2018 (2) TMI 2068 - AT - Income Tax

Tax Penalty Overturned Due to Unintentional Errors

Smt. Indiraben H. Patel Versus ACIT, Circle -3, Vadodara

The Tribunal overturned the penalty of Rs. 14,71,190 imposed under section 271(1)(c) of the Income Tax Act for concealment and furnishing inaccurate ... Penalty u/s. 271(1)(c) - long term capital gains and interest income addition - HELD THAT:- Assessee resides mostly in USA and her caretaker manages all of her domestic chorus including tax matters. It is evident that she had not declared the third transaction, proportionate cost of acquisition and interest income at the first instance. The fact however remains that the impugned sale deeds pertain to the very survey numbers. We observe in these facts that possibility of overlapping in such an instance cannot be completely ruled out. Once the assessee is not managing her affairs on her own, the possibility of an inadvertent error is clearly indicated in even claiming double cost of acquisition added back later. We take into account all these facts to quote hon’ble apex court’s landmark judgment in Price Water-house Coopers Pvt. Ltd. vs. CIT [2012 (9) TMI 775 - SUPREME COURT] that such inadvertence cannot be termed as an instance attracting the impugned penalty provision in Section 271(1)(c) of the Act. We repeat that the assessee’s multifolded errors hereinabove inter alia in not having declared only two sale transactions instead of three, not adjusting cost of indexation on proportionate basis, not declaring interest income in 1000s of rupees and not being able to prove cost of improvement which were admitted latter on being pointed out jointly read lead us to a conclusion that it was a silly mistake on her part on all these issues. We thus draw support from hon’ble apex court’s abovestated judgment to conclude that both the lower authorities have erred in imposing the penalty in question u/s. 271(1)(c) of the Act. The same is therefore deleted. - Decided in favour of assessee. Issues Involved:Assessment of penalty under section 271(1)(c) of the Income Tax Act, 1961 for concealment and furnishing inaccurate particulars of income.Analysis:Issue 1: Assessment of Long Term Capital Gains and Interest IncomeThe assessee, a senior citizen residing mostly in the USA, declared income mainly from long term capital gains. However, discrepancies were found in her declarations related to the sale of properties and interest income. The Assessing Officer reevaluated the long term capital gains and initiated penalty proceedings under section 271(1)(c) for alleged concealment and furnishing of inaccurate particulars of income.Issue 2: Impugned Penalty ProceedingsThe Assessing Officer imposed a penalty of Rs. 14,71,190 based on the discrepancies identified in the long term capital gains and interest income declarations. The CIT(A) upheld the penalty in the lower appellate proceedings, citing the assessee's conduct as concealment and furnishing inaccurate particulars of income.Issue 3: Tribunal's Analysis and DecisionUpon review, the Tribunal considered the assessee's circumstances, including her residence abroad and reliance on a caretaker for domestic affairs and tax matters. The Tribunal observed inadvertent errors in the declarations and noted the possibility of overlapping transactions due to the nature of the properties involved. Referring to a landmark judgment, the Tribunal concluded that the errors were not deliberate but a result of inadvertence, thus not warranting the penalty under section 271(1)(c). The Tribunal highlighted the assessee's multiple mistakes as unintentional and concluded that the penalty was unjustified.Conclusion:The Tribunal allowed the assessee's appeal, overturning the penalty of Rs. 14,71,190 imposed under section 271(1)(c) for concealment and furnishing inaccurate particulars of income. The decision was based on the assessee's inadvertent errors and the absence of deliberate misconduct.