2020 (6) TMI 188 - AT - Income Tax

Penalty u/s 271(1)(c) - non disclosure of capital gain - whether the income was taxable in the assessment year 2012-13 as the land in dispute was handed over to the developer but the consideration was not received in the assessment year 2012-13? - HELD THAT - Admittedly, in the present case the land has been handed over to the developer against the consideration which was fixed at ₹ 6 crores. Therefore, we are of the view that the transfer of the land has taken place in the assessment year 2012-13 in pursuance to the agreement dated 10th February 2012. The conditions as specified under section 53A of the transfer of property Act 1882 have been satisfied as discussed above. From the above, it is transpired that the land was transferred to the developer with the possession in the assessment year 2012-13 and therefore the transfer as per the provisions of section 2(47)(v) of the Act has taken place. Thus the income in our understanding on such transaction was taxable the assessment year 2012-2013. Whether the penalty can be levied in the year under consideration for the income offered to tax by the assessee in the year under consideration? - Question of the penalty arises when there is an income which was either concealed or furnished inaccurate particulars of income. Accordingly we hold that there cannot be any question of penalty as there was no taxable income in the hands of the assessee. As such, there cannot be any penalty merely on the ground that the assessee has offered some income during the assessment proceedings which was actually not chargeable to tax in the year under consideration. Assessee has not disclose the capital gain income in his income tax return on question, by the AO the assessee explained that such income was not offered to tax under the bona fides believe that the same would be taxable upon the completion of the entire project. This contention of the assessee was not doubted by the authorities below. Therefore it can be inferred that the assessee did not deliberately offer the impugned income in his income tax return. As such there was no deliberate/willful act on the part of the assessee either to conceal the income or furnish the inaccurate particular of income. We hold that there cannot be any penalty in the given facts and circumstances under the provisions of section 271(1)(c) of the Act for the reason that the assessee has not deliberately furnished inaccurate particular of income. Accordingly we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT - Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited 2020 (5) TMI 359 - ITAT MUMBAI

Issues Involved:
1. Confirmation of penalty for alleged furnishing of inaccurate particulars of income.
2. Non-appreciation of the appellant's reply for non-levy of penalty.
3. Justification for not showing Long Term Capital Gain (LTCG).
4. Defective notice issued without specifying the specific default.
5. Bona fide belief regarding non-inclusion of capital gain.
6. Applicability of Ahmedabad ITAT decisions.
7. Justification of penalty levied.

Issue-wise Detailed Analysis:

1. Confirmation of Penalty for Alleged Furnishing of Inaccurate Particulars of Income:
The appeal was directed against the order confirming the penalty for allegedly furnishing inaccurate particulars of income. The assessee contended that there was no such inaccuracy in the particulars furnished. The penalty was levied under section 271(1)(c) of the Income Tax Act for not including the sale proceeds of ?94,08,000/- from a property transaction in the income tax return. The AO calculated LTCG at ?79,77,246/- and added it to the total income, initiating penalty proceedings for filing inaccurate particulars and concealment of income.

2. Non-appreciation of the Appellant's Reply for Non-levy of Penalty:
The assessee argued that the reply dated 19/06/2017 was not properly appreciated by the CIT(A). The reply stated that the omission was due to a bona fide belief that the capital gain should be offered once the project was fully completed. The AO, however, disagreed, stating that the income would have escaped assessment if not selected for scrutiny.

3. Justification for Not Showing Long Term Capital Gain (LTCG):
The assessee claimed that there was a reasonable cause for not showing LTCG, as it was believed that the gain should be taxable upon the completion of the project. The CIT(A) found the appellant's contention general and vague, lacking supporting evidence. The AO observed that the transaction was not disclosed voluntarily, thus confirming the penalty.

4. Defective Notice Issued Without Specifying the Specific Default:
The assessee argued that the notice issued was defective as it did not specify the limb under which the proceedings were initiated, i.e., whether for furnishing inaccurate particulars or concealment of income. The CIT(A) did not address this issue adequately, confirming the penalty without clarifying the specific default.

5. Bona Fide Belief Regarding Non-inclusion of Capital Gain:
The assessee contended that the omission was under a bona fide belief, without any intention to evade taxes. The AO and CIT(A) did not accept this argument, stating that the income would have escaped assessment if not scrutinized, thus imposing the penalty.

6. Applicability of Ahmedabad ITAT Decisions:
The assessee argued that the decisions of Ahmedabad ITAT relied upon were applicable to their case. However, the CIT(A) observed that the facts of the appellant's case were different and distinguishable from those cases, thus not applicable.

7. Justification of Penalty Levied:
The assessee argued that no penalty should have been levied as there was no deliberate act to conceal income or furnish inaccurate particulars. The ITAT noted that the term "inaccurate particulars of income" signifies a deliberate act or omission. It was held that the details supplied were not found to be incorrect or false. The ITAT concluded that there was no deliberate/willful act to conceal income or furnish inaccurate particulars, thus setting aside the penalty.

Conclusion:
The ITAT held that there cannot be any penalty under section 271(1)(c) of the Act as the assessee did not deliberately furnish inaccurate particulars of income. The AO was directed to delete the penalty, and the appeal of the assessee was allowed. The order was pronounced beyond the period of 90 days due to the exceptional circumstances of the COVID-19 pandemic.

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