2019 (12) TMI 444 - AT - Income Tax

Imposition of penalty u/s 158 BFA (2) of the Income Tax Act, 1961 - Period of limitation - HC confirmed the addition by reversing the order of ITAT - HELD THAT - Assessment order under section 158BC(c) read with section 158BD of the Act was passed by the learned Assessing Officer on 10/6/2002; that the Ld. CIT(A) confirmed the additions made by the learned Assessing Officer by order dated 14/11/2002; that the Tribunal reversed the orders of the 1st appellate authority and a deleted the additions made by the learned Assessing Officer by order dated 03/08/2007; that the Hon ble High Court restored the additions made by the learned Assessing Officer while reversing the order of the Tribunal, by order dated 29/11/2010; and that the impugned penalty order under section 158BFA(2) of the Act was passed by the learned Assessing Officer on 15/5/2011. Facts narrated above are identical to the facts involved in the case of Cellphone Credit 2019 (5) TMI 1500 - ITAT DELHI and Intel Invofin (supra) wherein the Tribunal while placing reliance on the decision in the case of Aravind Kumar Jain (supra) held that the penalty order that was passed on 19/5/2011 as against the order of the Tribunal on 12/10/2006 was barred by limitation in terms of provisions under section 158BFA(3)(c) of the Act. The penalty levied by the learned Assessing Officer under section 158BFA(2) of the Act cannot be sustained because the assessee does not seem to have any intention to conceal the capital gain further the purpose of taxation and in fact had disclosed such investment in its financial statements and also had filed the return of income, of course with some delay - the levy of penalty is not automatic. Penalty do not sustain and is deleted - appeal of assessee allowed.

Issues:
1. Appeal against penalty under section 158 BFA (2) of the Income Tax Act, 1961 for undisclosed income from transfer of shares.
2. Delay in filing appeal against penalty.
3. Applicability of the law of limitation under section 158BFA(3)(c) of the Act.
4. Levying penalty on debatable issues.

Analysis:

Issue 1:
The appellant challenged the penalty imposed under section 158 BFA (2) for undisclosed income from the transfer of shares during the black period. The Assessing Officer treated the income as undisclosed due to non-filing of the return of income before the due date as prescribed in section 139(1) of the Act. The Tribunal and High Court differed in their decisions, leading to the imposition of the penalty.

Issue 2:
The delay in filing the appeal against the penalty was contested by the appellant. Despite the delay, the Tribunal decided to condone it to ensure substantial justice, stating that no prejudice was caused to the Revenue due to the delay.

Issue 3:
The applicability of the law of limitation under section 158BFA(3)(c) of the Act was debated. The appellant argued that the penalty order was beyond the limitation period, citing precedents. The Tribunal agreed that the penalty order was barred by limitation, considering the dates of various orders and the law's provisions.

Issue 4:
The question of levying a penalty on debatable issues arose. The appellant contended that since the issue of undisclosed income from share transfer was debatable, no penalty should be imposed. The Tribunal agreed, emphasizing that the appellant had disclosed the investment and filed the return of income, indicating no intention to conceal the gain for taxation purposes.

In conclusion, the Tribunal allowed the appeal, directing the Assessing Officer to delete the penalty imposed under section 158BFA(2) of the Act. The decision was based on the lack of intention to conceal income, the debatable nature of the issue, and the law of limitation. The judgment aimed to uphold fairness and justice in tax matters, considering the specific circumstances of the case.

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