R.S. Tradelink Pvt. Ltd. Vs ACIT (ITAT Surat)
No penalty unless there was conscious concealment or furnishing of inaccurate particulars of income
Conclusion: Penalty under section 271(1)(c) was not leviable as AO was not certain that for which limb he wanted to initiate penalty proceedings, that is, for concealment of income or for furnishing inaccurate particulars of income. AO initiated penalty proceedings on one footing and concluded on other footing, therefore, the basis of levy of penalty itself was not correct.
Held: During the scrutiny assessment, AO had made addition, on account of Long Term Capital Gain. AO in assessment order, had stated that penalty proceedings under section 274 r.w.s 271(1)(c) should be initiated for furnishing inaccurate particulars of income and concealment of income. However, AO had initiated penalty proceedings for concealment of income. Assessee challenged penalty levied by AO. It was held that AO had initiated the penalty proceedings on one footing and concluded on other footing. AO was not certain that for which limb he wanted to initiate penalty proceedings, that is, for concealment of income or for furnishing inaccurate particulars of income. Therefore, the basis of levy of penalty itself was not correct. Assessee company sold the land to Ambuja Cement for a certain consideration and out of the said receipt the bank loans were to be paid by the company. When this fact (that the said amount was not disclosed in the original return by way of capital gain) was drawn to the attention of the Director, he immediately and voluntarily offered the long term capital gain in the hand of the company by revising the return of income. The amount received from the transferee company of M/s Ambuja Cement had been shown by assessee-company under the head loan and advances, hence, there was no conscious concealment of income. So, where the circumstances of a case establish that the mistake was accidental and inadvertent and there was no material at all to justify any want of bona fide or any gross neglect, imposition of penalty was not justified.[ Mahadeshwara Movies 144 ITR 127 (kar) ]. Therefore, in the assessee’s case the penalty was not leviable unless it was shown that there was a conscious concealment or furnishing of inaccurate particulars of income.
FULL TEXT OF THE ORDER OF ITAT SURAT
Captioned appeal filed by the assessee, pertaining to the Assessment Year (AY) 2008-09, is directed against the order passed by the learned Commissioner of Income Tax (Appeals)-II, Surat [in short “the ld. CIT(A)”] in Appeal No. CAS-II/189/2013-14 dated 08.05.2014, which in turn arises out of penalty order passed by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 [hereinafter referred to as the “Act”]. The grievances raised by the assessee are as follows:
“1. On facts and circumstance of the case, the learned CIT(A) has erred in confirming the penalty of Rs.2,11,09,303/- u/s. 271(l)(c) of the Act as levied by the ld. AO in respect of the long term capital gain income of Rs.9,31,56,673/-without considering the contentions of the assessee, which is absolutely erroneous and bad-in-law and needs to be deleted in the interest of natural justice and equity.
2. The assessee craves to add, amend, alter, substitute, modify the above ground of appeal, if necessary, on the basis of submissions to be made at the time of personal hearing.”
2. Additional Grounds raised by assessee is as follows:
“On the facts and circumstances of the case as well as law on the subject, the learned assessing officer has erred in levying penalty u/s. 271(1)(c) and ld. CIT(A) has erred in confirming the penalty when assessing officer had not specified in the notice u/s.271(1)(c) r.w.s. 274 and in the penalty order whether the penalty was leviable for concealment of income or for furnishing inaccurate particulars thereof.”
3. Brief facts qua the issue are that assessee is a private limited company and engaged in the business of Coal trade. The assessee company filed its return of income on 30.09.2008 declaring total income of Rs.10,37,714/-. The scrutiny assessment under section 143(3) of the Act was finalized on 29.12.2010, with total income of Rs.9,51,17,548/-.
During the scrutiny assessment, the assessing officer has made two additions, on the followings issues:
(i).Addition made on estimated bases, that is, Estimated business income of Rs.19,60,875/- (Rs.6,53,62,500 x 3%),
(ii). Addition, on account of Long Term Capital Gain of Rs.9,31,56,673/-.
The assessing officer, vide para 11 of the assessment order, had stated that penalty proceedings under section 274 r.w.s 271(1)(c) of the Act should be initiated on both the additions for furnishing inaccurate particulars of income and
concealment of income. However, in para 8 of assessment order, in respect of penalty on estimated addition, the assessing officer has initiated the penalty
proceedings for furnishing inaccurate particulars of income. In respect of Income from capital gains, vide para 9 of assessment order, assessing officer has initiated penalty proceedings for concealment of income. However, in penalty order under section 271(1)(c) of the Act, the assessing officer has initiated penalty proceedings for both the additions for both the limbs, that is, concealment of income and furnishing inaccurate particulars of income and levied penalty observing as follows:
“9. In the light of the facts and circumstances of the case and forgoing discussion, I am satisfied that the assessee company has concealed the particulars of income and furnished the inaccurate particulars of it. Therefore penalty u/s.271(1)( c) is levied. As per section 271(1)(c) of the Act the amount of penalty should very between 100% to 300% of tax sought to be evaded. The amount of penalty under said section the amount of penalty ratios from tax sought 100% to be evaded to 300% of tax sought to be evaded, The working of quantum of penalty is as under:
