2016 (7) TMI 701 - AT - Income Tax

Penalty u/s. 271 (1)(c) - whether amount received by the assessee from two parties for surrendering its rights in a property,taxable u/s. 55 (2)(a)? - Held that - It is not the case of the AO that the stand taken by the assessee was totally against the provisions of the Act or that prima facie it was inadmissible. Maximum it could be said that there was difference of opinion. Thus, the claim made by the assessee was a legally plausible claim. It is a different issue that in the appellate proceedings the stand of the assessee was negated. The AO had gathered the information about the transaction from the return of income filed by the assessee. Thus, disclosure of primary facts was there. So, there was no concealment of particulars of income per se. Once basic facts have been disclosed by the assessee it has to be held that he had not concealed the particulars of income. Besides, particulars were not inaccurate as it had made the claim that it considered to be bonafide. Considering the peculiar facts and circumstances of the case, we are of the opinion that the order of the FAA does not suffer from any legal infirmity. The cases, relied upon by the AR, also endorse the view taken by the FAA. So, confirming his order, we decide the effective ground of appeal in favour of the assessee

Summary

Issues:
Appeal against deletion of penalty u/s. 271(1)(c) for furnishing inaccurate particulars of income.

Analysis:
The case involved an appeal challenging the deletion of penalty levied by the Assessing Officer (AO) for furnishing inaccurate particulars of income u/s. 271(1)(c) of the Act. The AO had initiated penalty proceedings after finding that the assessee had received a significant sum from a transaction and taxed it as Long-Term Capital Gain (LTCG). The First Appellate Authority (FAA) upheld the penalty, leading to the appeal before the Appellate Tribunal. The key argument of the assessee was that it had acted in good faith, disclosed all necessary facts, and made a legal claim based on expert advice. The FAA emphasized the need for a bona fide belief to avoid penalty under section 271(1)(c) and referred to relevant case laws supporting the assessee's position.

In the Tribunal, the Departmental Representative (DR) contended that the assessee had concealed income, while the Authorized Representative (AR) supported the FAA's decision, highlighting that the assessee had disclosed all relevant information and made a legal claim in good faith. The Tribunal observed that the assessee had disclosed the transaction details in the return of income, claimed the amount received was not taxable based on legal advice, and that the AO, FAA, and Tribunal had upheld the addition in quantum appeals. The Tribunal further noted that the AO had not provided sufficient reasoning for rejecting the assessee's explanation for not levying penalty u/s. 271(1)(c).

The Tribunal emphasized the distinction between assessment and penalty proceedings, stating that a disagreement on taxability does not automatically imply concealment of income. It highlighted that the AO had not demonstrated why the assessee's explanation was unacceptable, a prerequisite for imposing concealment penalty. The Tribunal concluded that the assessee's claim was legally plausible, there was no concealment of income as primary facts were disclosed, and the claim was made in good faith. Relying on relevant case laws, the Tribunal upheld the FAA's decision, dismissing the appeal and deciding in favor of the assessee against the AO.

In conclusion, the Tribunal's detailed analysis focused on the necessity of a bona fide belief, disclosure of primary facts, and the lack of concrete reasons for rejecting the assessee's explanation. The decision underscored the importance of independent views in penalty proceedings and upheld the FAA's order, ultimately dismissing the appeal filed by the AO.