2023 (2) TMI 807 - AT - Income Tax

Penalty u/s. 271(1)(c) - non-disclosure of capital gains at the time of filing of return of income - assessee in the revised computation has shown 5% share in these lands on which capital gain was computed - as per AO assessee had furnished revised computation only when the show cause notice was issued to the assessee - CIT(A) held that since both the figures of sale consideration and cost of acquisition were taken incorrectly, the mistake prima facie appears to be inadvertent and error occurred owing to absence of purchase and sale deed at the time of filing of return of income, thus deleted addition - HELD THAT - We find no infirmity in the order of CIT(A) so as to call for any interference. We further note that DR has not been able to point out any defect in the factual observations made by CIT(A) while allowing the appeal of the assessee. From the facts placed on record, in our considered view, it is a case where apparently a bonafide mistake was made by the assessee owing to lack of documents at the time of filing of return of income. Accordingly, we find no infirmity in the order of CIT(A) and the appeal of the Department is hereby dismissed.

Summary

Issues Involved:
- Appeal against penalty imposed under section 271(1)(c) for assessment year 2014-15 based on reduction in capital loss and furnishing inaccurate particulars of income.

Analysis:
1. The Department appealed against the order of the ld. Commissioner of Income Tax (Appeals) regarding the imposition of penalty under section 271(1)(c) for the assessment year 2014-15. The grounds of appeal included the reduction in capital loss not being considered for penalty and the alleged furnishing of inaccurate particulars of income by the assessee.

2. The brief facts of the case revealed that the assessee initially declared income of Rs. 26,370 but later filed a revised computation showing long term capital gains at Rs. 43,69,774 from properties sold during the year. The Assessing Officer initiated penalty proceedings, contending that the revised computation was submitted only after a show cause notice was issued. The penalty was confirmed under section 271(1)(c) for allegedly making an incorrect claim to evade taxes.

3. The ld. CIT(A) observed that the mistake in computation appeared to be inadvertent as the entire sale consideration was mistakenly taken as the assessee's income, while her actual share was only 5%. The error occurred due to the absence of purchase and sale documents at the time of filing the return. Citing legal precedents, the ld. CIT(A) allowed the appeal, emphasizing that the reduction in capital loss should be ignored for penalty imposition.

4. The Department challenged the relief granted by the ld. CIT(A) to the assessee. However, upon review, the Appellate Tribunal found no fault in the ld. CIT(A)'s decision. The Tribunal noted the absence of any defect in the factual observations made by the ld. CIT(A) and concluded that the mistake made by the assessee was bona fide due to the lack of documents at the time of filing the return. Consequently, the appeal of the Department was dismissed, upholding the decision of the ld. CIT(A).

5. In conclusion, the Appellate Tribunal affirmed the decision of the ld. CIT(A) to partially allow the assessee's appeal, emphasizing the inadvertent nature of the mistake made by the assessee in the absence of necessary documentation during the filing of the return of income for the assessment year 2014-15.