2016 (5) TMI 1092 - AT - Income Tax

Penalty u/s 271(1)(c) - concealment of income of Short Term Capital Gain - Held that - Respectfully relying on the decisions of Hon ble Apex Court in the case of Price Waterhouse Coopers Pvt Ltd (2012 (9) TMI 775 - SUPREME COURT ) and T. Ashok Pai (2007 (5) TMI 199 - SUPREME Court ), we are of the view that as the purchases and sale transactions were duly reflected in the investment account shown by the assessee in its balance-sheet, but due to inadvertent error, the assessee while submitting its return failed to add the Short Term Capital Gain to its income and the same has already been subjected to tax; and therefore, under these circumstances, the assessee s case is not a fit case for being visited with penalty u/s 271(1)(c) of the Act - Decided in favour of assessee.

Issues:
Appeal against deletion of penalty under section 271(1)(c) of the Income Tax Act for concealment of income of Short Term Capital Gain.

Analysis:
1. The Revenue appealed against the order of the ld. Commissioner Income-Tax (Appeals) regarding the deletion of a penalty under section 271(1)(c) for Assessment Year 2008-09. The penalty was imposed for concealing income related to the sale of shares of REI Agro Limited.
2. The assessee, a Private Limited Investment Company, filed its return for the assessment year declaring total income at Rs. NIL after claiming carried forward unabsorbed loss. During assessment proceedings, it was found that profit on the sale of shares of REI Agro Limited was not disclosed. An addition of Rs. 1,30,27,505 was made, and a penalty of Rs. 15,24,180 was imposed for concealment of income.
3. The ld. CIT(A) allowed the appeal of the assessee, stating that the mistake was inadvertent and the appellant had a reasonable cause for not showing the profit on the sale of shares in the return of income. The penalty was deleted based on the appellant's submission that the error was unintentional and there was no intention to defraud the revenue.
4. The Revenue contended that the penalty should not have been deleted, while the authorized representative of the assessee argued that the gain arising from the sale of shares was inadvertently not offered for taxation due to a genuine mistake.
5. The Tribunal observed that the transactions were duly reflected in the investment account but were not bifurcated and shown under the head "Capital Gains" in the return of income. Citing relevant legal precedents, the Tribunal noted that inadvertent errors or omissions do not constitute deliberate concealment of income.
6. Relying on the decisions of the Hon'ble Supreme Court, the Tribunal concluded that the assessee's case was not a fit one for imposing a penalty under section 271(1)(c) as the Short Term Capital Gain had already been subjected to tax and the error was inadvertent. The Tribunal upheld the order of the ld. CIT(A) and dismissed the Revenue's appeal.

This detailed analysis of the judgment highlights the key legal arguments, facts, and decisions made by the Tribunal in the case involving the deletion of a penalty for concealment of income under the Income Tax Act.

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