2023 (11) TMI 849 - AT - Income Tax

Levy of penalty u/s. 271(1)(c) - income surrendered while filling the return of income in response to notice u/s. 153A - addition of short term capital gain voluntarily surrendered for taxation in the assessment proceedings by filing revised computation of income - HELD THAT - As relying on Kirit Dahyabhai Patel case 2015 (1) TMI 201 - GUJARAT HIGH COURT assessee has surrendered the income while filling the return of income in response to notice u/s. 153A of the Act and even on the small addition made in the assessment proceeding was also pursuant to the revised computation of income filed by the assessee in the assessment proceeding for which the ld. AO did not find any fault and the nature of income added are short term capital gain of minor amount, small amount of rent and interest income on deposit. The assessee has surrendered all these amount for tax by revising the computation of income in the assessment proceeding. This act of the assessee cannot be considered with that of the case where the amount added in the finalizing the assessment by the assessing officer and the assessee has not willingly not disclosed. Thus, the charge of providing concealment of income or furnishing of inaccurate particular of income which was done with deliberate, willful or mala fide intention is not seen in this case. As such the same was not shown due bona-fide error which the assessee corrected voluntarily in the assessment proceedings by filling the revised computation of income. Therefore, in this facts and circumstances, it cannot be held that the assessee has concealed his income and liable to penalty under section 271(1)(c) - we also find support and guidance from the judgment of Gujarat State Electricity Corporation Ltd 2022 (10) TMI 1052 - GUJARAT HIGH COURT wherein held that in no penalty can be imposed where the assessee made bona fide mistake and corrected the same on realization of mistake. We find that the assessee under the bona fide belief not offered income on short term capital gain which has been corrected in the assessment proceeding by filling the revised computation of income and the same is not disputed further. Thus, there was no will full attempt of the assessee to conceal his income. Penalty deleted - Decided in favour of assessee.

Summary

Issues Involved:
1. Delay in filing the appeal.
2. Levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961.

Summary:

1. Delay in Filing the Appeal:
The appeals were delayed, and the assessee contended that the appeal was filed online on 25.04.2023, within the time limit, but the hard copy was submitted on 23.05.2023 due to the appellant being out of town. The tribunal condoned the delay and proceeded to hear the matter on merits.

2. Levy of Penalty under Section 271(1)(c):
The primary issue in all twelve appeals was the levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961. The tribunal consolidated the appeals and took ITA No. 336/JP/2023 as the lead case for discussion, as the facts and circumstances were identical across all cases.

The assessee argued that the penalty was wrongly upheld by the CIT(A), as the income declared in the return filed under Section 153A was the assessed income, and no concealment or furnishing of inaccurate particulars occurred. The assessee had filed a revised computation of income during the assessment proceedings, which was accepted by the AO without finding any fault.

The CIT(A) had partly upheld the penalty, stating that the assessee had concealed particulars of income by not including short-term capital gains in the original return. However, the tribunal found that the assessee had voluntarily surrendered the additional amount for taxation during the assessment proceedings, which was accepted without any issues.

The tribunal referred to the Gujarat High Court's decision in Kirit Dahyabhai Patel Vs. ACIT, which held that the return filed in response to notice under Section 153A is to be considered as a return filed under Section 139, and penalty is to be levied on the income assessed over and above the income returned under Section 153A. The tribunal also noted that the assessee had corrected the mistake voluntarily, indicating no willful attempt to conceal income.

Based on these findings, the tribunal set aside the CIT(A)'s decision and directed the AO to delete the penalty imposed. The decision in ITA No. 336/JP/2023 was applied mutatis mutandis to ITA Nos. 337 to 347/JP/2023, and all appeals were allowed.

Order Pronounced:
The order was pronounced in the open court on 24/08/2023.