2016 (2) TMI 754 - HC - Income Tax

Penalty u/s.271(1)(c) - income offered for taxation during survey and return of income was revised after detection by department - Held that - Commissioner of Income Tax(A) during the penalty proceedings had again examined the issue whether the claim of capital gain made in the regular return of income to the extent of ₹ 1.62 Crores with the particulars in support of the same. On examination, the CIT(A) reaches a prima facie conclusion that the income could be regarded as long term capital gain. Once the aforesaid conclusion has been reached coupled with two further facts viz. the authorities have rendered a finding of fact that the Respondent-assessee had not concealed its income nor filed inaccurate particulars attributable to capital gains in its regular return of income, the view taken to delete the penalty is a possible view. - Decided in favour of assessee

Summary

Issues:
- Appeal against deletion of penalty under Section 271(1)(c) of the Income Tax Act, 1961 for Assessment Year 2006-2007.

Analysis:
- The Respondent initially declared a total income of Rs. 9.69 lakhs in the return, but did not offer Rs. 1.62 Crores as Long Term Capital Gain for taxation. During a survey, additional income of Rs. 5 Crores was declared, including the unreported Rs. 1.62 Crores for the assessment year. A revised return was filed later, offering the unreported amount for taxation.
- The Assessing Officer imposed a penalty of Rs. 55.79 lakhs under Section 271(1)(c) for incorrect exemption claim. However, the CIT(A) deleted the penalty, noting that all transaction details were disclosed in the return and sufficient evidence supported the capital gain claim.
- The Tribunal upheld the CIT(A)'s decision, emphasizing that since the income particulars were disclosed in the return, penalty imposition was unjustified. It cited relevant case laws to support the decision.
- The Revenue argued that the disclosure change during assessment should attract penalty if it impacts tax payable. They contended that the CIT(A) did not follow natural justice principles, but the Court found no evidence of such breach.
- The Court differentiated the present case from the Mak Data P. Ltd case, where income concealment was involved. Here, the Respondent disclosed the income in the original return, believing it to be exempt. The Court rejected the Revenue's argument regarding tax impact due to the change of head of income.
- The CIT(A) and Tribunal's findings were deemed reasonable and not perverse. The Court dismissed the appeal, stating it did not raise substantial questions of law. No costs were awarded.

This detailed analysis covers the issues involved in the appeal against the deletion of penalty under Section 271(1)(c) of the Income Tax Act for the specified assessment year.