2014 (5) TMI 966 - AT - Income Tax

Penalty u/s 271(1)(c) of the Act - Capital gains not shown in the return Assessee disturbed due to illness of father Held that - Due to the lack of correct information, the authorized consultant could not be in a position to reveal the sale transaction in the return of income - From the bank statements, it was found that the amount was received from the purchaser, Rohit Ramavtar Poddar - under bona fide belief it was shown in the balance sheet as a liability - the property and the amount invested had also been shown towards asset s side - when the father was admitted in the hospital and as the bad luck would have it, later on expired, the possibilities would be that the non-offer of Long Term Capital Gain might have been an inadvertent silly mistake on the part of the two appellants Relying upon Price Waterhouse Coopers (P.) Ltd. Versus Commissioner of Income-tax, Kolkata I 2012 (9) TMI 775 - SUPREME COURT - the error committed could be described only as a human error, which we all are prone to make - the imposition of penalty was held as not justified Decided in favour of Assessee.

Summary

Issues:
- Confirmation of penalty u/s.271(1)(c) of Rs.3,24,290 for non-disclosure of Long Term Capital Gain.

Analysis:
1. The appeals challenged penalty levied u/s.271(1)(c) for non-disclosure of Long Term Capital Gain. The facts revealed that the appellants had a 50% share in a property, which was sold but not disclosed in the return of income. The AO assessed Long Term Capital Gain of Rs.14,29,960 in each hand. The penalty was imposed as the AO deemed the non-disclosure deliberate.

2. During penalty proceedings, it was argued that the non-disclosure was due to inadvertent errors, specifically citing the illness of the appellants' father as a reason. The CIT(A) affirmed the penalty, rejecting the argument that the non-disclosure was unintentional.

3. The appellants contended that there was no mala fide intention to conceal the Long Term Capital Gain and rectified the mistake by offering it before the AO finalized the assessment. They argued that the non-disclosure was due to incorrect classification in the balance sheet, not deliberate concealment.

4. The Revenue supported the penalty, stating it was a clear case of non-disclosure detected through information obtained under IT Act. They relied on precedents to justify the penalty imposition.

5. The Tribunal analyzed the facts, noting the inadvertent errors in classification and the circumstances surrounding the non-disclosure. Citing the decision in Price Waterhouse Coopers Pvt. Ltd. Vs. CIT, the Tribunal held that the non-disclosure was not deliberate but a human error. Therefore, the penalty was deemed unjustified, and the appeals were allowed.

6. The Tribunal distinguished the case from precedents where deliberate non-disclosure was evident, emphasizing the unintentional nature of the appellants' errors. The decision to delete the penalty was based on the application of legal principles regarding inadvertent mistakes and lack of deliberate concealment.

7. Ultimately, the Tribunal allowed the appeals of the assessees, concluding that there was no deliberate concealment of income, and directed the deletion of the penalty imposed under section 271(1)(c) for non-disclosure of Long Term Capital Gain.