2023 (9) TMI 480 - AT - Income Tax

Penalty u/s 271(l)(c) - appellant had filed return of income disclosing the short-term capital gain - HELD THAT - The assessee while computing the income and filing revised income was under bonafide mistake/bonafide belief that the assessee can claim the entire charges of amount paid to the AUDA as Capital Gain as deduction under Capital Gain. The said standard belief or mistake cannot be termed as furnishing of inaccurate particulars or concealment of income. The decision of Hon ble Supreme Court in the case of CIT vs. Reliance Petroproducts (P) Limited, 2010 (3) TMI 80 - SUPREME COURT is applicable in assessee s case. Therefore, the penalty does not survive. Appeal of the assessee is allowed.

Summary

Issues:
The appeal against the order passed by the CIT(A) confirming the penalty for Assessment Year 2013-14.

Grounds of Appeal:
1. The CIT(A) erred in passing the order u/s. 250 of the IT Act confirming the penalty of INR 1,92,000 for A.Y. 2013-14.
2. The CIT(A) erred in passing the order without appreciating that the penal provision of section 271(l)(c) is not attracted as the appellant had disclosed the short-term capital gain.
3. The CIT(A) erred in levying penalty on short term capital gain despite the appellant voluntarily filing a revised return disclosing the gain before any show cause notice.
4. The CIT(A) erred in levying penalty on disallowance of cost of improvement based on an assumption regarding expenses borne by co-owners.
5. The CIT(A) erred in not recording a finding of fact regarding the default of concealment of income or furnishing inaccurate particulars.
6. The CIT(A) erred in not considering relevant judgments submitted by the appellant.

Details:
The assessee filed the return of income on 31.01.2014, declaring total income of Rs. 5,60,737. A revised return was filed on 31.03.2015, declaring total income of Rs. 9,93,733. The assessment under Section 143(3) of the Income Tax Act, 1961 was completed on 25.02.2016, determining total income at Rs. 11,80,970. The Assessing Officer added Rs. 6,20,210 under "Capital Gain" due to expenses related to AUDA. Penalty proceedings under Section 271(1)(c) were initiated for furnishing inaccurate particulars of income, resulting in a penalty of Rs. 1,92,000.

The CIT(A) dismissed the appeal, and in the absence of the assessee during the hearing, the submissions made before the CIT(A) were considered as contentions for the present appeal before the ITAT. The DR relied on the Assessment Order, Penalty Order, and CIT(A) order.

After hearing the DR and examining the material on record, it was found that the assessee's mistake in claiming entire AUDA charges as Capital Gain deduction was a bonafide belief, not concealment of income. Citing the case of CIT vs. Reliance Petroproducts, it was concluded that the penalty was not justified. The appeal of the assessee was allowed, and the penalty was set aside.

In conclusion, the appeal filed by the assessee against the penalty was allowed by the ITAT on 8th September 2023.