2013 (10) TMI 275 - AT - Income Tax

Penalty u/s 271(1)(c) of the Income Tax Act short term capital gains was not disclosed in the return of income - Held that - Reliance has been placed upon the judgment in the case of Kailashbhai Ambalal Shah 2010 (11) TMI 131 - ITAT, AHMEDABAD - The assessee has not brought any clinching material in support of the statement that she was not aware of the details of the return of income filed by the power of attorney holder and further in the absence of any evidence has been brought on record to demonstrate that the return of income was filed without the knowledge of the Assessee - Assessing Officer was fully justified levied the penalty in the present case Decided in favor of Revenue.

Summary

Issues Involved:
1. Legitimacy of the penalty levied under section 271(1)(c) for non-disclosure of capital gains.
2. Validity of the revised return filed by the assessee.
3. Applicability of the decision in the case of Kailashbhai Ambalal Shah vs. ITO.

Issue-wise Detailed Analysis:

1. Legitimacy of the penalty levied under section 271(1)(c) for non-disclosure of capital gains:

The Revenue appealed against the CIT(A)'s order dated 21.08.2012, which deleted the penalty of Rs. 6,83,700/- levied by the Assessing Officer (A.O.) under section 271(1)(c) on 23rd May 2011. The A.O. had noticed that the assessee did not disclose the capital gain arising from the sale of an immovable property within one year of its purchase. The A.O. considered Rs. 21,55,360/- as undisclosed income and levied the penalty accordingly. The CIT(A) deleted the penalty, noting that the omission was inadvertent and rectified by the assessee upon realization, before any specific show-cause notice was issued by the A.O. The CIT(A) concluded that the penalty was not exigible as the revised return was filed voluntarily and before any detection by the A.O.

2. Validity of the revised return filed by the assessee:

The assessee, a non-resident, filed her return through a power of attorney holder who inadvertently omitted the capital gain. Upon receiving a notice under section 142(1) from the A.O. and realizing the omission, the assessee revised her return and paid the due taxes. The CIT(A) held that the revised return was filed suo-moto before any specific detection of default by the A.O., and thus, the penalty under section 271(1)(c) was not justifiable.

3. Applicability of the decision in the case of Kailashbhai Ambalal Shah vs. ITO:

The Revenue argued that the revised return was not voluntary and relied on the decision in Kailashbhai Ambalal Shah vs. ITO, where the Tribunal upheld the penalty for concealment of income. The Tribunal noted that in Kailashbhai Ambalal Shah's case, the return was filed after the A.O. had made specific enquiries and detected the concealment, which was not the case here. The Tribunal distinguished the facts, noting that the A.O. had not made any specific enquiries or detected concealment before the revised return was filed. The Tribunal emphasized that the revised return was filed voluntarily, and the omission was due to the power of attorney holder's oversight, not the assessee's malafide intent.

Conclusion:

The Tribunal concluded that the penalty under section 271(1)(c) was justified as the capital gain was disclosed only after being confronted by the Department. The assessee did not provide sufficient evidence to demonstrate ignorance of the return filed by the power of attorney holder. The Tribunal held that the principles from the Kailashbhai Ambalal Shah case applied, supporting the A.O.'s penalty imposition. Consequently, the CIT(A)'s order was set aside, and the Revenue's appeal was allowed. The Tribunal pronounced the order in open court on 04-10-2013.