2012 (8) TMI 763 - AT - Income Tax

Penalty u/s 271(1)(c) - consideration for transfer of ownership rights of a film received in AY 2006-07 - agreement signed in 2007-08 - assessee disclosed the consideration amount in AY 2006-07 - CIT (A) vide order for AY 06-07 held that the said amount could only be taxed in next AY 2007-08 - assessee filed revised computation of income for AY 07-08 before finalization of assessment of said AY, not accepted by AO - Held that - Aforesaid factual matrix nowhere proves that the assessee had either concealed the income or furnished any inaccurate particulars. The very fact that it had duly mentioned the consideration in year of receipt itself proves its bonafides. Even otherwise also, every instance of addition in the assessment proceedings does not ipso facto led to conclusion that an assessee is guilty of concealment etc. as the penalty proceedings are altogether different in nature. Deletion of penalty stands confirmed - Decided against Revenue

Issues:
Challenge to deletion of penalty under section 271(1)(c) by ld CIT (A) for Assessment Year 2007-08.

Detailed Analysis:

1. Background and Assessment Year 2006-07:
The appellant, a partnership firm involved in copyrights of motion pictures, received a sum regarding transfer of ownership rights in the movie "Amar Akbar Anthony" in Assessment Year 2006-07. The amount was not treated as sales in the Profit & Loss Account, leading to its addition by the Assessing Officer. The CIT (A) later directed that the consideration should be taxed in Assessment Year 2007-08.

2. Revised Computation and Penalty Proceedings:
Before finalizing the assessment for Assessment Year 2007-08, the appellant submitted a revised computation of income and Profit & Loss Account, including the consideration amount. However, the Assessing Officer did not accept the revision, adding the amount and issuing a penalty notice under section 271(1)(c) for alleged failure to disclose all material facts.

3. Assessee's Explanation and Penalty Imposition:
The appellant explained that the omission in the original return was due to a dispute, and upon the CIT (A)'s order, they revised the return and accounts. Despite this, the Assessing Officer imposed a penalty of 100% of the tax sought to be evaded, considering it a case of false explanation and non-disclosure.

4. Deletion of Penalty by CIT (A):
The CIT (A) deleted the penalty, stating that the appellant had disclosed the amount in the earlier assessment year, indicating no intention to conceal the income. The Revenue appealed, arguing that the appellant's conduct amounted to concealment, citing relevant case law and requesting to uphold the penalty.

5. Arguments and Case Law References:
The appellant contended that they were not guilty of furnishing inaccurate particulars or concealing income, emphasizing the disclosure in the previous assessment year. Case laws such as CIT vs. Reliance Petro Products Pvt. Ltd. and Metal Rolling Works Ltd. vs. CIT were cited to support the position that disclosure in the original return negates the accusation of concealment.

6. Judicial Analysis and Conclusion:
After detailed hearings and reviewing lower authorities' orders and case law, the Tribunal found that the appellant had disclosed the consideration in the year of receipt and that the penalty proceedings should not automatically lead to a conclusion of concealment. Relying on the judgments in Reliance Petro Products Ltd. and Metal Rolling Works Ltd., the Tribunal upheld the CIT (A)'s decision to delete the penalty, rejecting the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the deletion of the penalty under section 271(1)(c) for Assessment Year 2007-08 based on the appellant's disclosure in the earlier assessment year and the absence of intent to conceal income.

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