2014 (8) TMI 61 - AT - Income Tax

Penalty u/s 271(1)(c) Capital gains liability u/s 50C Held that - The calculation of capital gains was nil and on this belief transaction was not disclosed in assessee s return of income - the assessee became liable for capital gain and he offered the same for taxation - The revised computation of capital gain was accepted by the Revenue and exemption u/s 54 was duly granted to the assessee - capital gains liability arose on account of application of sec. 50C of the Act - stamp duty value of the subject property was taken as the consideration deemed to have been received by the assessee - In view of the deeming provision u/s 50C, the assessee has made liable for capital gains tax - There has been no concealment or deliberate Act on the part of the assessee in furnishing inaccurate particulars of income, warranting imposing of penalty u/s 271(1)(c) of the Act - relying upon CIT Vs Harnarain 2011 (10) TMI 14 - DELHI HIGH COURT - no penalty can be imposed, if the assessee surrenders his income voluntarily even after receipts of questionnaire, in absence of detection or information of concealment by the Revenue - the order of the CIT(A) has correct and in accordance with law and no interference is called for law Decided against Revenue.

Summary

Issues involved:
- Appeal against CIT(A) order imposing penalty under section 271(1)(c) of the Act
- Whether penalty for concealment of income is leviable for voluntary disclosure during assessment proceedings
- Application of section 50C of the Act in determining capital gains liability
- Interpretation of the term "concealment" in the context of penalty under section 271(1)(c)

Analysis:
1. The appeal was filed by the Revenue against the CIT(A) order imposing a penalty under section 271(1)(c) of the Act. The CIT(A) allowed the appeal of the assessee based on various judicial pronouncements supporting the claim that penalty for concealment of income is not leviable for voluntary disclosure of income even during assessment proceedings. The Delhi High Court's decision in a specific case highlighted that no penalty can be imposed if the appellant surrenders income voluntarily after receiving a questionnaire, without any detection or information in the possession of the revenue. This reasoning led the CIT(A) to conclude that imposing a penalty on a salaried employee for a significant amount would be harsh.

2. The Tribunal considered the facts of the case, where the assessee had sold a residential house and purchased another one, resulting in capital gains liability due to the application of section 50C of the Act. The Tribunal noted that the assessee had not deliberately concealed any information or furnished inaccurate particulars of income. The stamp duty value of the property was deemed as the consideration received by the assessee, leading to the capital gains tax liability. Citing the Hon'ble Jurisdictional High Court's decision in a specific case, the Tribunal emphasized that before imposing a penalty under section 271(1)(c), it must be established that the concealment was a deliberate act with mens rea. The Tribunal highlighted that surrendering income voluntarily, even after receiving a questionnaire, does not indicate non-voluntariness unless there is evidence to the contrary. The Tribunal upheld the CIT(A) order as correct and in accordance with the law, dismissing the appeal of the Revenue.

3. The judgment focused on the interpretation of the term "concealment" in the context of penalty under section 271(1)(c) of the Act. It emphasized that mere omission from the income tax return does not amount to concealment unless there is evidence of intention to hide or conceal income to avoid tax. The Tribunal referred to relevant judicial decisions to support the conclusion that surrendering income voluntarily, even after questionnaire receipt, does not automatically lead to the imposition of a penalty. The absence of detection or information indicating concealment by the revenue authorities was crucial in determining the applicability of the penalty. Ultimately, the Tribunal dismissed the appeal of the Revenue, upholding the CIT(A) order and emphasizing the importance of establishing deliberate concealment before imposing penalties under the Act.