whether the transactions dated 26-12-2004 and 26-03-2005 fall within the period of three months or not, because the Act, under section 94(7)(b)(i) uses the words after such Date , and the revenue authorities have used this expression against the assessee, which even the assessee has not denied, but the revenue authorities could not point which could lead to omission, concealment or inaccurate and certainly nothing has been found to be false - mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee - decided in favour of assessee.

Summary

Issues:
Levy of penalty u/s 271(1)(c) for furnishing inaccurate particulars of income based on provisions of section 94(7).

Analysis:
The case involved an appeal by the assessee against the order of the CIT(A) sustaining the penalty u/s 271(1)(c) imposed by the AO. The dispute arose from the assessee's purchase and sale of units of Sundram Bond Saver within a specific period. The AO disallowed the loss claimed by the assessee under section 94(7) and initiated penalty proceedings. The CIT(A) upheld the penalty, relying on Explanation 1 to section 271(1)(c) and various judicial precedents. The assessee contended that there was no deliberate omission or concealment of income, challenging the applicability of section 94(7) and the accuracy of the penalty imposition.

The ITAT examined the facts and legal arguments presented by both parties. It noted that the crux of the dispute was whether the transactions fell within the three-month period specified in section 94(7). The ITAT emphasized that the burden of proof in penalty proceedings lies with the department to establish concealment of income. Citing relevant judicial decisions, including the Hon'ble Supreme Court's interpretations of "inaccurate" and "concealment," the ITAT concluded that there was no deliberate omission or concealment by the assessee in this case. The ITAT highlighted that the mere making of an unsustainable claim does not amount to furnishing inaccurate particulars. Therefore, based on the lack of evidence supporting concealment or inaccuracy, the ITAT set aside the CIT(A)'s decision and canceled the penalty imposed by the AO.

In the final judgment, the ITAT allowed the appeal, emphasizing that the penalty could not be sustained in the absence of findings indicating incorrect, erroneous, or false information provided by the assessee. The ITAT's decision was grounded in the principles of burden of proof, lack of deliberate concealment, and the distinction between inaccurate particulars and unsustainable claims. The ITAT's detailed analysis focused on legal interpretations, precedents, and the specific circumstances of the case, ultimately leading to the cancellation of the penalty imposed under section 271(1)(c).