2017 (5) TMI 1361 - AT - Income Tax

Penalty u/s.271(1)(c) - income from future and option transaction - Held that - The assessee in its original return filed under section 139(1) had set off the said income against the loss incurred. However, while filing return under section 153A, the same was withdrawn in view of the realisation that the same was not permissible as per law. The explanation given by the appellant for disclosing reduced income in the return filed under section 139(1) is factually correct and the said reduced income is not attributable to any income regarding which particulars had not been correctly filed. The erroneous claim made earlier has been withdrawn on realising the mistake at the time of filing the return in response to notice under section 153A. The amount involved is ₹ 1,21,539. The said wrong claim could have been discovered by the assessee or could have been noticed by the AO in time after filing the return under section 139(1). However, the said incorrect claim did not get noticed either by the assessee or by the AO and its correction at the time of filing of return under section 153A would not lead to imposition of penalty under section 271(1)(c). - Decided against revenue Penalty u/s.271(1)(c) - undisclosed foreign income - Held that - The return revised by the appellant is within the limit stipulated as per section 139(5) and therefore gets substituted by the return filed under section 139(1). Since there is no difference between the income returned in a return filed under section 139 and the assessed income, there is no cause for imposition of penalty under section 271(1)(c). The same is therefore rightly directed to be deleted by learned CIT(A).- Decided against revenue

Summary

Issues:
1. Penalty deletion on undisclosed foreign income for assessment years 2011-12 and 2012-13.
2. Applicability of Section 271(1)(c) of the Income Tax Act.
3. Interpretation of CBDT Circular No.21/2015.
4. Difference in income disclosure under Section 139(1) and Section 153A.
5. Justification for penalty imposition by Assessing Officer.
6. Validity of penalty deletion by CIT(A).
7. Judicial precedents and legal interpretations influencing penalty decisions.

Issue 1: Penalty Deletion on Undisclosed Foreign Income:
The appeals involved challenges to the deletion of penalties on undisclosed foreign income for the assessment years 2011-12 and 2012-13. The CIT(A) had deleted penalties of ?49,915 and ?788, respectively, imposed under Section 271(1)(c) of the Income Tax Act.

Issue 2: Applicability of Section 271(1)(c):
The Assessing Officer relied on Section 271(1)(c) to impose penalties due to discrepancies in income disclosure between returns filed under Section 139(1) and Section 153A. The appellant contested the penalty imposition, citing judicial precedents and legal interpretations.

Issue 3: Interpretation of CBDT Circular No.21/2015:
The appellant invoked an exception under CBDT Circular No.21/2015 to challenge the penalty imposition despite low tax effect. The interpretation of this circular played a role in the penalty deletion decisions.

Issue 4: Difference in Income Disclosure:
Significant differences in income disclosure under Section 139(1) and Section 153A led to penalty impositions. The appellant explained discrepancies, attributing them to changes in taxability status and corrections in income declarations.

Issue 5: Justification for Penalty Imposition:
The Assessing Officer justified penalty impositions by highlighting the non-disclosure of income, citing legal provisions and judicial decisions to support the penalties under Section 271(1)(c).

Issue 6: Validity of Penalty Deletion by CIT(A):
The CIT(A) deleted penalties after considering explanations provided by the appellant regarding income discrepancies. The CIT(A) found no malafide intent in the income disclosures and relied on judicial precedents to support penalty deletions.

Issue 7: Judicial Precedents and Legal Interpretations:
Various judicial precedents, including decisions of the Delhi High Court and ITAT benches, influenced the penalty decisions. The CIT(A) and the appellate tribunal considered legal interpretations to uphold penalty deletions based on factual explanations provided by the appellant.

In conclusion, the appellate tribunal dismissed the appeals of the Revenue, affirming the penalty deletions on undisclosed foreign income for the respective assessment years. The decisions were based on detailed analysis of income disclosures, legal provisions, judicial precedents, and interpretations of relevant circulars and acts.