2010 (5) TMI 937 - AT - Income Tax

Summary

Issues Involved: Confirmation of penalty u/s 271(1)(c) of the Income-tax Act for the assessment year 2006-07.

Issue 1: Disallowance of Loss and Imposition of Penalty
- The Assessing Officer disallowed a loss claimed by the assessee on the sale of a portal site against capital gains, initiating and levying a penalty for concealment u/s 271(1)(c).
- Assessee's contention: The mistake in claiming the loss was inadvertent, rectified by filing a revised return offering the amount for taxation, with no inaccurate particulars or facts concealed.
- Assessee's argument supported by the acceptance of audited books of account and the involvement of an income-tax consultant in preparing the return.
- Assessee relied on precedents where penalties were not imposed for inadvertent errors.
- Conclusion: The penalty was not imposable due to the inadvertent nature of the mistake and the absence of inaccurate particulars.

Issue 2: Justification for Penalty Imposition
- Revenue's stance: Penalty imposition justified based on the inadmissible claim of set off of loss against capital gains, as per section 50(2), with reference to legal precedents.
- Assessee's rebuttal citing a Delhi High Court judgment that penalties should not be imposed for inadvertent errors.
- Conclusion: The penalty was deleted considering the inadvertent error, the low tax amount involved, and the explanations provided by the tax consultant.

Conclusion: The penalty u/s 271(1)(c) for the assessment year 2006-07 was deleted by the Appellate Tribunal ITAT Delhi, emphasizing the inadvertent nature of the error and the absence of inaccurate particulars or concealment of facts.