2019 (1) TMI 277 - AT - Income Tax

Penalty u/s 271(1)(c) - non-disclosing the capital gain income - no specific charge mentioned in the notice issued u/s 274 - Held that - The overall conduct of the assessee and circumstances suggest that the assessee deliberately did not offer the capital gain income in her income tax return. In our considered view, non-availability of the fund cannot be an excuse for not disclosing the capital gain income earned by the assessee. The case law relied on by the assessee before the lower authorities are not relevant to the facts of the case on hand. The assessee has concealed her particulars of income by not disclosing the long-term capital gain in her return of income. No reason to disturb the finding of the CIT(A). Hence, the ground of the assessee is dismissed Indeed there is no specific charge in the notice issued u/s 274/271(1)(c) of the Act as alleged by the assessee. However, we note that there was a specific charge for concealment of income on the basis of which the AO levied the penalty in his order dated 20.06.2012. Therefore, we are of the view that the assessee cannot get immunity from the penalty on the ground that there was no specific charge in the notice issued u/s 274 of the Act. - decided against assessee

Issues Involved:
1. Confirmation of penalty under Section 271(1)(c) for concealment of income.
2. Validity of penalty notice under Section 274 read with Section 271(1)(c) due to lack of specific charge.

Issue-wise Detailed Analysis:

1. Confirmation of Penalty under Section 271(1)(c) for Concealment of Income:

The primary issue raised by the assessee was the confirmation of the penalty of ?5,71,406/- under Section 271(1)(c) of the Income Tax Act, 1961, for concealing particulars of income related to the sale of property. The assessee failed to declare the capital gain from the sale of land in Jodhpur amounting to ?30,41,000/- in her return of income. The AO calculated the capital gain at ?26,57,708/- and added it to the total income of the assessee, initiating penalty proceedings under Section 271(1)(c) for concealment of income.

The assessee argued that the omission was due to an error by her accountant, who failed to include the capital gain in the return. An affidavit from the accountant was submitted, stating it was his mistake. However, the AO rejected this argument, noting that the assessee, being an adult and educated, could not claim ignorance of such a significant transaction. The AO concluded that there was deliberate concealment of income and levied the penalty.

The CIT(A) upheld the AO's decision, emphasizing that the assessee did not disclose the capital gain even after multiple notices and only acknowledged it when specifically queried. The CIT(A) found no satisfactory or reasonable cause for the non-disclosure and dismissed the accountant's mistake as an invalid excuse, affirming the penalty.

On appeal, the Tribunal noted the time gap between the accountant's awareness of the mistake and the issuance of the scrutiny notice, indicating that the assessee had ample time to rectify the error but did not. The Tribunal concluded that the assessee deliberately did not disclose the capital gain and upheld the penalty, dismissing the assessee's ground.

2. Validity of Penalty Notice under Section 274 read with Section 271(1)(c) due to Lack of Specific Charge:

The assessee contended that the penalty notice under Section 274 read with Section 271(1)(c) was invalid as it did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars. The Tribunal acknowledged the lack of specific charge in the notice but noted that the AO's final penalty order clearly stated the penalty was for concealment of income.

The Tribunal referred to the Gujarat High Court's judgment in the case of Snita Transport (P) Ltd., which held that a defect in the penalty notice does not invalidate the penalty proceedings if the final order specifies the charge. The Tribunal also noted that the Supreme Court's dismissal of the Revenue's appeal in the case of SSA’s Emerald did not lay down any law on the issue of defective notices, and thus, the Gujarat High Court's ruling remained binding.

Consequently, the Tribunal dismissed the additional ground of appeal, affirming that the lack of specific charge in the notice did not provide immunity from the penalty.

Conclusion:

The Tribunal dismissed the appeal, upholding the penalty under Section 271(1)(c) for concealment of income and ruling that the defect in the penalty notice did not invalidate the proceedings. The judgment emphasized the responsibility of the assessee to ensure accurate disclosure of income and the irrelevance of the accountant's mistake as a defense.

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