2023 (3) TMI 816 - AT - Income Tax

Penalty u/s 271(1)(c) - assessee has made transaction in Penny Stock Scrip - assessee filed his return of income declaring income in response to notice issued u/s148 - detection of concealment of income by department - HELD THAT - As decided in Rajiv Garg case 2008 (7) TMI 363 - PUNJAB AND HARYANA HIGH COURT AO had simply rested his conclusion on act of assessee of having offered additional income in revised return and had failed to take any objection that declaration of income made by assessee in his revised return and his explanation were not bona fide, penalty imposed upon assessee, was not justified and had rightly been set aside by appellate authorities. Also in Whiteford India Limited 2014 (2) TMI 541 - GUJARAT HIGH COURT held that in absence of clear finding of assessing officer whether assessee is guilty of concealment or furnishing inaccurate particulars of income, penalty levied under section 271(1)(c) cannot be sustained. Thus direct the AO delete the entire penalty addition u/s 271(1)(c). Decided in favour of assessee.

Summary

Issues:
Appeal against penalty levied under section 271(1)(c) of the Income Tax Act, 1961 for assessment year 2012-13.

Detailed Analysis:

1. Background and Assessment: The appeal was filed by the assessee against the penalty levied by the assessing officer under section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 2012-13. The assessing officer reopened the case under section 147 of the Act based on information regarding penny stock transactions by the assessee. The assessee declared additional income earned on the transfer of shares after the case was reopened, and the assessing officer initiated penalty proceedings.

2. Penalty Proceedings: The assessing officer issued a show-cause notice for levying the penalty, which the assessee contested by stating that the income earned on the shares was already included in the return filed in response to the reopening notice. However, the assessing officer imposed a penalty at 100% of the tax sought to be evaded, leading to the appeal before the Ld. CIT(A) and subsequently before the Tribunal.

3. Appellate Proceedings: The NFAC/Ld. CIT(A) upheld the penalty under section 271(1)(c) after considering the submissions of the assessee. The Tribunal then heard arguments from both parties. The authorized representative for the assessee contended that there was no concealment of income as the return filed in response to the notice under section 148 was accepted without any changes. The representative relied on relevant case laws to support the argument.

4. Tribunal's Decision: After considering the submissions and the orders of the lower authorities, the Tribunal noted that the return filed by the assessee in response to the notice under section 148 included the income earned from the transfer of shares, which was accepted without any alteration. The Tribunal referred to previous court judgments that emphasized the importance of assessing whether there was intentional concealment or furnishing of inaccurate particulars of income before imposing a penalty under section 271(1)(c).

5. Legal Precedents: The Tribunal cited the decisions of the Hon'ble Punjab & Haryana High Court and the jurisdictional High Court in similar cases where penalties were set aside due to lack of evidence of deliberate concealment or inaccurate reporting of income. Relying on these precedents, the Tribunal directed the Assessing Officer to delete the entire penalty amount imposed under section 271(1)(c) in this case.

6. Final Decision: Consequently, the Tribunal allowed the appeal of the assessee, ruling in favor of deleting the penalty. The decision was pronounced in the open court on 07/03/2023.