2022 (12) TMI 1270 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - addition on account of short term capital gains on sale of Helicopter - addition made u/s 50 - Disallowance of excess depreciation and disallowance of Helicopter expenses - HELD THAT - The addition was made based on the information provided by the appellant during the course of assessment proceedings and on the basis of information contained in the Return of Income. Therefore, the appellant cannot be held guilty of furnishing of inaccurate particulars of income nor concealing of particulars of income. Since the information filed along with return of income, unequivocally stated that the Helicopter was sold for a consideration but, the appellant had failed to reduce the entire consideration received on sale of Helicopter from opening WDV of the block of assets under which the Helicopter falls and offered to tax the excess of sale consideration over opening value WDV of block of the assets. It is not even a case of wrong claim made by the assessee in the return of income. The fact that the entire information regarding the sale of the Helicopter was available in the return of income, an accompanied document, would go to show that it is bona-fide inadvertent error and the ratio of the decision of Price Waterhouse Coopers (P.) Ltd 2012 (9) TMI 775 - SUPREME COURT is squarely applicable. The mere fact that the assessee had chosen not to contest the addition in the appellate forum, cannot automatically entail levy of penalty as held by the Hon ble Supreme Court in the case of Sir Shadi Lal Sugar General Mills Ltd. 1987 (7) TMI 3 - SUPREME COURT The appellant cannot be held guilty of furnishing inaccurate particulars of income or concealing the particulars of income and it is not a fit case for levy of penalty u/s 271(1)(c) of the Act. Hence, we reverse the orders passed by the lower authorities and quash the penalty order. Thus, the grounds of appeal filed by the assessee stand allowed.

Summary

Issues:
Appeals against orders of CIT(A) for assessment years 2013-14, 2014-15, and 2015-16 - Levy of penalty u/s 271(1)(c) - Allegation of furnishing inaccurate particulars of income.

Analysis:
Issue 1: Levy of Penalty u/s 271(1)(c)
- The appellant, a partnership firm, filed appeals against orders of CIT(A) for assessment years 2013-14, 2014-15, and 2015-16 concerning the levy of penalty u/s 271(1)(c) of the Income Tax Act, 1961.
- The Assessing Officer had imposed a penalty based on the addition made under section 50 of the Act, related to the sale of a Helicopter by the appellant.
- The appellant had inadvertently failed to reduce the entire sale consideration from the opening value of the block of assets, resulting in the addition of short term capital gains.
- The appellant contended that the mistake was inadvertent and not a case of furnishing inaccurate particulars of income or concealing income.
- The appellant's stance was supported by the fact that the information regarding the sale was correctly disclosed in the return of income and accompanying documents.
- The Tribunal held that the appellant's error was bona fide and inadvertent, falling within the ambit of the decision in Price Waterhouse Coopers (P.) Ltd. vs. CIT.
- The Tribunal also cited the case of Sir Shadi Lal Sugar & General Mills Ltd. vs. CIT to emphasize that not contesting an addition in the appellate forum does not automatically warrant the levy of a penalty.
- Consequently, the Tribunal reversed the lower authorities' orders and quashed the penalty, allowing the appeals filed by the assessee for all the assessment years in question.

Final Decision:
- The Tribunal allowed all three appeals filed by the assessee, setting aside the penalty imposed under section 271(1)(c) for the assessment years 2013-14, 2014-15, and 2015-16.