Concealment penalty deleted as assessee was unaware of tax on sale of property. Assessee agreed to pay taxes on the capital gain and paid the tax same date the assessment order was passed
ABCAUS Case Law Citation:
ABCAUS 2172 (2018) (01) ITAT
The Challenge/Grievance:
The main grievance of the assessee was against the imposition and confirmation of penalty of levied under section 271(1)(c) of the Income Tax Act, 1961 (the Act).
Important Case Laws Cited/relied upon by the parties:
CIT vs. S.V. Electricals P. Ltd., 155 Taxman 158 (M.P)
CIT vs. Ashim Kumar Agarw3al, 153 Taxman 226 (Jharkhand)
CIT vs. Harnarain
CIT vs. Pricewaterhouse Coopers Pvt. Ltd., 2012-ITR-VSC244 (SC).
T Ashok Pai vs. CIT [2007] 161 Taxman 340 (SC).
Brief Facts of the Case:
The assessee had filed his return of income. Proceedings under section 147 of the Act was initiated by issuing notice under section 148 of the Act to examine the escapement of capital gain from sale of immoveable property.
During the course of assessment proceedings, assessee himself attended the proceedings and submitted that the income from capital gain was not shown by the assessee, as he was unaware of the provisions related to tax on sale of property. The assessee agreed to pay taxes on the capital gain accruing to him on account of transfer of property and paid the tax on the same date on which the assessment order was passed.
The Assessing Officer, however, passed penalty order under section 271(1)(c) of the Act stating that assessee has not shown in his return of income the income from sale of property and assessee had paid tax only when notice under section 148 was issued to the assessee. The Assessing Officer was of the opinion that had he not noticed the sale of property and not issued notice under section 148 of the Act, then the assessee would have not paid taxes on capital gain.
Before the CIT(A), the assessee pleaded his ignorance of law and submitted that because of the complexities of the income tax provisions, there was a bona-fide mistake on his part, because of which tax on sale of property was not included in the return of income, but when he came to know about the tax to be paid, the very day when the assessment order was passed he paid taxes.
The assessee submitted that following propositions as emerged from various case laws relied upon by him:
| Where the assessee surrenders his full income though at a later stage, there was no question of any concealment on his part and no penalty under section 271(1)(c) of the Act was leviable and that an omission from the return of income did not amount to concealment. |
| Surrender of the amount by the assessee after receipt of questionnaire could not lead to an inference that it was not voluntary in the absence of any material on record to suggest that it was bogus or untrue. |
| There cannot be any penalty under section 271(1)(c) of the Act for a bona-fide/ inadvertent/human error. |
| Mere omission or negligence does not constitute deliberate act of suppression. |
However, the CIT(A) confirmed the penalty levied under section 271(1)(c) of the Act.
Being aggrieved, assessee preferred this appeal before the Tribunal.
Observations made by the Tribunal:
It was observes that the assessee had not entered details sale of immoveable property nor paid tax on the same. However, when notice under section 148 of the Act was issued, assessee himself attended the proceedings and thereafter paid the entire tax on the same date when the assessment order was finalized.
According to the ITAT, this behaviour on the part of the assessee showed that when he had filed the return, there was some omission on the part of the assessee to include the tax on the sale of property. However, when he received notice under section 148 of the Act, he was very eager to know what mistake has been committed by him and, therefore, he himself attended the hearing before the Assessing Officer and on coming to know about the amount of tax payable, had immediately paid tax on the same date. He even not challenged the assessment order and had accepted the assessment as passed by the Assessing Officer and paid due tax. Therefore, there is no loss to the Revenue.
The ITAT observed that the judicial pronouncements are absolutely clear that if in the return of income certain mistake is there, which is bona-fide and there is also no loss to the Revenue, then in the absence of any material on record, it cannot come be concluded that assessee has deliberately concealed the income or has furnished inaccurate particulars of income.
Ot was noted that in the instant case, there was nothing on record to show that there was any malafide intention on the part of the assessee to conceal the income or furnish inaccurate particulars of income but there was an omission while filing the return of income which was rectified through challan on the very date of passing the assessment order.
Decision/ Conclusion/Held:
The penalty was cancelled.
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