2014 (11) TMI 1196 - AT - Income Tax

Penalty u/s 271(1)(c) - short term capital gains earned by the assessee on the sale of land was not disclosed in the original return of income but was declared by the assessee in the revised return of income - HELD THAT - Assessment case of the assessee is different from the penalty imposed on account of concealment of income or filing inaccurate particulars of income and that certain disallowance/addition could legally be made in the assessment proceeding on the preponderance of probabilities, but no penalty could be imposed u/s 27l(1)(c) on the preponderance of probabilities and Revenue has to prove that the claim by the assessee was not genuine or was inflated to reduce its tax liability. Before us, no material has been brought on record by the Revenue to demonstrate that the explanations and submissions made by the assessee were false. Before us, Revenue has also not brought on record any binding contrary decision in its support. We are of the view that in the present case no penalty u/s 271(1)(c) is leviable and therefore we direct its deletion. Thus this ground of Assessee is allowed and in the result the appeal of the Assessee is allowed.

Summary

Issues:
Appeal against penalty under section 271(1)(c) for non-disclosure of short-term capital gain in original return of income.

Detailed Analysis:
The case involved appeals by multiple family members against the penalty imposed under section 271(1)(c) for non-disclosure of short-term capital gains in the original return of income for the assessment year 2007-08. The Assessee, an individual, initially declared a total income of Rs. 12,02,782/- which was later revised to Rs. 23,20,134/-, including Rs. 12,25,000/- as short-term capital gain on the sale of land. The Assessing Officer (AO) imposed a penalty, alleging concealment of income, as the capital gain was not disclosed in the original return but only in the revised return. The Assessee contended that the revised return was voluntarily filed upon realizing the omission and was accepted by the AO without any further additions.

The Assessee argued that there was no intention to conceal income, and the revised return accurately reflected the additional income from the land sale. The Assessee's representative cited precedents where penalties were deleted when additional income was disclosed voluntarily during assessment proceedings. The Tribunal noted that the AO accepted the revised return without challenging the declared income, indicating a lack of mala fide intent on the Assessee's part. The Tribunal emphasized that the assessment process differs from penalty imposition, requiring the Revenue to prove lack of genuineness in the Assessee's claims for penalty under section 271(1)(c).

Relying on the precedent and lack of evidence from the Revenue to refute the Assessee's explanations, the Tribunal concluded that no penalty under section 271(1)(c) was justified in this case. The Tribunal found no basis for penalty imposition as the Assessee's actions did not amount to furnishing inaccurate particulars of income. Consequently, the Tribunal allowed the Assessee's appeal, directing the deletion of the penalty.

In a consolidated order for all family members' appeals, the Tribunal extended the decision made in the primary case to the related appeals, allowing the grounds of the Assessees and ultimately allowing all the appeals. The Tribunal emphasized the importance of distinguishing between assessment adjustments and penalties for concealment, requiring the Revenue to establish lack of genuineness in the Assessee's declarations to justify penalty imposition under section 271(1)(c).