2020 (3) TMI 675 - AT - Income Tax

Penalty u/s 271(1)(c) - non-disclosure of working of capital gains - the assessee had rectified the mistake during the course of assessment proceedings - HELD THAT - As complete details/ particulars were available before the AO in regard to this transaction of sale of sales and conversion of its investment into stock-in-trade. In view of the explanation of the assessee that there has been an inadvertent mistake/ error in filing the return of income and that also occurred entirely on accountant oversite of the chartered accountant while computing income which was required to be computed after considering the provisions of section 45A(2) of the Act. Having regard to the fact that investments were converted into stock-in-trade during the previous year relevant to this assessment year, the charter accountant should have considered the computation of income under section 45(2) of the Act. We noted that this mistake was immediately rectified by the assessee during the assessment proceedings and according to us, this mistake has occurred on the advice of chartered accountant, who has filed the return of income. Hence, we are of the view that the CIT(A) has rightly relied on the decision of Hon ble Supreme Court in the case of Reliance Petro Product Private Limited 2010 (3) TMI 80 - SUPREME COURT . Hence, we are of the view that the CIT(A) has rightly deleted the penalty. - Decided against revenue.

Summary

Issues:
- Penalty under section 271(1)(c) for non-disclosure of working of capital gains rectified during assessment proceedings.

Analysis:
1. The appeal by Revenue challenged the deletion of penalty under section 271(1)(c) by CIT(A) for non-disclosure of working of capital gains rectified during assessment proceedings. The AO initiated penalty proceedings as the assessee declared loss in the return of income, which was rectified during assessment proceedings. The AO alleged inaccurate particulars of income, leading to penalty imposition.

2. The CIT(A) deleted the penalty, emphasizing that the conversion of capital assets into stock-in-trade was genuine, as per the decision in CIT vs. Reliance Petroproducts Pvt. Ltd. The CIT(A) noted that the assessee rectified the mistake promptly during assessment proceedings, attributing it to the chartered accountant's oversight. The CIT(A) concluded that there was no concealment or inaccurate particulars of income, following the Supreme Court's decision.

3. The Tribunal upheld the CIT(A)'s decision, stating that the assessee rectified the mistake promptly during assessment proceedings, relying on the advice of the chartered accountant. The Tribunal noted that the complete details were available before the AO, and the mistake was rectified in good faith. The Tribunal confirmed the deletion of the penalty, citing the Supreme Court's decision in Reliance Petro Product Private Limited.

4. In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the deletion of the penalty under section 271(1)(c) by the CIT(A). The Tribunal's decision was based on the prompt rectification of the mistake during assessment proceedings and the reliance on professional advice, in line with legal precedents.

This detailed analysis covers the issues involved in the legal judgment comprehensively, highlighting the key arguments and decisions made by the authorities involved.