2013 (7) TMI 823 - AT - Income Tax

Penalty u/s 271(1)(c) - Long term capital gain - Sale of ancestral property - CIT upheld penalty - Held that - Explanation offered by the assessee, would go to show that the assessee discharged the burden placed upon it. Thus, in as much as on merits, the assessee had already declared the correct income before detection by the department by filing an application u/s273A of the act - it was admitted by the Department that the information came from the assessee without any suggestion or detection from the Department and notice under s. 148 of the Act was issued long after the settlement petition to the CIT. This would show that no enquiry was made with reference to the declaration filed u/s 273A of the Act by the assessee and no question was asked by the ITO as to the basis he is going to adopt for distributing the total income declared in the computation of income filed before CIT - Following decision of Balvantrai S Contractor v. ITO 2010 (11) TMI 855 - ITAT AHMEDABAD - Decided in favor of assessee.

Summary

Issues:
Assessee's appeal against penalty u/s. 271(1)(C) for A.Y. 2002-03.

Analysis:
1. The assessee filed a return of income showing total income of Rs.86,299, later filed an application u/s. 273A disclosing Long Term Capital Gain. Assessing Officer reopened assessment u/s. 147, determined total income at Rs.15,85,860, and initiated penalty proceedings u/s. 271(1)(C).
2. Assessee contended good faith disclosure and tax discharge, requesting penalty waiver. AO levied penalty of Rs.3,11,542. CIT(A) confirmed AO's action despite the assessee's submissions.
3. Assessee cited a similar case where penalty on identical facts was deleted by ITAT, involving co-owner of the land. Assessee sought penalty deletion based on the precedent.
4. ITAT referred to the previous case involving co-owner, where penalty was deleted due to the assessee disclosing correct income before detection by the department. ITAT found no fraud or neglect, deleting the penalty imposed by AO and confirmed by CIT(A).
5. Consequently, ITAT allowed the assessee's appeal, deleting the penalty imposed under section 271(1)(C) for A.Y. 2002-03.