2022 (2) TMI 41 - AT - Income Tax

Penalty levied u/s. 271(1)(c) - claim made u/s. 10(38) not allowable - HELD THAT - What is clearly coming out from the fact that it is not disputed by either party about the income arising as Capital Gain on SSNNL bond. It is mere claim of the assessee made in his return of income that the same is exempt u/s 10(38) is not considered by the assessing officer in the quantum order. Against the order of the quantum revenue and assessee has filed their respective appeals. In the case of Shri Manan Patel and in the case of Maulikumar M Patel. 2016 (11) TMI 1710 - ITAT AHMEDABAD - these four appeals of assessee and revenue which is in relation to the order of the Ld. CIT(A) it was decided by the tribunal that the gain which is arising out of the SSNNL bond is capital gain and not interest on securities. Therefore, as contended by AR of the assessee that when the tribunal has already contended that the gain arising from the SSNNL bond is chargeable to capital gain only then the issue in the penalty proceeding is only disallowance of claim of the assessee and the case of the assessee is squarely covered with the decision of the Hon ble Supreme Court in the case of CIT Vs. Reliance Petro Products Ltd 2010 (3) TMI 80 - SUPREME COURT We find force in the argument of AR of the assessee that considering the overall facts, at the best, the claim of the assessee can be regarded as wrong which cannot be equated with the furnishing of inaccurate particulars of income. Considering, the decision of the Honourable Supreme Court on the issue, we hold that there is no error in the order of the Ld. CIT(A) in law as well as on facts and the appeal is of the revenue is not maintainable and is dismissed.

Summary

Issues:
Appeal filed by revenue challenging deletion of penalty by the Ld. CIT(A) in two cases involving long term capital gain claimed as exempt under section 10(38) - Dispute over whether the gain is chargeable to tax - Jurisdictional concerns regarding penalty notice - Argument on concealment of income or furnishing inaccurate particulars - Applicability of penalty under section 271(1)(c) of the Income Tax Act.

Detailed Analysis:

1. Appeal against Deletion of Penalty:
The revenue filed appeals challenging the deletion of penalty by the Ld. CIT(A) in two cases where the assessing officer had levied penalties under section 271(1)(c) of the Income Tax Act. The issue revolved around the claim of long term capital gain as exempt under section 10(38) by the assessee. The assessing officer disallowed the claim, asserting that the gain was chargeable to tax as the condition of paying Securities Transaction Tax (STT) for exemption under section 10(38) was not fulfilled. The penalty was levied at 200% of the tax sought to be evaded. The Ld. CIT(A) deleted the penalty, citing that the appellant did not furnish inaccurate particulars of income, relying on relevant case laws.

2. Jurisdictional Concerns and Technical Grounds:
During the proceedings, jurisdictional concerns were raised regarding the penalty notice issued by the assessing officer. The appellant contended that there was no clear finding to levy the penalty at 200% under section 271(1)(c). The assessing officer's detailed findings were scrutinized, and the technical argument was presented that the notice lacked proper application of mind. The assessing officer's considerations on this point were emphasized by the revenue, while the appellant argued against the maintainability of the penalty based on technical grounds.

3. Concealment of Income and Furnishing Inaccurate Particulars:
The core contention in the case was whether there was concealment of income or furnishing of inaccurate particulars by the appellant to attract penalty under section 271(1)(c). The Ld. CIT(A) based the decision on the fact that all relevant facts were presented in the return of income and before the assessing officer. Citing the decision of the Hon'ble Supreme Court in the case of CIT Vs. Reliance Petro Products Ltd., the penalty was deemed unjustified and deleted. The argument focused on the rejection of the claim not automatically leading to penalty imposition.

4. Final Decision and Dismissal of Appeals:
After considering the arguments presented by both parties, the tribunal upheld the decision of the Ld. CIT(A) and dismissed the appeals of the revenue. It was concluded that the claim made by the appellant, though incorrect, did not amount to furnishing inaccurate particulars of income. The tribunal found no error in the Ld. CIT(A)'s order in law or on facts. The appeals were deemed not maintainable, and the penalty was dismissed in both cases.

This detailed analysis covers the key issues, arguments, and the final decision rendered in the appellate tribunal's judgment involving the deletion of penalties under section 271(1)(c) of the Income Tax Act.