2019 (11) TMI 577 - AT - Income Tax

Penalty u/s 271(1)(c) - concealment of income in respect of long term capital gains - HELD THAT - It is well settled that the parameters of judging the justification for addition made in the assessment case of the assessee is different from the penalty imposed on account of concealment of income or filing inaccurate particulars of income and that certain disallowance/addition could legally be made in the assessment proceedings on the preponderance of probabilities but no penalty could be imposed u/s. 271(1)(c) on the preponderance of probabilities and Revenue has to prove that the claim of expenses by the assessee was not genuine or was inflated to reduce its tax liability. Before us, Ld.A.R. has given the reasons for not offering the capital gains to tax initially but was offered subsequently in the return of income filed in response to notice u/s 148 of the Act. The submissions have not been controverted by the Revenue nor have they been found to be untrue. There is nothing on record to demonstrate that assessee had concealed the particulars of income. Considering the totality of the aforesaid facts and also relying on the decision of Bombay ITAT in the case of NSE IT Ltd., Vs. DCIT 2018 (3) TMI 1585 - ITAT MUMBAI we are of the view that in the present case no case for levy of penalty u/s. 271(1)(c) of the Act has been made out. We thus direct the deletion of penalty u/s. 271(1)(c) of the Act. Thus, the grounds of assessee are allowed.

Summary

Issues Involved:
Levy of penalty under section 271(1)(c) for alleged concealment of income in respect of long term capital gains and dividends shown as exempt.

Detailed Analysis:

1. Long Term Capital Gains:
The appeal pertains to the assessment year 2011-12 where the assessee initially claimed exemption under section 10(38) of the Act on the transfer of shares. However, it was discovered that the shares were sold in an open offer without paying Security Transaction Tax, making the capital gains taxable. The Assessing Officer (AO) re-opened the case under section 148 of the Act and levied a penalty under section 271(1)(c) for alleged concealment of income. The Commissioner of Income Tax (Appeals) upheld the penalty. The assessee contended that the non-disclosure was due to a genuine belief that the gains were exempt and rectified the return upon realizing the tax liability. The Tribunal noted that the assessee's explanation was not found false, and there was no evidence of intentional concealment. Relying on precedent, the Tribunal ruled in favor of the assessee, directing the deletion of the penalty.

2. Dividends Shown as Exempt:
Additionally, the appeal challenged the penalty imposed for alleged concealment of income in relation to dividends shown as exempt. The Tribunal consolidated this issue with the long term capital gains matter. The assessee argued that the non-disclosure was unintentional and rectified upon understanding the tax implications. The Tribunal considered the facts presented by the assessee and found no evidence of deliberate concealment. Citing legal principles, the Tribunal concluded that no case for penalty under section 271(1)(c) was established and ordered the deletion of the penalty.

In conclusion, the Appellate Tribunal, in the case concerning long term capital gains and dividends shown as exempt, ruled in favor of the assessee, directing the deletion of the penalties imposed under section 271(1)(c) for alleged concealment of income.