2015 (6) TMI 921 - AT - Income Tax

Penalty u/s 271(1)(c) - addition under the head Income from House Property has been made by the Assessing Officer only by recomputing the income - Held that - Due to an arithmetical mistake in the computation statement filed by the assessee along with its return of income, the impugned addition has been made. This is evident from the Statement of Taxable income, a copy of which was submitted in the paper book. As can be seen from the said statement, it is clear that the assessee has disclosed all the facts relating to the earning of income from property in the return of income filed. Hence no particulars of income from House Property have been suppressed. The addition of ₹ 52,85,744/-has been made on recomputation of income under the head Income from House Property . As such, levy of penalty u/s 271(1)(c) with regard to the addition of ₹ 52,85,744/- is not warranted. We are of the opinion that assessee has neither concealed any income nor furnished inaccurate particulars of income for the year under consideration. Further, there is no seized material based on which the additions are made in the assessment. Disallowance of loss on sale of fixed assets - Held that - We find from schedule 10 to P&L for the year under consideration, a copy of which is placed in the paper book that Loss on sale of fixed Assets for Rs.l0,74,750/- has been shown in it and hence the assessee has not concealed any particulars with regard to his income. The assessee has not concealed any particulars of income and the addition made by the AO is a technical one. We are of the opinion that levy of penalty u/s 271(1)(c) in respect of this addition is not also not warranted. See Kanbay Software (P) Ltd 2009 (4) TMI 499 - ITAT PUNE-A wherein held penalty under section 271(1)(c) is a penalty for concealment of income or for furnishing of inaccurate particulars or under the extended definition by virtue of the Explanation 1 to section 271(1)(c), for a deemed concealment of income. As a corollary to this legal position, unless it is established that there is concealment of income or furnishing of inaccurate particulars or it is established that, on the facts of the case, concealment of income can be deemed in accordance with the provisions of law, the penalty provisions cannot be invoked at all - Decided against revenue.

Summary

Issues:
Appeal against order of CIT (A) for A.Y 2005-06 - Addition under "Income from House Property" and disallowance of loss on sale of fixed assets - Penalty u/s 271(1)(c) - Justification of penalty based on concealment or inaccurate particulars.

Analysis:
1. Addition under "Income from House Property" and Disallowance of Loss on Sale of Fixed Assets:
- A search and seizure action under section 132 was conducted in the group cases of Sujana Universal Industries Ltd., resulting in an assessment under section 143(3) r.w.s. 153C for A.Y 2005-06.
- The Assessing Officer (AO) made additions totaling &8377; 52,85,744 by recomputing income under "Income from House Property" and disallowing loss on sale of fixed assets amounting to &8377; 10,74,750.
- The appellant contested these additions, arguing that they had disclosed all relevant facts and that the additions were technical in nature, not indicative of concealment or inaccurate particulars.

2. Penalty u/s 271(1)(c):
- The AO levied a penalty of &8377; 22,81,879 under section 271(1)(c) based on the additions made in the assessment.
- The appellant contended that the penalty was unwarranted as there was no concealment of income or furnishing of inaccurate particulars. They cited various legal precedents to support their position.
- The CIT (A) upheld the additions but acknowledged that there was no concealment or inaccurate particulars in the appellant's case, referencing the Supreme Court judgment in CIT v. Reliance Petroproducts Pvt. Ltd.

3. Judgment and Decision:
- The ITAT Hyderabad Bench, comprising Shri P.M. Jagtap and Smt. Asha Vijayaraghavan JJ, dismissed the Revenue's appeal.
- The tribunal found that the additions made by the AO were based on technical errors and not indicative of concealment or inaccurate particulars by the assessee.
- Citing the decision in Kanbay Software India Pvt Ltd, the tribunal emphasized that penalty under section 271(1)(c) is for concealment or furnishing inaccurate particulars, which were not present in this case.
- Consequently, the tribunal concluded that the penalty levied was not justified, and the appeal against it was dismissed.

In conclusion, the ITAT Hyderabad upheld the appellant's position, ruling that the penalty under section 271(1)(c) was not warranted due to the absence of concealment or inaccurate particulars, based on the technical nature of the additions made in the assessment.