2018 (12) TMI 1394 - HC - Income Tax

Penalty levied u/s 271(C) - whether the assessee s transactions of sale of shares would result into capital gain or business income? - taxing the assessee s house properties which the assessee had not offered to tax - Held that - Tribunal noted that in absence of any concealment of particulars of income penalty cannot be attached. With respect to taxing the assessee s house properties which the assessee had not offered to tax. Here also the Tribunal came to the conclusion that the explanation offered by the assessee for not offering the notional rental income of such properties was a plausible explanation. The Tribunal therefore did not confirm the decision of the Assessing Officer to impose penalty. We are broadly in agreement with the view of the Tribunal. The Tribunal having examined the facts on record has come to factual conclusions. No question of law in this respect therefore arises.

Issues involved:
Challenge to deletion of penalty under Section 271(1)(c) of the Income Tax Act, 1961 by the Income Tax Appellate Tribunal.

Detailed Analysis:

1. Penalty under Section 271(1)(c):
The issue pertains to the penalty imposed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961. The CIT appeals granted partial relief to the assessee, leading to the matter reaching the Tribunal. The Tribunal, in its judgment, deleted the penalty, prompting the Revenue to file this appeal.

2. Share Transactions and House Property Income:
The Tribunal observed that the AO had made additions on three counts - share transactions, house property income, and dividend stripping. Regarding share transactions, the AO levied a penalty for concealing income particulars. The Tribunal noted that the change in the head of income could not automatically lead to a penalty. It emphasized that the explanation provided by the assessee was bona fide, and additions during assessment do not automatically warrant a penalty.

3. House Property Income Continued:
Concerning house property income, the Tribunal found the assessee's claim of all three properties being self-occupied properties (SOPs) unjustifiable. The explanation provided by the assessee for including the income from these properties was deemed inaccurate and against the provisions of the Act, leading to a concealment penalty.

4. Dividend Stripping:
In the case of dividend stripping, the Tribunal referred to a previous decision and reversed the FAA's order, canceling the penalty. It highlighted that the assessee had provided full details and did not conceal any income particulars. The Tribunal concluded that making a claim not sustainable in law does not amount to furnishing inaccurate particulars, especially when the claim is made in good faith.

5. Judicial Review and Disposition:
The High Court agreed with the Tribunal's findings, emphasizing that the Tribunal had made factual determinations based on the evidence. It was noted that no legal questions arose from the Tribunal's factual conclusions. The Court also addressed the Revenue's challenge based on a previous case, Walter Saldanah, where the Tribunal's decision was under appeal. However, due to the minimal revenue implication in the present case, the appeal was not entertained. The Court disposed of the Tax Appeal, allowing the Revenue to raise all contentions in the pending appeal concerning the Tribunal's judgment in the Walter Saldanah case.

This detailed analysis outlines the issues involved in the legal judgment, the Tribunal's reasoning for deleting the penalty, and the High Court's affirmation of the Tribunal's decision while addressing the Revenue's concerns regarding a related case.

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