2014 (8) TMI 1151 - AT - Income Tax

Penalty u/s 271(l)(c) - incorrect capital gain claim - Assessee had revised the calculation of capital gains on account of wrong consideration of the date of purchase - Held that - The assessee had during the course of assessment proceedings revised the return of income and the same was accepted by the A.O. Before us no material has been brought on record to demonstrate that the submissions of the Assessee were false. When the assessee has furnished all the material facts relevant thereto the disallowance of such claim cannot automatically lead to the conclusion that there was concealment of particulars of his income by the assessee or furnishing inaccurate particulars thereof. What is to be seen is whether the said claim made by the assessee was bona fide and whether all the material facts relevant thereto have been furnished and once it is so established the assessee cannot be held liable for concealment penalty under s. 271(1) (c) of the Act. - Decided in favour of assessee.

Summary

Issues:
1. Assessment of taxable income for A.Y. 2007-08.
2. Excessive claim of exempt income from the sale of agricultural land.
3. Levying of penalty under section 271(1)(c) for furnishing inaccurate particulars of income.

Analysis:

Issue 1: Assessment of taxable income for A.Y. 2007-08
The appeal was filed against the order of CIT(A)-XVI, Ahmedabad for the assessment year 2007-08. The Assessee, an individual deriving income from various sources, filed a return declaring total income. During scrutiny, it was found that the Assessee had made an excessive claim of exempt income from the sale of agricultural land. The Assessing Officer (A.O) adjusted the capital gains considering the correct purchase date, leading to the penalty imposition. The CIT(A) confirmed the penalty, stating that the Assessee furnished inaccurate particulars of income, concealing the income. The Assessee then appealed before the ITAT.

Issue 2: Excessive claim of exempt income from the sale of agricultural land
The Assessee revised the return during assessment proceedings, correcting the purchase date of the land. The Assessee voluntarily disclosed the gain as short-term capital gain and revised the income. The Assessee argued that there was no concealment of income or filing of inaccurate particulars, as the mistake was inadvertent and immediately rectified. The ITAT noted that the correction was brought to the A.O's notice by the Assessee and no evidence suggested that the Revenue detected concealment due to the date error.

Issue 3: Levying of penalty under section 271(1)(c) for furnishing inaccurate particulars of income
The ITAT analyzed the provisions of section 271(1)(c) and explained that the penalty is leviable if the person conceals income or furnishes inaccurate particulars. The ITAT highlighted that if the Assessee offers an explanation that is not false and substantiates it, penalty shall not be imposed. In this case, since the Assessee revised the return, disclosed all relevant facts, and the explanation was found to be bona fide, the ITAT held that the penalty was unjustified. The ITAT canceled the penalty levied by the A.O, allowing the Assessee's appeal.

In conclusion, the ITAT allowed the Assessee's appeal, emphasizing that the Assessee's revised return and disclosure of all relevant facts demonstrated a bona fide explanation, leading to the cancellation of the penalty under section 271(1)(c).