2015 (10) TMI 939 - AT - Income Tax

Penalty u/s. 271(1)(c) - wrong claim on the sale of shares - addition of Short Term Capital on sale of shares in the income returned - Held that - In the present case, we observe that the assessee has not furnished inaccurate particulars with respect to the purchase and sale of shares. The mistake has been committed in computing the capital gain arising from sale of shares. We are of considered view that the mistake is bonafide and unintentional. The Revenue has not denied that the details of share transactions furnished by assessee are correct. The assessee has only erred in computing capital gain from sale of shares. Thus, in view of the facts of the case it cannot be said that it is a case fit for levy of penalty u/s. 271(1)(c) of the Act. Hence, the order levying penalty is set aside and the appeal of the assessee is allowed. See Udayan Mukherjee Versus Commissioner of Income-Tax. 2005 (11) TMI 62 - CALCUTTA High Court - Decided in favour of assessee.

Summary

Issues involved:
Levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 for furnishing inaccurate particulars of income.

Detailed Analysis:

Issue 1: Levy of Penalty
The case involved the appeal against the order of the Commissioner of Income Tax (Appeals) confirming the levy of penalty under section 271(1)(c) of the Income Tax Act, 1961. The assessee, an individual, had initially declared a total income in the return for the assessment year 2008-09, which included capital gains from the sale of shares of a company. However, the Assessing Officer determined that the capital gains were short-term and not long-term as claimed, leading to the initiation of penalty proceedings.

Issue 2: Assessee's Submission
The assessee contended that the misclassification of the capital gains was an inadvertent error and not a deliberate attempt to provide inaccurate particulars of income. The assessee had disclosed all transactions and had even pointed out the mistake during assessment proceedings. The representative argued that the mistake was bona fide and there was no intention to conceal income. Case laws were cited to support the argument that a mere mistaken calculation does not amount to concealment.

Issue 3: Revenue's Argument
On the other hand, the Revenue argued that the assessee's actions, including initially treating the gains as long-term and then claiming the same as short-term, indicated a deliberate effort to suppress income by furnishing inaccurate particulars. The Revenue supported the Commissioner's decision to uphold the penalty and urged the dismissal of the assessee's appeal.

Judgment and Analysis
The Tribunal analyzed the facts and legal precedents cited by both parties. It noted that the assessee had correctly reported the details of share transactions but erred in computing the capital gains. Citing relevant case laws, including the distinction between furnishing inaccurate particulars and making a mistaken calculation, the Tribunal concluded that the assessee's mistake was unintentional and not a case of concealment. Therefore, the Tribunal set aside the penalty levied under section 271(1)(c) of the Act, allowing the appeal of the assessee.

In conclusion, the Tribunal's decision emphasized the importance of distinguishing between inadvertent errors in calculation and deliberate attempts to conceal income. The judgment highlighted that the mere making of an incorrect claim, without inaccurate particulars being furnished, does not warrant the imposition of penalties under the Income Tax Act.