Tax Tribunal rules penalty not applicable under Section 271(1)(c)

Smt. Amita Tulsyan, Shri Mithilesh Kumar Tulsyan Beneficiary Trust, Aryan Tulsyan Beneficiary Trust, Kaushal Tulsyan Beneficiary Trust, Saurabh Tulsyan Beneficiary Trust And Lakshya Tulsyan Beneficiary Trust, Hyderabad Versus Income Tax Officer Ward 11 (2) Hyderabad

Smt. Amita Tulsyan, Shri Mithilesh Kumar Tulsyan Beneficiary Trust, Aryan Tulsyan Beneficiary Trust, Kaushal Tulsyan Beneficiary Trust, Saurabh Tulsyan ... Issues Involved:
1. Sustainability of the CIT (A) order confirming the penalty levied under Section 271(1)(c) of the I.T. Act.
2. Whether the assessee furnished inaccurate particulars of income or concealed income.
3. Validity of the penalty imposed under Section 271(1)(c) of the I.T. Act.

Detailed Analysis:

1. Sustainability of the CIT (A) Order Confirming Penalty:
The primary issue revolves around the confirmation of the penalty levied by the AO under Section 271(1)(c) of the I.T. Act by the CIT (A). The appeals were filed against the CIT (A)-5, Hyderabad's orders dated 31.05.2018, which confirmed the penalties imposed by the AO. The penalties were related to the alleged concealment of income and furnishing of inaccurate particulars by the assessee in their returns of income.

2. Furnishing Inaccurate Particulars of Income or Concealment of Income:
The assessee, an individual and Director of companies engaged in trading Polymer products, filed returns for the A.Y 2014-15, declaring an income of Rs. 19,62,150/-. The AO received information from the DIT (Inv.) Hyderabad about the assessee's sale of shares for Rs. 12,89,690/- which was not admitted in the return. The AO reopened the assessment under Section 148 and found that the assessee claimed long-term capital gains (LTCG) on shares of M/s. Unno Industries Ltd as exempt under Section 10(38). The AO, based on the investigation report from the DIT (Inv.) Kolkata, concluded that the LTCG was bogus, generated through an organized racket to bring back unaccounted money. Despite the assessee providing all relevant documents and voluntarily offering the LTCG to tax to avoid litigation, the AO imposed a penalty under Section 271(1)(c).

3. Validity of the Penalty Imposed Under Section 271(1)(c):
The Tribunal examined whether the penalty under Section 271(1)(c) was justified. The assessee argued that there was no concealment or furnishing of inaccurate particulars as the LTCG was declared in the original return and claimed as exempt. The AO initially accepted the return but later reopened the assessment based on new information. The Tribunal noted that the assessee had declared the LTCG and claimed exemption under Section 10(38) on the grounds that shares suffered STT, which was later withdrawn. Citing the Supreme Court's judgment in CIT vs. Reliance Petro Products (P) Ltd, the Tribunal emphasized that merely making an incorrect claim does not amount to furnishing inaccurate particulars. The Tribunal concluded that the necessary conditions for imposing a penalty under Section 271(1)(c) did not exist as there was no deliberate act of concealment or furnishing of inaccurate particulars by the assessee.

Conclusion:
The Tribunal allowed the appeals, ruling that the penalty under Section 271(1)(c) was not leviable. The Tribunal found that the conditions for initiating and levying the penalty were not met, as the assessee's actions did not constitute furnishing inaccurate particulars or concealment of income. The penalty imposed by the AO and confirmed by the CIT (A) was deleted, and the appeals were allowed.