2019 (7) TMI 1315 - AT - Income Tax

Penalty u/s 271(1)(c) - inadvertent omission in not offering the LTCG on the sale of the aforesaid shop - HELD THAT - Chart filed by the assessee alongwith balance sheet, reveals beyond any doubt, that the deduction pertaining to building premises was duly disclosed by the assessee in the aforesaid block of assets . Assessee in the course of the assessment proceedings on learning about its aforesaid inadvertent omission in not offering the LTCG on the sale of the aforesaid shops had worked out its income under the said head and offered the same for tax. When the assessee had disclosed the deduction of ₹ 67,00,000/- pertaining to sale of the aforesaid three shops from the block of assets in its balance sheet for the year under consideration, therefore, there is substantial force in its claim that the failure to offer LTCG on the sale of the said shops had inadvertently remained omitted to be shown in the return of income for the year under consideration. We are of the considered view that imposition of penalty u/s 271(1)(c) would be unwarranted in a case where the assessee had committed an inadvertent and a bonafide error, and had not intended or attempted to either conceal its income or furnish inaccurate particulars. As relying on Price Waterhouse Coopers (P.) Ltd. Versus CIT - 2012 (9) TMI 775 - Supreme Court failure on the part of the assessee could only be described as a human error which all are prone to make. Further, it was observed that though the assessee should have been careful, but the absence of due care would not mean that the assessee is guilty of either furnishing inaccurate particulars or had attempted to conceal its income. We find that the facts of the case before us clearly falls within the four corners of the aforesaid view taken by the Hon ble Apex Court. - Decided in favour of assessee.

Summary

Issues:
1. Appeal against penalty under Sec. 271(1)(c) of the Income Tax Act, 1961 for furnishing inaccurate particulars of income and concealment of income.
2. Failure to offer Long Term Capital Gain (LTCG) on the sale of properties in the return of income.

Analysis:

Issue 1: Appeal against Penalty under Sec. 271(1)(c):
The appeal challenged the penalty imposed under Sec. 271(1)(c) for furnishing inaccurate particulars of income and concealment of income. The appellant contended that the mistake was a bonafide error and not intentional concealment. The CIT(A) deleted the penalty related to excess claim of municipal taxes but upheld the penalty for not offering LTCG from the sale of properties. The appellant argued that the LTCG omission was inadvertent and immediately rectified during assessment proceedings. The Departmental Representative supported the lower authorities' decision. The Tribunal found that the appellant had disclosed the deduction in the balance sheet but failed to offer LTCG in the return. Citing the Price Water House Cooper Pvt. Ltd. case, the Tribunal held that the error was bonafide and inadvertent, not an attempt to conceal income. Consequently, the Tribunal set aside the penalty imposed under Sec. 271(1)(c).

Issue 2: Failure to Offer LTCG on Property Sale:
The appellant failed to offer LTCG from the sale of three properties in the return of income. The AO initiated penalty proceedings under Sec. 271(1)(c) for inaccurate particulars of income. The AO imposed a penalty for not disclosing the LTCG. The CIT(A) upheld the penalty, stating that the omission was not inadvertent. However, the Tribunal noted that the appellant had disclosed the deduction in the balance sheet, indicating an inadvertent error in not offering LTCG. The Tribunal emphasized the appellant's bonafide mistake and lack of intention to conceal income. Relying on the Price Water House Cooper Pvt. Ltd. case, the Tribunal concluded that the penalty was unwarranted and allowed the appeal.

In conclusion, the Tribunal allowed the appeal, setting aside the penalty imposed under Sec. 271(1)(c) for failure to offer LTCG on the sale of properties. The judgment highlighted the appellant's bonafide mistake and lack of intention to conceal income, aligning with legal precedents regarding inadvertent errors in income disclosure.