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2013 (12) TMI 1418 - HC - Income TaxPenalty u/s 271(1)(c) - Held that - The assessee has himself disclosed his additional income vide letter before passing of assessment order - Following Commissioner of Income Tax Ahmedabad Vs. Reliance Petro-products Private Ltd 2010 (3) TMI 80 - SUPREME COURT - There has to be concealment of the particulars of the income of the assessee and secondly the assessee must have furnished inaccurate particulars of his income in order to be covered u/s 271(1)(c) - The assessee himself disclosed the value of land and calculated long term capital gain - Decided against Revenue.
Issues:
1. Appeal against deletion of penalty under Section 271(1)(c) of the Income Tax Act, 1961. 2. Disclosure of concealed income by the assessee. 3. Revision of sale consideration for long term capital gains. 4. Interpretation of Section 271(1)(c) for penalty imposition. 5. Assessment of inaccurate particulars of income. Analysis: Issue 1: Appeal against deletion of penalty under Section 271(1)(c) of the Income Tax Act, 1961 The appellant filed an Income Tax Appeal challenging the deletion of penalty of Rs.9,87,719 imposed under Section 271(1)(c) of the Act. The Tribunal had directed the Assessing Officer to cancel the penalty based on the grounds that the additional income was offered by the assessee before detection by the AO, and there was no concealment detected by the assessing authority. The Tribunal relied on a judgment stating that once the revised return has been regularized by the revenue, penalty under Section 271(1)(c) is not leviable. The High Court upheld the Tribunal's decision, emphasizing the bonafide nature of the disclosure by the assessee. Issue 2: Disclosure of concealed income by the assessee The assessee disclosed long term capital loss initially but later revised the sale consideration as per Section 50 C of the IT Act, offering capital gains for taxation. The AO initiated penalty proceedings under Section 271(1)(c) as the revised amount was not offered for taxation in the original return. The Tribunal found that the assessee had made the disclosure before the assessment order was passed, indicating a lack of concealment. The High Court concurred with the Tribunal's findings, dismissing the appeal. Issue 3: Revision of sale consideration for long term capital gains The assessee revised the sale consideration for long term capital gains, leading to penalty proceedings by the AO. The AO calculated the long term capital gain based on the revised sale consideration and cost of acquisition. However, the Tribunal and the High Court found no concealment as the assessee voluntarily disclosed the additional income before the assessment order was finalized. Issue 4: Interpretation of Section 271(1)(c) for penalty imposition The High Court referred to the judgment in Commissioner of Income Tax, Ahmedabad Vs. Reliance Petro-products Private Ltd, which clarified the conditions for levying penalties under Section 271(1)(c). The Court emphasized that the provision requires concealment of income or furnishing inaccurate particulars, which was not established in this case. The Court highlighted that incorrect claims in law do not amount to furnishing inaccurate particulars, and there must be factual inaccuracies to invoke the penalty provision. Issue 5: Assessment of inaccurate particulars of income The High Court reiterated that the conditions under Section 271(1)(c) must exist before imposing a penalty. It emphasized that inaccuracies in the particulars provided by the assessee in the return are necessary to trigger the penalty. Since no details supplied by the assessee were found to be incorrect or false, the penalty under Section 271(1)(c) was deemed inapplicable. The Court upheld the Tribunal's decision that the penalty was not leviable due to the absence of inaccurate particulars in the assessee's return. In conclusion, the High Court dismissed the Income Tax Appeal as it did not raise any substantial question of law, affirming the Tribunal's decision to cancel the penalty under Section 271(1)(c) based on the voluntary disclosure of additional income by the assessee.
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