2018 (3) TMI 230 - HC - Income Tax

Petition for Waiver of Penalty Dismissed

The court dismissed the petition, ruling that the petitioner did not meet the conditions for waiver of penalty under Sections 273(A) and 273(A)(4) of the ... Penalty u/s 271(1)(c) - eligibility to benefit of Section 273A - Held that:- In the present case, the petitioner was in possession of the detailed and specific information in respect of the suspicious long term capital gain on share, but he failed to submit the same prior to the detection of the Assessing Officer (prior to letter dated 27.10.2017 issued by the AO and neither he produced any material evidence or document that his case is of genuine hardship nor he pointed out that it would cause genuine hardship financially or in any manner and thus, the learned authority rightly rejected the prayer for waiver of penalty in section 273A(1)(4) of the Act, as he failed to fulfill the conditions prescribed therein and thus, we are of the view that the learned authority has not committed any legal error in passing the impugned order, no case is made out to interfere with the well reasoned impugned order as prayed by the petitioner is made out. The petition filed by the petitioner has no merit and is accordingly, dismissed. Issues Involved:1. Assailing the order rejecting the application for waiver of penalty under Section 273(A) / 273(A)(4) of the Income Tax Act, 1961.2. Determination of whether the petitioner met the conditions for waiver of penalty under Section 273(A) of the Act.3. Consideration of genuine hardship for waiver of penalty under Section 273(A)(4) of the Act.Issue-wise Detailed Analysis:1. Assailing the order rejecting the application for waiver of penalty under Section 273(A) / 273(A)(4) of the Income Tax Act, 1961:The petitioner, a proprietor of a chemical manufacturing business, filed his income tax return for the Assessment Year 2014-15, declaring a total income of Rs. 4,15,030/-. He claimed a long-term capital gain (LTCG) of Rs. 13,58,846/- as exempt under Section 10(38) of the Act. The case was selected for scrutiny due to suspicious LTCG on shares. The Assessing Officer (AO) issued notices under Sections 143(2) and 142(1) of the Act. The AO found the share transactions to be bogus and added the LTCG under the head 'Income from Other Sources', initiating penalty proceedings under Section 271(1)(c) for furnishing inaccurate particulars of income.2. Determination of whether the petitioner met the conditions for waiver of penalty under Section 273(A) of the Act:The petitioner filed a petition for waiver of penalty under Section 273(A), claiming that he made full disclosures voluntarily and in good faith before detection by the AO, cooperated in the assessment, and paid the resultant tax and interest. However, the Principal Commissioner found that the petitioner did not meet the conditions for waiver as the revised computation was submitted only after the AO had detailed and specific information about the suspicious LTCG. The Principal Commissioner concluded that the petitioner did not voluntarily disclose the LTCG prior to detection by the AO.3. Consideration of genuine hardship for waiver of penalty under Section 273(A)(4) of the Act:The petitioner argued that the penalty should be waived due to genuine hardship. However, the Principal Commissioner found no evidence or documents to support the claim of genuine hardship. The petitioner failed to demonstrate that the penalty would cause financial or any other form of hardship. The court upheld the Principal Commissioner's decision, noting that the petitioner did not fulfill the conditions for waiver under Section 273(A)(4).Conclusion:The court dismissed the petition, concluding that the petitioner did not meet the conditions for waiver of penalty under Sections 273(A) and 273(A)(4) of the Income Tax Act. The court found no legal error in the Principal Commissioner's decision to reject the waiver application, as the petitioner failed to voluntarily disclose the LTCG prior to detection and did not provide evidence of genuine hardship. The petition was dismissed with no orders as to costs.