2022 (7) TMI 56 - AT - Income Tax

Penalty u/s. 271(1)(c) - assessee's claim of short term capital gain was treated as business income - disallowance u/s. 14 was made as AO and100% claim of 80G deduction was reduced to 50% - HELD THAT - On the issues aforesaid on which penalty has been sustained, no cogent case has been made out of concealment or furnishing of inaccurate particulars. When all the details are before the Revenue authorities and the claim is not accepted, this fact ipso facto cannot lead to levy of penalty u/s. 271(1)(c) - This view is duly expounded in the case of Reliance Petro Products Pvt. Ltd. 2010 (3) TMI 80 - SUPREME COURT - In our considered opinion, assessee's claim as aforesaid cannot be said to be ex-facie bogus. Hence, we set aside the orders of authorities below and decide the issue in favour of assessee.

Summary

Issues:
1. Imposition of penalty under section 271(1)(c) of the Income Tax Act.
2. Treatment of short term capital gain as business income.
3. Disallowance under section 14A of the Income-tax Act.
4. Reduction of 80G deduction claim.

Analysis:
1. The appeal was against the order of the ld. CIT (Appeals) confirming the penalty imposed under section 271(1)(c) of the Income Tax Act. The penalty was levied due to the treatment of short term capital gain as business income, disallowance under section 14A of the Income-tax Act, and reduction of 80G deduction claim. The penalty amount was Rs. 5,86,741.

2. The ld. CIT(A) partly allowed the appeal by disagreeing with the Assessing Officer's treatment of short term capital gain as business income. The CIT(A) upheld the disallowance under section 14A of the IT Act against the exempt income. The CIT(A) directed the Assessing Officer to recompute the tax sought to be evaded and considered that no disallowance of expenditure can be made if not claimed by the Assessee during the year.

3. The Appellate Tribunal noted that no cogent case of concealment or furnishing inaccurate particulars was made out. The Tribunal referred to the Hon'ble Supreme Court decision in Reliance Petro Products Pvt. Ltd. and concluded that when all details are before the Revenue authorities and the claim is not accepted, it does not automatically lead to the imposition of a penalty under section 271(1)(c) of the Act. The Tribunal found that the claim made by the assessee was not ex-facie bogus and decided the issue in favor of the assessee.

4. The Tribunal set aside the orders of the authorities below and allowed the assessee's appeal, ruling in favor of the assessee. The decision was pronounced in the open court on June 23, 2022.