2018 (12) TMI 1812 - AT - Income Tax

Penalty u/s 271(1)(c) - defective notice - non specification of charge - vague notice and vague findings giving in the penalty order - claiming wrong exemption u/s 54 - HELD THAT - In the instant case, we find that the notice initiating the penalty proceedings is uncertain where the AO uses the expression concealment particulars of income or furnished inaccurate particulars of income . During the penalty proceedings, he has given a decisive and clear finding as reflected in the penalty order that the assessee is guilty of furnishing inaccurate of particulars of income' as the assessee, in its original computation has deliberately avoided disclosing true particulars and furnished inaccurate particulars by claiming wrong exemption u/s 54 which was as such not available to the assessee. Therefore, following the legal proposition as discussed above, we are unable to accede to the aforesaid contention of the ld AR. Regarding the contentions of the ld AR on merits, we have gone through the computation of income so filed by the assessee along with the original return of income wherein the assessee has shown long term capital gains of ₹ 9,01,537 and has claimed exemption under section 54. The computation so filed is silent on the nature and specifics of the property so purchased by the assessee. There is thus clearly lack of disclosure as far as nature of property so purchased by the assessee. On examination thereof, the AO has found that the assessee has sold an immoveable property in form of a shop and has purchased another shop and which is not eligible for exemption under section 54 of the Act. It is thus not a case where there is adequate disclosure of nature of property in the return of income and it is only the legal claim so made by the assessee u/s 54 on appreciation of such facts which has been denied by the AO. Therefore, it is clear case of furnishing inaccurate particulars of income and we see no infirmity in the findings of the AO in this regard. Regarding the contention of the ld AR that the assessee has suomoto revised the computation of income and even paid the taxes during the course of assessment proceedings, we are unable to accede to the said contentions of the ld AR - Appeal of the assessee is dismissed.

Summary

Issues Involved
1. Legality of the penalty order passed under Section 271(1)(c) of the Income Tax Act, 1961.
2. Confirmation of the penalty amounting to ?4 lakhs under Section 271(1)(c) of the Income Tax Act, 1961.

Detailed Analysis

1. Legality of the Penalty Order Passed under Section 271(1)(c)
The assessee argued that the penalty proceedings initiated under Section 271(1)(c) were illegal and bad in law due to the issuance of a vague notice. The notice did not specify whether the charge was for "concealment of income" or "furnishing inaccurate particulars of income." The assessee relied on various judicial decisions, including CIT vs. SSA’s Emerald Meadows and CIT vs. M/s Manjunatha Cotton & Ginning Factory, to support their contention.

Upon examining the facts, the Tribunal referred to the penalty notice dated 11.07.2016, which stated that the assessee had either concealed particulars of income or furnished inaccurate particulars of income. The penalty order dated 27.01.2017 concluded that the assessee was guilty of furnishing inaccurate particulars of income. The Tribunal found that the Assessing Officer (AO) had given a decisive finding in the penalty order, thus substituting the initial uncertain charge with a conclusive default.

The Tribunal cited its own decision in the case of Smt. Shipra Jain and Ors. vs. ACIT, which emphasized that the AO must specify the charge against the assessee during penalty proceedings. The Tribunal also referenced the decision of the Coordinate Bench in HPCL Mittal Energy vs. Add. CIT, which held that the AO must be clear about the charge at the time of passing the penalty order. The Tribunal concluded that the uncertain charge at the initiation stage was made good by a clear finding in the penalty order, thereby validating the penalty order.

2. Confirmation of the Penalty Amounting to ?4 Lakhs
The Tribunal examined the merits of the case and found that the assessee had claimed a deduction under Section 54 of the Act for the purchase of a commercial property, which is not eligible for such exemption. The assessee had filed a revised computation of income during the assessment proceedings, surrendering the wrong claim and paying the due tax. However, the AO held that the assessee had deliberately concealed income by claiming the wrong exemption and imposed a penalty under Section 271(1)(c).

The Tribunal noted that the assessee's original computation of income lacked adequate disclosure regarding the nature of the property purchased. The AO discovered that the property was a shop, not eligible for exemption under Section 54. The Tribunal agreed with the AO's finding that the assessee had furnished inaccurate particulars of income.

Regarding the assessee's contention that the revised computation was filed suo moto, the Tribunal upheld the findings of the CIT(A), which stated that the revised computation was not voluntary but was filed only when the AO cornered the assessee. The Tribunal emphasized that ignorance of law is no excuse and that the provisions of Section 54 are clear about the eligibility of the exemption.

The Tribunal also reviewed other decisions cited by the assessee and found them not supportive of the assessee's case. Consequently, the Tribunal confirmed the penalty order under Section 271(1)(c) and dismissed the appeal.

Conclusion
The Tribunal upheld the penalty order passed under Section 271(1)(c) of the Income Tax Act, 1961, confirming the levy of ?4 lakhs for furnishing inaccurate particulars of income. The appeal filed by the assessee was dismissed.