2009 (8) TMI 1154 - HC - Income Tax

Appeal dismissed, penalty deleted under Income Tax Act; no concealment found.

The High Court dismissed the appeal, upholding the Tribunal's decision to delete the penalty imposed under Section 271(1)(c) of the Income Tax Act. The ... Penalty u/s 271(1)(c) - Addition of Short term capital gain under the head “Professional Development Expenses - Disallowance of expenses and under the head “Professional Development Expenses” and under the head Advertisement - Tribunal has set aside the penalty order stating that there was no concealment of income or furnishing of inaccurate particulars - HELD THAT:- Where the assessee has disclosed all material facts in regard to the claim made, the onus placed upon the assessee stood discharged. In the instant case, the assessee had disclosed all the particulars of income. AO disallowed the expenses claimed on the ground that they were not incurred for the business purpose of the assessee and that they have been claimed against exempted income. Thus, it cannot be held that the assessee has filed inaccurate particulars of income or had concealed its income. Thus, the penalty cannot be levied for this reason also. We also observe that the expenses claimed by the assessee have not been found by the AO as bogus or false. Thus, the genuineness of the expenses incurred by the assessee has not been doubted by the AO and, therefore, the penalty cannot be levied on the assessee still further, the assessee explained that it was due to genuine mistake that it omitted to show the capital gain on the sale of six cars and that as soon as it was pointed out, the same was accepted by the assessee. In this context, assessee, by referring to the order of Suresh Chand Mittal, [2001 (6) TMI 63 - SC ORDER] submitted that it has been held that where the department has not discharged its burden of proving concealment and has simply rested its conclusion on the act of voluntary surrender done by the assessee in good faith, the penalty could not be imposed. Hence, for the reasons given in the foregoing, we set aside the order of the CIT (A) and the Assessing Officer and delete the penalty - Decided in favour of assesee. Issues:Assessment of short term capital gain on sale of cars, disallowance of Professional Development Expenses, disallowance of Advertisement expenses, penalty proceedings under Section 271(1)(c) of the Income Tax Act.Assessment of Short Term Capital Gain:The Assessing Officer made three additions to the income of the assessee, including a sum on account of short term capital gain from the sale of cars. The assessee excluded profit from the sale of cars under long term capital loss, resulting in the addition of short term capital gain to the income. The Tribunal set aside the penalty order, stating no concealment of income or furnishing of inaccurate particulars. The Income Tax Appellate Tribunal accepted the assessee's explanation that the exclusion of profit from the sale of cars was inadvertent, leading to the deletion of the penalty.Disallowance of Professional Development Expenses:The assessee debited expenses under 'Professional Development Expenses' for sponsoring its director for a post-graduation course abroad in law. The Assessing Officer disallowed these expenses as unrelated to the business without proof of necessity or nexus to business. The Tribunal held that the expenses were genuinely claimed by the assessee, and no concealment of income was found, leading to the deletion of the penalty.Disallowance of Advertisement Expenses:The assessee claimed heavy advertisement expenses for business promotion without sufficient explanation or proof of relevance to the business. The Tribunal found the explanation vague and disallowed the expenses, but no concealment of income was established. The penalty was deleted as the genuineness of the expenses was not doubted, and the onus was on the department to prove concealment.Penalty Proceedings:The Assessing Officer initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act, alleging concealment of income or filing inaccurate particulars. However, the Tribunal found no satisfaction recorded regarding concealment in the assessment order. It emphasized that penalty and assessment proceedings are separate, requiring the department to prove concealment with additional material. As the assessee disclosed all facts and no bogus expenses were found, the penalty was deleted due to lack of evidence of concealment.In conclusion, the High Court dismissed the appeal, stating that no question of law arose in the circumstances. The Tribunal's decision to delete the penalty was upheld based on the lack of evidence establishing concealment of income or filing of inaccurate particulars.