2012 (6) TMI 157 - AT - Income Tax

Write back sundry credit balances - AO disallowed the credit as the assessee on the doubt on genuineness of the books of accounts prepared by the assessee - not even got its accounts audited - imposed the penalty Held that - A mere making of the claim which is not sustainable in law will not amount to furnishing inaccurate particulars regarding the income of the assessee - there is nothing to indicate incorrectness of particulars beyond unacceptability of the claim of deduction the impugned penalty to the extent relatable to write off of Rs. 60,54,678, cannot be sustained in favour of assessee. Penalty in respect of long-term capital gain - assessee s contention that the returned loss was understated by Rs. 44,70,437 vis-a-vis the loss stated originally as this aspect of the matter has not been examined by any of the authorities below by way of a speaking order Held that - Matter deserves to be remitted to the file of the AO for fresh adjudication give a fair opportunity of hearing to the assessee

Summary

Issues:
1. Assessment under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 2002-03.
2. Penalty imposed on sundry balances written off, income-tax paid, and long-term capital gain.
3. Accuracy of particulars of income furnished by the assessee.
4. Appeal against penalty imposed by the Assessing Officer.
5. Remittance of penalty matter related to long-term capital gain for fresh adjudication.

Analysis:

1. The appeal was filed against the order passed by the Commissioner of Income-tax (Appeals) for the assessment year 2002-03 under section 271(1)(c) of the Income-tax Act, 1961. The penalty was imposed on sundry balances written off, income-tax paid, and long-term capital gain. The assessee claimed that the amounts written off were outstanding for a long time but failed to provide complete particulars for the write-off.

2. The Assessing Officer initiated penalty proceedings, stating that the assessee furnished inaccurate particulars of income by wrongfully claiming deductions. The penalty was imposed as the genuineness of the accounts was doubted due to lack of audit. The Commissioner of Income-tax (Appeals) upheld the penalty, concluding that the assessee provided inaccurate particulars by wrongfully claiming a deduction.

3. The ITAT noted the Supreme Court's decision in a similar case where it was held that a mere claim not sustainable in law does not amount to furnishing inaccurate particulars. The ITAT found that in the present case, the penalty was levied for furnishing inaccurate particulars without any indication of incorrectness beyond unacceptability of the deduction claim. Therefore, the penalty related to the write-off of sundry balances was deleted.

4. Regarding the penalty on long-term capital gain, the ITAT observed that the matter had not been examined thoroughly by the authorities, and the adjustment made by the assessee was not viewed as concealment of income. The ITAT remitted the matter to the Assessing Officer for fresh adjudication to determine if there was concealment or only a change of head, directing a fair opportunity for the assessee to present facts.

5. The ITAT partly allowed the appeal, upholding the grievance related to the penalty on long-term capital gains for statistical purposes and remitting the matter for fresh adjudication. The Assessing Officer was instructed to re-examine the issue in accordance with the law and provide a speaking order after considering all relevant facts and submissions.

In conclusion, the ITAT's judgment addressed the accuracy of particulars furnished by the assessee, the imposition of penalties on various items, and the need for a thorough examination of the long-term capital gain issue to ensure fairness and compliance with the law.