1976 (1) TMI 53 - AT - Income Tax

Summary

Issues:
- Appeal against penalty under section 271(1)(c) of the IT Act, 1961 for the assessment year 1968-69.

Analysis:
1. The assessee derived income from various sources, including interest, dividends, and property income. During assessment, it was found that a partial partition in the family resulted in the assessee receiving shares worth Rs. 2,50,000, leading to a capital gain of Rs. 1,52,475, which was not declared in the return. The Income Tax Officer (ITO) initiated penalty proceedings under section 271(1)(c) for alleged concealment of income.

2. In response to the penalty notice, the assessee provided a detailed explanation, stating that the capital gains were below Rs. 5,000 and were not intentionally concealed. The assessee argued that the disclosure was made in good faith and any discrepancies were due to genuine errors in calculation, not deliberate concealment.

3. The ITO imposed a penalty of Rs. 5,836 under section 271(1)(c) after determining that the assessee willfully concealed income related to capital gains. The Appellate Assistant Commissioner (AAC) upheld the penalty, stating that the assessee failed to disclose accurate particulars of income and concealed capital gains.

4. The Appellate Tribunal noted that the assessee had disclosed all details regarding the sale and purchase of shares, and the alleged capital gains were based on a bona fide belief that there were no gains. The Tribunal observed that the assessee revised the return voluntarily before the assessment was completed, indicating good faith in rectifying any potential errors.

5. The Tribunal found no evidence of intentional concealment or furnishing inaccurate particulars of income by the assessee. It concluded that the penalty under section 271(1)(c) was not justified and allowed the appeal, canceling the penalty order.

6. Additionally, the Tribunal addressed the argument regarding the legal status of the Hindu Undivided Family (HUF) due to the demise of the karta. However, since the Tribunal ruled in favor of the assessee on the merits, it did not delve into the legal implications of the HUF's status.

7. In summary, the Tribunal held that there was no concealment of income by the assessee, as the disclosure was made in good faith, errors were rectified promptly, and there was no deliberate attempt to conceal income. Consequently, the penalty under section 271(1)(c) was revoked.