2024 (10) TMI 925 - AT - Income Tax

Penalty levied u/s. 271(1)(c) - assessee had not offered Short Term Capital Gain u/s 50 on sale of depreciable fixed asset as its income in return of income or during the scrutiny proceedings - whether assessee had not filed inaccurate particulars of income? - HELD THAT - If the disclosure of facts is incorrect or false to the knowledge of the assessee, and this fact is established, then such disclosure cannot take such assessee out from the purview of the act of concealment of particulars or furnishing inaccurate particulars for the purpose of levy of penalty. Penalty u/s 271(1)(c) is leviable if the AO is satisfied in the course of any proceedings under this Act that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. As noted that the Ld.AO placed reliance on the decision of Dharmendra Textile Processors 2008 (9) TMI 52 - SUPREME COURT that dealt with the concept of mens rea in order to impose penalty for a breach of civil obligation and is not applicable to the present facts of the case. There is no case of concealment made out by the revenue, as all the necessary facts were available on record and the disallowance of the claim admitted to be withdrawn by the assessee in the quantum proceedings is due to a wrong claim made. Decided against revenue.

Summary

Issues:
Penalty under section 271(1)(c) for concealing income and furnishing inaccurate particulars.

Analysis:
The case involves an appeal regarding the deletion of a penalty levied under section 271(1)(c) of the Income Tax Act. The appellant, the revenue, contested the decision of the Ld.CIT(A) to delete the penalty on the grounds that the assessee had not offered Short Term Capital Gain on the sale of a depreciable fixed asset as income during the assessment year. The Ld.CIT(A) based the penalty deletion on the argument that the claim made by the assessee was not sustainable in the eyes of the law, and the relevant details to verify the claim were available on record, indicating no concealment. The Ld.CIT(A) referred to precedents such as the decision of the Hon'ble Bombay High Court to support the penalty deletion.

The Ld.AO initiated penalty proceedings under section 271(1)(c) after disallowing the short term capital gains claimed by the assessee in the assessment. The Ld.AO proposed the penalty after the assessee withdrew the claim during the quantum proceedings. The Ld.AO levied the penalty at 100% of the tax sought to be evaded, citing civil offense liability and relying on a Supreme Court decision. The assessee then appealed to the Ld.CIT(A), who noted that the claim made by the assessee was not sustainable in law, leading to the penalty deletion.

The Tribunal rejected the revenue's appeal, stating that there was no case of concealment as all necessary facts were available on record, and the withdrawal of the claim by the assessee was due to an incorrect claim made. The Tribunal upheld the Ld.CIT(A)'s decision to delete the penalty, emphasizing that the penalty provision applies when there is a failure to disclose fully or truly all material particulars of income. The Tribunal highlighted the distinction between concealment and inaccuracy in disclosure, emphasizing the need for accurate and complete disclosure to avoid penalties.

In conclusion, the Tribunal dismissed the revenue's appeal, affirming the deletion of the penalty by the Ld.CIT(A) based on the lack of concealment and the incorrect claim made by the assessee. The judgment underscores the importance of accurate and complete disclosure of income particulars to avoid penalties under section 271(1)(c) of the Income Tax Act.