9911796707
TMI Blog2016 (7) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... is arising out of order of CIT(A)-XXXII, Kolkata vide Appeal No. 66/XXXII/11-12/50(2)/Kol dated 30.07.2013. Assessment was framed by ITO, Ward-50(2), Kolkata u/s. 143(3) of the Income tax Act, 1961 (hereinafter referred to as the Act ) for AY 2008-09 vide his order dated 29.12.2010. 2. The only issue to be decided in this appeal of assessee is as to whether penalty u/s. 271(1)(c) of the Act could be levied in the facts and circumstances of the case. 3. Brief facts of this issue are that the assessee is an Individual carrying on the business of agricultural items for the last several years. She has filed her return of income declaring a total income of ₹ 1,46,864/- and exempted income of ₹ 10,86,573/- on 31.03.2009 in Form No. ITR-4 for the Assessment Year 2008-09. The return of income has been processed u/s 143(1) of the Act accepting the returned income. Subsequently the case has been selected for scrutiny. During the course of hearing u/s.143(2) of the Act, the Ld. AO asked for an explanation of exempted income which was shown in the 'Schedule El' of the return Form No. ITR- 4. In reply, the assessee explained that the closing balance of the investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Reported in 261 ITR 67 wherein it was held as under: The Assessing Officer did not accept the explanation offered by the assessee and taxed the difference of ₹ 1,40,000/- as Short Term Capital Gain. No appeal was preferred and the addition had become final. Thereafter the Assessing officer initiated the penalty proceedings u/s 271(1)(c) of the Income-tax Act, 1961, and levied penalty. The Tribunal reduced the penalty. On further appeal to the High Court: 'Held, that the assessee had shown Long Term Capital Gain and claimed exemption but transaction has been disclosed in the return. There was no concealment of income and penalty could not be imposed.' Decision of this case: When the assessee has disclosed the transaction which is the basis for capital gains tax and through wrongly claimed exempted from the capital gains tax, but that cannot be a case of penalty under section 271(1)(c) of the Income-tax Act 1961. If it has claimed any exemption after disclosing the relevant basic facts and under ignorance of the provisions of the Act of 1961, and not offered that amount for tax, in such cases, penalty should not be imposed. In such cases ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eflected in the Assessment Order- As per the written submission the assessee earned L TCG for an amount of ₹ 289,620/-; STCG for an amount of ₹ 7,96,953/- and dividend from Mutual Funds for an amount of ₹ 13,833/- It is clear that in course of assessment proceedings the assessee had co-operated with the Learned AO. The Ld. AO taxed the STCG of ₹ 6,51,937/- which includes Security Transaction Tax of ₹ 12,341/-. It is not in dispute that the break up of STCG of ₹ 6,51,937/- was furnished before the Learned AO. The Learned AR claimed that the deeming fiction of Explanation 1 to section 271(1)(c) applies only with respect to facts material to the computation of income and not with the computation per se. The fiction does not apply where the controversy is regarding the legality of the claim made by the assessee. Further, when the assessee offers an explanation in discharge of the onus cast upon him by Explanation 1 to section 271(1)(c), the A.O. must consider the explanation objectively and unless he finds the same against the human probabilities or unless there are any real inconsistencies or factual errors in such an explanation, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and also find that the AO had levied penalty for filing inaccurate particulars of income in respect of short term capital gains of ₹ 6,51,937/- and levied penalty of ₹ 60,173/- thereon. But the Ld. CIT(A) had confirmed the levy of penalty on the ground of concealment of income. Hence, there is a basic difference on the charge attributed on the assessee by the revenue. In these circumstances, penalty could not be imposed on the assessee. In this regard, we place reliance on the decision of Hon ble Karnataka High Court in the case of CIT Vs. MANJUNATHA COTTON AND GINNING FACTORY Ors. reported in (2013) 359 ITR 565 (Kar.) , wherein it was held as under: The final conclusion of the Hon ble Court was as follows:- 63. In the light of what is stated above, what emerges is as under: a) Penalty under Section 271(1)(c) is a civil liability. b) Mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities. c) Willful concealment is not an essential ingredient for attracting civil liability. d) Existence of conditions stipulated in Section 271(1)(c) is a sine qua non for initiation of penalty proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty proceedings have to be initiated by the appellate authority and not the Assessing Authority. p) Notice under Section 274 of the Act should specifically state the grounds mentioned in Section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income q) Sending printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law. r) The assessee should know the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee . s) Taking up of penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law . t) The penalty proceedings are distinct from the assessment proceedings. The proceedings for imposition of penalty though emanate from proceedings of assessment, it is independent and separate aspect of the proceedings. u) The findings recorded in the assessment proceedings in so far as concealment of income and furnishing of incorrect particulars would not operate as res judicata in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
