2016 (5) TMI 484 - AT - Income Tax

Penalty u/s 271(1)(c) - excess cost of acquisition claim of the assessee - Held that - the assessee has neither furnished inaccurate particulars of income nor he has concealed the particulars of income from tax authorities, because the assessee has merely enhanced the cost of acquisition of the land for the purpose of computation of income stated to be due to inadvertent mistake, which he has subsequently revised and paid the tax on the remaining amount. In our view, this is a case of mere clerical mistake which was to be examined by the AO at the very outset to take into account the actual cost of the acquisition of the land to assess the short term capital gain. Moreover, the cost of acquisition of the land was already in the notice of the tax authorities, the assessee being a tax payee. So, making incorrect claim does not amount to furnishing of inaccurate particulars. Moreover, in the penalty order, it is nowhere recorded that the details submitted by the assessee in its return are found to be incorrect or erroneous or false and in these circumstances, penalty u/s 271(1)(c) of the Act is not sustainable. - Decided in favour of assessee.

Summary

Issues:
1. Short Term Capital Gain calculation error leading to penalty under section 271(1)(c) of the Income-tax Act, 1961.
2. Validity of penalty imposed by the Assessing Officer and sustained by the CIT(A).
3. Appeal against penalty order under section 271(1)(c).

Analysis:
1. The appellant, M/s. B.K. Concast Pvt. Ltd., filed an appeal seeking to set aside the penalty imposed under section 271(1)(c) for Short Term Capital Gain calculation error. The original return declared a lower amount, later revised voluntarily to a higher sum, leading to penalty initiation by the Assessing Officer.
2. The Assessing Officer initiated penalty proceedings based on the addition made to the short term capital gain due to an alleged error in cost of acquisition claimed by the assessee. Despite notices, the assessee did not contest, leading to the penalty order being passed.
3. The Tribunal considered whether the assessee had concealed income or furnished inaccurate particulars. The assessee admitted the error in cost calculation but revised it voluntarily. The Tribunal referred to the Supreme Court judgment in CIT vs. Reliance Petroproducts Pvt. Ltd. where it was held that incorrect claims do not amount to inaccurate particulars unless found to be incorrect or false.
4. The Tribunal found that the assessee's error was inadvertent and not an attempt to conceal income. As the details in the return were not found to be incorrect or false, the penalty under section 271(1)(c) was deemed unsustainable. The appeal was allowed, setting aside the penalty order.

This detailed analysis covers the issues involved in the judgment, providing a comprehensive understanding of the legal reasoning and outcome of the case.