Case Law Details
Dineshkumar Kanjibhai Patel-HUF Vs ITO (ITAT Ahmedabad)
Introduction: This article discusses the recent order of ITAT Ahmedabad concerning Dineshkumar Kanjibhai Patel-HUF’s appeal against the penalty u/s Section 271(1)(c) of the Income Tax Act. The appellant claimed Long Term Capital Gain (LTCG) on the sale of shares but faced rejection from the Assessing Officer, leading to the penalty imposition.
Analysis: Dineshkumar Kanjibhai Patel-HUF filed a return of income declaring income after claiming exemption under Section 10(38) for LTCG earned from the sale of shares. However, the Assessing Officer rejected the claim, made an addition under Section 68, and initiated penalty proceedings under Section 271(1)(c) for alleged concealment of particulars of income.
The appellant argued that they did not conceal any income and reported LTCG as per the return of income. They contested the imposition of penalty under Section 271(1)(c).
The ITAT Ahmedabad noted that the appellant did not conceal income or file inaccurate particulars at any stage of revealing income to the revenue authorities. As a result, the ITAT found that Section 271(1)(c) did not apply in this case, and the penalty was unjustified.
Conclusion: The ITAT Ahmedabad allowed Dineshkumar Kanjibhai Patel-HUF’s appeal, deleting the penalty imposed under Section 271(1)(c) of the Income Tax Act, as no concealment of particulars or inaccurate income filing was found.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The appeal filed by the assessee is against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre, (in short “NFAC”), Delhi on 13.03.2023 for A.Y. 2011-12.
2. The grounds of appeal raised by the assessee are as under:
“1. The learned C.I.T.(Appeals) grossly erred in law and on facts in confirming the penalty of Rs.42,876/- levied u/s. 271(1)(c) by the learned Assessing Officer. It is submitted that it be so held now and the penalty as confirmed by C.I.T.(Appeals) be deleted.
2. The learned C.I.T.(Appeals) erred in confirming the penalty order u/s.271(1)(c) of the learned Assessing Officer, particularly, when there was no concealment of particulars of income or no concealment of income and the same were duly reflected in the return of income and were fully substantiated during the course of assessment proceedings and only the income was converted from exempt income to taxable income by the learned Assessing Officer. It is submitted that it be so held now and the penalty of Rs.42,876/- u/s.271(1)(c) as confirmed by C.I.T.(Appeals) be deleted.”
3. The assessee filed return of income declaring income of Rs. 16,270/-after claiming exemption under Section 10(38) for a sum of Rs. 3,80,400/-being Long Term Capital Gain (in short “LTCG”) earned by the assessee on the sale of shares of M/s. DEvika Proteins Limited on the ground that they were held by him for more than one year, and thereafter, sold the same through stock exchange enabling him to offer the aforesaid exemption. The Assessing Officer rejected the claim of the assessee on the ground that the said capital gain was in respect of penny stock and made addition of Rs. 3,99,900/- being sale consideration received under Section 68 of the Act. The Assessing Officer initiated proceedings under Section 271(1)(c) for concealment of particulars of income thereby issuing notice on 22.12.2018. The assessee filed his reply. After taking cognizance of the reply the Assessing Officer levied penalty under Section 271(1)(c) for concealment of particulars of income for a sum of Rs. 42,876/- at the rate of 100%.
4. Being aggrieved by the penalty order the assessee filed appeal before the CIT(A). The CIT(A) dismiss the appeal of the assessee.
5. The Ld. A.R. submitted that the assessee has not concealed any income as such but has claimed the LTCG as per the details filed in return of income. Therefore, the imposition of penalty under Section 271(1)(c) is not justifiable.
6. The Ld. D.R. relied upon the assessment order, penalty order and the order of the CIT(A).
7. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that in the assessment order itself in Para 4.14 the Assessing Officer noted that the capital gain shown by the assessee in the statement of income as a credit entry was rejected and the addition was made in respect of non-granting of LTCG. But the fact remains that the assessee at no point of time concealed its particulars of income or filed inaccurate particulars of income at any stage of revealing its income to the revenue authorities. Thus, in the present case Section 271(1)(c) does not apply as the assessee at no point of time concealed its income from the revenue authorities. Thus, the Assessing Officer as well as the CIT(A) was not right in levying penalty under Section 271(1)(c) of the Act. Hence, the appeal of the assessee is allowed.
8. In result, the appeal of the assessee is allowed.
This Order Pronounced in Open Court On 14/07/2023
