2020 (8) TMI 36 - AT - Income Tax

Penalty u/ s 271(1)(c) - bogus long-term capital gain - Assessee himself had surrendered his long-term capital gains claim to be exempt u/s 10(38) as bogus in the assessment - HELD THAT - We see no reason to express our concurrence with the Revenue s stand. We make it clear that hon ble apex court s landmark decision in Reliance Petroproducts case 2010 (3) TMI 80 - SUPREME COURT has settled the law that quantum and penalty proceedings stand on different footing and each and every disallowance/addition in the former does not ipso facto attract the latter penal provision. Assessee has filed all the relevant supporting evidence in support of genuineness of this above-stated long-term capital gains derived during the course of scrutiny. That being the case, we find that this tribunal s coordinate bench s decision in Smt. Amita Tulsiyan 2019 (5) TMI 849 - ITAT HYDERABAD holds that such an instance neither amounts to concealment nor furnishing of inaccurate particulars of income u/s 271 - Decided in favour of assessee.

Summary

Issues:
Appeal against penalty under section 271(1)(c) of the Income Tax Act, 1961 for assessment year 2015-16.

Analysis:
The appellant's appeal challenged the imposition of a penalty under section 271(1)(c) for alleged bogus long-term capital gains. The Revenue contended that the appellant voluntarily surrendered the claim for exemption under section 10(38) as bogus during assessment, justifying the penalty. However, the tribunal disagreed with the Revenue's stance, citing the Supreme Court's decision in Reliance Petroproducts' case, which clarified that quantum and penalty proceedings are distinct. The tribunal noted that the appellant provided supporting evidence for the genuineness of the long-term capital gains. Referring to a previous decision, the tribunal concluded that the appellant's actions did not amount to concealment or furnishing inaccurate particulars of income under section 271 of the Act, leading to the deletion of the penalty.

The tribunal's decision highlighted the importance of distinguishing between quantum and penalty proceedings, emphasizing that not every disallowance or addition in the former automatically attracts the penalty provision. By considering the evidence presented by the appellant and referencing a relevant precedent, the tribunal found no grounds for sustaining the penalty imposed by the lower authorities. Consequently, the tribunal allowed the appellant's appeal, overturning the penalty under section 271(1)(c) for the assessment year 2015-16.

The judgment, delivered by Shri S. S. Godara, JM, and Dr. A.L. Saini, AM, on 22.07.2020, clarified the legal position regarding penalties under section 271(1)(c) of the Income Tax Act, 1961. The tribunal's thorough analysis of the appellant's case, in light of relevant legal precedents and evidentiary support, resulted in the deletion of the penalty imposed for alleged bogus long-term capital gains. The decision serves as a reminder of the need for a factual and legal basis to justify penalties, ensuring that taxpayers are not penalized unfairly based on mere disallowances or additions in the assessment process.