2003 (6) TMI 190 - AT - Income Tax

Summary

Issues Involved:
1. Whether the CIT(A) erred in deleting the penalty imposed under section 271(1)(c) of the Income-tax Act.
2. Whether the revised return filed by the assessee was bona fide.
3. Whether the assessee concealed income or furnished inaccurate particulars in the original return.
4. Applicability of legal precedents and judgments to the case.

Detailed Analysis:

1. Whether the CIT(A) erred in deleting the penalty imposed under section 271(1)(c) of the Income-tax Act:
The Revenue appealed against the CIT(A)'s decision to delete the penalty imposed by the Assessing Officer (AO) under section 271(1)(c). The AO had initially imposed the penalty after finding discrepancies in the assessee's original return, where the assessee claimed long-term capital gains and exemption under section 54F. The CIT(A) deleted the penalty, reasoning that the assessee had not suppressed any material facts and had disclosed all particulars in the original return. The CIT(A) relied on the judgment in CIT v. S. Sucha Singh Anand, which held that the relevant return for penalty purposes is the one on which assessment is completed.

2. Whether the revised return filed by the assessee was bona fide:
The AO and the Revenue argued that the revised return was not filed bona fide but was a calculated move to avoid penalty after the AO initiated scrutiny and investigations. The AO had conducted extensive inquiries and found that the entities involved in the share transactions were not traceable, casting doubt on the genuineness of the transactions. The assessee filed the revised return only after these inquiries, changing the income from long-term capital gains to income from other sources. The Tribunal agreed with the AO, stating that the revised return was not filed voluntarily but was a reaction to the ongoing investigation.

3. Whether the assessee concealed income or furnished inaccurate particulars in the original return:
The Tribunal found that the assessee had furnished inaccurate particulars of income in the original return by claiming long-term capital gains and exemption under section 54F without fulfilling the necessary conditions. The AO's investigations revealed that the parties involved in the share transactions were not genuine, and the assessee's claim for exemption was unfounded. The Tribunal held that the assessee's actions were deliberate and aimed at evading tax.

4. Applicability of legal precedents and judgments to the case:
The Revenue cited several judgments, including K.P. Madhusudhanan v. CIT, which emphasized that the onus is on the assessee to prove that any omission or wrong statement in the original return was not deliberate. The Tribunal also referred to the judgment in Amjad Ali Nazir Ali v. CIT, which held that revised returns filed after the discovery of concealment do not protect the assessee from penalty. The Tribunal distinguished the judgments cited by the assessee, noting that those cases involved bona fide mistakes, unlike the present case where the revised return was filed only after the AO's investigation.

Conclusion:
The Tribunal concluded that the assessee had intentionally filed inaccurate particulars in the original return and that the revised return was not filed bona fide. Consequently, the penalty under section 271(1)(c) was rightly imposed by the AO. The appeal filed by the Revenue was allowed, and the order of the CIT(A) deleting the penalty was set aside.