2013 (5) TMI 76 - AT - Income Tax

Penalty u/s. 271(1)(C) - Long Term Capital Gain was calculated - Disallowance of interest expenses - Conealing the income and furnishing inaccurate particulars of income - Held that - Ld. A.O. specifically held in penalty order as the assessee has furnished inaccurate of his income and thereby concealing his income to the extent of Rs. 5,47,114/- . The assessee had not filed any reply before the A.O. and the A.O. has not violated the principle of natural justice. There was not ground of appeal before the CIT(A) of violation of principle of natural justice - Thus, the CIT(A) was right in confirming the order - However, in the interest of justice, the assessee is allowed one more opportunity to explain the reasons for not imposing penalty by the A.O - We set aside the order of the A.O - The assessee is directed to make full compliance of the notice of the A.O.

Summary

Issues:
Appeal against penalty u/s. 271(1)(C) for A.Y. 2005-06.

Analysis:
The appellant filed a return of Nil income for A.Y. 2005-06, which was scrutinized under section 143(3) of the IT Act. Discrepancies were found regarding the cost of acquisition of a flat and claimed interest expenses, leading to the initiation of penalty proceedings u/s. 271(1)(C) for concealing income and furnishing inaccurate particulars. The CIT(A) considered valuation reports and estimated the fair market value of the flat, resulting in a revised Long Term Capital Gain. Despite being given an opportunity to explain, the penalty was imposed by the Assessing Officer. The appellant challenged this penalty order before the CIT(A) but failed to comply with statutory notices, leading to the confirmation of the penalty.

The appellant, in the appeal before the ITAT, argued that the additions were debatable and the interest claim was an oversight, citing relevant case laws. The ITAT noted that the Assessing Officer had specifically mentioned concealment of income in the penalty order and that the appellant did not respond to the allegations. While confirming the penalty, the ITAT granted the appellant another opportunity to provide reasons for not imposing the penalty initially and directed full compliance with the notice.

In conclusion, the ITAT allowed the appeal of the assessee for statistical purposes, providing a chance to explain the reasons for not imposing the penalty earlier and emphasizing compliance with the notice issued by the Assessing Officer.