2022 (9) TMI 600 - AT - Income Tax

Penalty u/s. 271(1)(c) - difference between the returned income (loss) and income(loss) as per computation - Addition made for not furnishing the documentary evidence regarding the value of property and other expenses incurred - addition for filing inaccurate particulars of income - additions qua capital gain and difference between the ITR vis a vis computation of income, by holding that the act of the Assessee was deliberate act to furnish the inaccurate particulars of income, which lead to evade the income - HELD THAT - Almost all the relevant details, may not be in the form of documents specifically qua expenditures incurred, otherwise available before the Assessing Officer for consideration. As decided in Reliance Petro Products (P) Ltd. 2010 (3) TMI 80 - SUPREME COURT held that a meremaking of the claim, which is not sustainable in law by itself will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to inaccurate particulars. Considering the peculiar facts and circumstances, as the Assessee had already closed down its business and therefore, could not file the part documents as required by the AO, however, from the documents produced, it is apparently clear that required details with regard to the purchase price/value of the property was available before the authorities belowand even also we find the claim made by the Assessee as bona fide and therefore cannot be termed as dishonest or mala fide, hence we are of the considered view that in facts and circumstances and the documents available on record as stated above, no penalty is leviable . Even otherwise wealso do not find any material/reason or justification for levy of penalty and affirmation thereof. Consequently, the penalty under challenge is deleted. - Decided in favour of assessee.

Summary

Issues:
1. Assessment of short term capital gain/loss on sale of property.
2. Penalty imposition under section 271(1)(c) of the Income-tax Act, 1961 for furnishing inaccurate particulars of income.

Issue 1: Assessment of short term capital gain/loss on sale of property

The appellant claimed a capital loss of Rs.32,87,521 on the sale of a property, but the Assessing Officer (AO) re-computed the capital gain to Rs.46,07,886 due to lack of evidence regarding the purchase cost and other expenses. The AO added Rs.78,95,407 as capital gain, considering the total purchase cost for the property to be Rs.63,92,114. The appellant argued that the expenses claimed were genuine but could not provide documentary evidence. The AO also initiated penalty proceedings under section 271(1)(c) for filing inaccurate particulars of income. The appellant contended that the claim was made in good faith based on available evidence. The AO imposed a penalty of Rs.24,41,157, considering the claim as deliberate and mala fide.

Issue 2: Penalty imposition under section 271(1)(c) of the Income-tax Act

The appellant challenged the penalty before the Commissioner, who upheld the penalty on the capital gain addition but deleted the penalty on a minor difference in income computation. The Commissioner noted that the appellant failed to substantiate the cost and expenses related to the property, leading to inaccurate particulars being furnished. The Commissioner relied on judgments to support the penalty imposition. The appellant argued that all relevant details were available before the authorities, even though specific documents were not produced due to business closure. The appellant presented evidence of property purchase and financing, demonstrating bona fide intention in the claim. The Tribunal found the claim to be genuine and not mala fide, citing a Supreme Court judgment that mere unsustainable claims do not warrant penalty. Consequently, the Tribunal deleted the penalty, finding no justification for its imposition.

In conclusion, the Tribunal allowed the appeal, deleting the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961. The decision was based on the appellant's bona fide claim supported by available evidence, which did not warrant penalty imposition.