2022 (1) TMI 534 - AT - Income Tax

Penalty u/s 271(1)(c) - whether there is concealment of income or the assessee filed inaccurate particulars of the income? - HELD THAT - In this particular case of the assessee, the Revenue is not invoked the proper limb of Section 271(1)(c) i.e. whether there is concealment of income or the assessee filed inaccurate particulars of the income. It is not at all mentioned by the Revenue authorities in the penalty notice dated 10.09.2013 relating to under which penalty limb of Section 274 r.w.s. 271(1)(c), the assessee's case will fall. Revenue authorities while imposing penalty as well as invoking the penalty provisions cannot be vague in their invocation which is beyond the scope of Income Tax Statute. Besides that, the principles of natural justice were not at all followed by the Revenue in assessee's case. On merit also land in question does not fall within the ambit of capital asset , as defined u/s. 2(14) and therefore, capital gain arising on sale of such lands is exempt, this submission of the Ld. AR is correct and as per law. Therefore, the penalty does not sustain. Incorrect provisions of the penalty - Penalty u/s 271(1)(c) cannot be levied in this assessment year as this is the search year in view of the provisions of Section 271AAA as the search took place on 21.09.2010, the reliance of the Ld. AR on the decision of the Tribunal in case of Dr. Naman A. Shastri 2015 (11) TMI 109 - ITAT AHMEDABAD is apt in the present case. Revenue has invoked incorrect provisions of the penalty and that cannot be said the fault of the assessee. Therefore, penalty does not sustain.

Summary

Issues:
- Appeal against penalty under Section 271(1)(c) of the Income Tax Act for Assessment Years 2007-08, 2009-10, 2010-11, and 2011-12.

Analysis:
1. The appellant challenged the penalty levied under Section 271(1)(c) for all four assessment years. The main contention was that the penalty was unjustified as there was no concealment of income or inaccurate particulars furnished. The appellant argued that the penalty was unsustainable in law and without jurisdiction.

2. The appellant, engaged in the business of estate agent/broker, disclosed profits and commissions in compliance with the law. The Assessing Officer initiated penalty proceedings without providing a reasonable opportunity for a hearing, which was against the principles of natural justice. The appellant contended that the penalty order was passed without proper consideration of facts and explanations submitted.

3. The appellant's representative argued that the penalty was imposed at a higher rate without sufficient justification. It was highlighted that the Revenue did not specify the limb of Section 271(1)(c) under which the penalty was imposed, leading to ambiguity. The appellant also contended that certain transactions were exempt from tax under the law.

4. The Tribunal observed that the Revenue failed to specify the grounds for imposing the penalty and did not follow the principles of natural justice. It was noted that the land in question did not qualify as a "capital asset," making the capital gains exempt. The Tribunal agreed with the appellant's arguments and held that the penalty was not sustainable.

5. Consequently, the Tribunal allowed all the appeals, stating that the penalties imposed for the respective assessment years were unjustified and lacked legal basis. The Tribunal emphasized the importance of adherence to procedural fairness and clarity in penalty imposition under the Income Tax Act.

This detailed analysis of the judgment provides insights into the issues raised by the appellant, the arguments presented, and the Tribunal's reasoning in allowing the appeals against the penalties imposed under Section 271(1)(c) for the mentioned assessment years.