2015 (5) TMI 234 - HC - Income Tax

Long term capital gain working - Valuation of the property - Appellant claims that he was owner of 1/3rd share in a immovable property - penalty under section 271(1)(c) as the capital gain had been computed on inadvertent assumption that the said property had been acquired prior to 1st April, 1981, while it had in fact been acquired on 24th August, 1981 - non granting of personal hearing - Held that - The only thing that can be said about the argument desperately canvassed before us is that the Assessing Officer did not give a personal hearing nor granted an opportunity to the Assessee before imposing penalty is that such argument is now being raised without pointing out such a defect in the Assessing Officer's order before the Tribunal. Apart therefrom, we do not find how, when the Assessing officer's order was challenged before the Commissioner and the Assessee succeeded before the Commissioner, the penalty was set aside, that from an Appeal by the Revenue against the Tribunal's order can such a ground be raised. Even if such a plea can be raised now, we do not find that there is any prejudice caused, as all the fact finding authorities have gone elaborately through the contentions raised by the Assessee. There is no miscarriage of justice. No substantial question of law - Decided against assessee.

Summary

Issues:
1. Incorrect computation of capital gain by the Assessee.
2. Imposition of penalty under section 271(1)(c) of the Income Tax Act, 1961.
3. Appeal against the order of the Commissioner of Income Tax (Appeals).
4. Tribunal's reversal of the Commissioner's finding regarding the disclosure of capital gains by the Assessee.

Issue 1: Incorrect computation of capital gain by the Assessee
The Assessee claimed to be the owner of a share in an immovable property in Mumbai, which was sold to a company for a substantial amount. Initially, the Assessee incorrectly assumed the property was acquired before April 1, 1981, leading to an inaccurate computation of capital gains. Upon realizing the error, the Assessee corrected the acquisition date and cost. However, the Assessing Officer imposed a penalty under section 271(1)(c) for filing inaccurate particulars of income, which was challenged by the Assessee.

Issue 2: Imposition of penalty under section 271(1)(c) of the Income Tax Act, 1961
The penalty was imposed by the Assessing Officer due to the Assessee's initial incorrect computation of capital gains. The Commissioner of Income Tax (Appeals) allowed the Assessee's appeal against the penalty, but the Revenue filed an appeal against this decision. The Tribunal ultimately upheld the penalty, leading to further legal proceedings challenging the imposition of the penalty.

Issue 3: Appeal against the order of the Commissioner of Income Tax (Appeals)
After the Commissioner of Income Tax (Appeals) allowed the Assessee's appeal against the penalty, the Revenue filed an appeal against this decision. The Tribunal reversed the Commissioner's finding, leading to the Assessee's challenge of this decision before the High Court.

Issue 4: Tribunal's reversal of the Commissioner's finding regarding the disclosure of capital gains by the Assessee
The High Court addressed the argument raised by the Appellant's Counsel that the Tribunal erred in reversing the Commissioner's finding that the Assessee had voluntarily intimated the incorrect computation of capital gains. The Tribunal based its decision on the belief that the disclosure was prompted by a query from the Revenue, not a voluntary act by the Assessee. The High Court analyzed relevant case law, including a Supreme Court judgment and a Calcutta High Court judgment, to determine the distinction between voluntary disclosure and inadvertent errors in computation. Ultimately, the High Court dismissed the appeals, finding no substantial question of law and no perversity in the Tribunal's reasoning.

This detailed analysis of the judgment highlights the issues related to the incorrect computation of capital gain, the imposition of penalty, the appeal process, and the Tribunal's reversal of the Commissioner's finding, providing a comprehensive understanding of the legal proceedings involved in the case.