2017 (7) TMI 571 - AT - Income Tax

Assessee's Disclosure Accepted, Penalty Deleted

Swami Vivekanand Educational Society Versus The D.C.I.T., Yamuna Nagar, Haryana

The Tribunal found that the assessee did not conceal income but rather disclosed all relevant particulars regarding the transfer of assets. The ... Levy of penalty under section 271(1)(c) - assessee made an incorrect claim - Held that:- In the present case that there was a transfer of assets for consideration which had been received by way of book entries and hence, the transfer is not a donation. It is evident from this finding of the I.T.A.T. that the explanation of the assessee that mere book entries were passed, crediting the transferors and debiting the corpus fund was found to be correct. But at the same time, it was interpreted on the same set of facts that the transfer was not by way of donation. In such circumstances, the assessee society at best can be held to have made an incorrect claim which does not tantamount to furnishing inaccurate particulars of income. Merely because the assessee did not return capital gains on the impugned transaction, which was added to the income of the assessee, penalty under section 271(1)(c) is not attracted. Mere non acceptance of the plausible enough explanation of the assessee in quantum proceedings will not tantamount to concealment of particulars of income or furnishing of inaccurate particulars of income to attract the levy of penalty under section 271(1)(c) of the Act. - Decided in favour of assessee. Issues Involved:1. Levy of penalty under section 271(1)(c) of the Income Tax Act, 1961.2. Concealment of particulars of income.3. Furnishing of inaccurate particulars of income.4. Validity of the assessee’s explanation regarding the transfer of assets.Detailed Analysis:1. Levy of Penalty under Section 271(1)(c) of the Income Tax Act, 1961:The appeal was filed by the assessee challenging the order of the Commissioner of Income Tax (Appeals), Panchkula, which confirmed the levy of penalty under section 271(1)(c) of the Income Tax Act, 1961. The penalty was initially levied by the Assessing Officer on the grounds that the assessee had concealed income by not showing capital gains on the transfer of assets.2. Concealment of Particulars of Income:The assessee argued that the assets had been transferred as donations to other societies without any consideration, and thus, no capital gains arose. The Assessing Officer, however, treated the transfer as a sale at book value and calculated capital gains accordingly. The CIT (Appeals) upheld this view, stating that the assessee did not disclose the capital gains in its return of income, thus concealing particulars of income.3. Furnishing of Inaccurate Particulars of Income:The assessee contended that all particulars related to the transfer of assets were disclosed in the balance sheet filed along with the return of income. The Tribunal noted that the details of the transaction leading to the alleged capital gains were indeed disclosed in the return, and thus, the assessee did not furnish inaccurate particulars of income. The Tribunal referred to the Supreme Court's decision in CIT Vs. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC), which clarified that merely making a claim that is not accepted by the Revenue does not amount to furnishing inaccurate particulars.4. Validity of the Assessee’s Explanation Regarding the Transfer of Assets:The Tribunal found the explanation offered by the assessee—that the transfer was a donation and not a sale—to be plausible and substantiated. The resolution passed by the assessee society stated that the assets were transferred without consideration, and the corresponding accounting entries supported this claim. The Tribunal held that the Revenue did not provide evidence to prove that the assets were transferred for consideration. Therefore, the assessee’s explanation was considered bona fide, and the conditions for imposing penalty under Explanation-1(A) and (B) of section 271(1)(c) were not met.Conclusion:The Tribunal concluded that the basic condition for the levy of penalty under section 271(1)(c)—concealment of particulars of income—was not fulfilled in this case. The assessee had disclosed all relevant particulars in its return of income, and the explanation provided was found to be plausible. Consequently, the Tribunal set aside the order of the CIT (Appeals) and deleted the penalty of Rs. 25,88,518/- levied under section 271(1)(c) of the Act. The appeal of the assessee was allowed.