2016 (11) TMI 738 - AT - Income Tax

Penalty imposed u/s 271(1)(c) - not declaring the correct Long Term Capital on sale of immovable properties - Held that - Rule of Evidence and in case the assessee fails to offer any explanation or his explanation is found to be false or the explanation is not substantiated the presumption that he has concealed particulars of income automatically comes into play. It is true that the assessee had disclosed the transactions regarding sale of property in the computation of income filed with the return of income. We further find that the ld. CIT(A) has deleted the penalty in the case of the very assessee for A.Y 2008-09 by relying on the decision of the ITAT vide order dated 22.11.2013. In view of our above discussion conclusion of the ld. CIT(A) and following our own order we uphold the order of the first appellate authority and we decline to interfere with the same. We direct the AO to delete the penalty so made by him. - Decided in favour of assessee.

Summary

Issues:
- Whether the penalty imposed by the AO under section 271(1)(c) of the Act was rightly deleted by the CIT(A)?

Analysis:
1. Issue of Penalty Deletion:
- The appeal was filed by the Revenue against the CIT(A)'s order for A.Y 2008-09 regarding the deletion of penalty under section 271(1)(c) of the Act.
- The AO calculated long term capital gain differently from what the assessee declared, resulting in an addition of undisclosed income and invoking penalty provisions.
- The CIT(A) deleted the penalty, leading to the Revenue's appeal before the Tribunal.

2. Legal Position on Penalty Levy:
- The Tribunal discussed the legal position under section 271(1)(c) emphasizing that concealment or furnishing inaccurate particulars must be deliberate acts by the assessee.
- Referring to judicial pronouncements, the Tribunal highlighted that penalty is not automatic and must be based on deliberate acts of concealment or furnishing inaccurate particulars.
- Quoting Supreme Court decisions, it clarified that incorrect claims do not automatically attract penalty unless there is deliberate concealment or furnishing of inaccurate particulars.

3. Assessee's Defense and Tribunal's Decision:
- The assessee claimed a bonafide belief regarding the income from property sale and argued against any concealment or inaccurate particulars.
- Considering the legal position and facts, the Tribunal upheld the CIT(A)'s decision to delete the penalty, citing the disclosure of property sale details and reliance on a previous ITAT order in favor of the assessee.

4. Conclusion:
- The Tribunal dismissed the Revenue's appeal, directing the AO to delete the penalty imposed under section 271(1)(c) for the A.Y 2008-09.
- The decision was based on the absence of deliberate concealment or furnishing of inaccurate particulars by the assessee, as per the legal interpretation provided.

This detailed analysis of the judgment showcases the legal intricacies involved in the penalty deletion case under section 271(1)(c) of the Act, emphasizing the importance of deliberate actions by the assessee in determining the applicability of penalties.