1983 (3) TMI 98 - AT - Income Tax

Summary

Issues: Alleged concealment of income on account of long term capital gains, Penalty under section 271(1)(c) for non-disclosure.

In this judgment by the Appellate Tribunal ITAT CALCUTTA-B, the dispute revolved around the alleged concealment of income due to long term capital gains from the sale of gold and jewelry. The Income Tax Officer (ITO) observed that the assessee had not disclosed capital gains from the sale of golden ornaments, leading to an addition of Rs. 4,356 based on the cost of the previous owner. Subsequently, penalty proceedings under section 271(1)(c) were initiated, and the ITO imposed a penalty of Rs. 1,484 due to the lack of explanation for the non-disclosure. The assessee appealed, arguing that she believed no capital gains tax applied to the sale of jewelry received as a gift from her mother. The Tribunal noted that the sale proceeds were disclosed in the capital account, making it easily detectable by the ITO. Citing precedents where penalties were deleted for genuine belief or mistaken notions of law, the Tribunal concluded that the penalty was unwarranted in this case. The Tribunal emphasized that lack of due care does not equate to fraud or wilful neglect, ultimately deleting the penalty imposed on the assessee.

The Tribunal's analysis highlighted the importance of the assessee's explanation for non-disclosure, emphasizing the bona fide belief held by the assessee regarding the taxability of the jewelry received as a gift. The Tribunal differentiated between cases involving additions to the quantum of income and penalties for concealment, citing relevant precedents to support their decision. The Tribunal also referenced cases where penalties were deleted based on genuine belief or mistaken legal notions, indicating a consistent approach towards penalties in such circumstances. The Tribunal underscored that mere lack of due care does not amount to fraud or wilful neglect, emphasizing the need to consider the overall facts and circumstances of each case before upholding a penalty. Consequently, the Tribunal accepted the appeal and deleted the penalty imposed on the assessee, emphasizing the importance of assessing the intent behind non-disclosure before penalizing taxpayers.