2019 (7) TMI 434 - AT - Income Tax

Levy of penalty u/s. 271(1)(c) - assessee sold jewellery and had earned long term capital gain which was not offered to tax - maximum penalty levied @ 300% - HELD THAT - It is an admitted fact that despite sale of jewellery and earning long term capital gain, the assessee has not disclosed the same in the return of income which was added by the AO and thereafter initiated penalty proceedings u/s. 271 (1) (c) and levied penalty of ₹ 71,886/- being 300% of the tax sought to be evaded. In my opinion levy of penalty @ 300% is not justified - Therefore, restrict the same to 100% tax sought to be evaded which amounts to ₹ 23,962/-. - Decided partly in favour of assessee.

Summary

Issues:
Levy of penalty under section 271(1)(c) of the Income Tax Act.

Analysis:
The appeal was filed against the order of the CIT(A) regarding the levy of a penalty of ?1,70,317 by the Assessing Officer under section 271(1)(c) of the Act for the assessment year 2010-11. The appellant did not appear during the hearing, and the appeal was disposed of based on the available record and after hearing the Ld. DR. The main issue raised by the assessee was the confirmation of the penalty by the CIT(A).

The facts of the case revealed that the assessment was completed with an addition of ?1,70,317 on account of long term capital gain, which the assessee failed to disclose in the return of income. The CIT(A) confirmed the penalty imposed by the Assessing Officer after considering the submissions made by the appellant regarding the voluntary disclosure of the long term capital gain during the assessment proceedings.

The Tribunal observed that despite earning long term capital gain from the sale of jewellery, the assessee did not disclose it in the return of income, leading to the initiation of penalty proceedings under section 271(1)(c) of the Act. The Tribunal found the levy of penalty at 300% unjustified and reduced it to 100% of the tax sought to be evaded, amounting to ?23,962. Consequently, the appeal was partly allowed by the Tribunal.

In conclusion, the Tribunal modified the penalty imposed by the Assessing Officer, considering the undisclosed long term capital gain by the assessee. The decision highlighted the importance of disclosing income accurately and the consequences of non-disclosure under the provisions of the Income Tax Act.