2019 (9) TMI 440 - AT - Income Tax

Tribunal rules no concealment penalty for revised return with LTCG disclosure

Ram Prakash Nagori, Hyderabad., Aditya Bansal, Hyderabad., Shobha Devi, Hyderabad. Versus Dy. Commissioner of Income-tax, Circle – 2 (2), Hyderabad.

Ram Prakash Nagori, Hyderabad., Aditya Bansal, Hyderabad., Shobha Devi, Hyderabad. Versus Dy. Commissioner of Income-tax, Circle – 2 (2), Hyderabad. - TMI Issues Involved:1. Legitimacy of penalty under Section 271(1)(c) for concealment of income.2. Validity of the revised return under Section 153A.3. Impact of voluntary disclosure on penalty proceedings.4. Applicability of judicial precedents in the context of the case.Issue-wise Detailed Analysis:1. Legitimacy of Penalty under Section 271(1)(c) for Concealment of Income:The primary issue is whether the penalty under Section 271(1)(c) for concealment of income is justified. The assessee originally filed a return of income, claiming exemption under Section 10(38) for long-term capital gains (LTCG) on listed securities. After a search operation, a revised return was filed, admitting higher income and withdrawing the exemption claim. The Assessing Officer (AO) initiated penalty proceedings, asserting that the assessee had concealed income. The penalty was upheld by the CIT(A), but the Tribunal found that the assessee had disclosed the transaction in the original return and subsequently revised it, implying no concealment or furnishing of inaccurate particulars.2. Validity of the Revised Return under Section 153A:The assessee argued that the revised return filed under Section 153A should be treated as a return under Section 139, and thus, there was no concealment. The Tribunal agreed, noting that the assessee had already disclosed the LTCG transaction in the original return and merely withdrew the exemption claim in the revised return. The Tribunal emphasized that the revised return was a response to the search and did not constitute concealment of income.3. Impact of Voluntary Disclosure on Penalty Proceedings:The assessee contended that the exemption under Section 10(38) was surrendered based on discussions with tax authorities, with an understanding that no penalty would be levied. The Tribunal considered this argument and noted that the assessee had voluntarily withdrawn the exemption claim in the revised return. The Tribunal cited the case of CIT vs. Reliance Petro Products (P) Ltd., where the Supreme Court held that making an incorrect claim does not amount to furnishing inaccurate particulars. The Tribunal concluded that the voluntary disclosure and subsequent withdrawal of the exemption claim did not warrant a penalty under Section 271(1)(c).4. Applicability of Judicial Precedents:The Tribunal referred to several judicial precedents, including the case of Pr. CIT Vs. Smt. Baisetty Ravathi and the decision of the coordinate bench in Smt. Amita Tulsyan and others. In these cases, it was held that merely making an incorrect claim does not amount to furnishing inaccurate particulars. The Tribunal found these precedents applicable to the present case, as the assessee had disclosed the LTCG transaction and subsequently revised the return without any incriminating material found during the search. The Tribunal also distinguished the case from MAK Data (P) Ltd., noting that the facts were not similar.Conclusion:The Tribunal concluded that the necessary conditions for levying penalty under Section 271(1)(c) did not exist in the case. The assessee had disclosed the LTCG transaction in the original return and voluntarily revised the return, withdrawing the exemption claim. The Tribunal set aside the order of the CIT(A) and directed the AO to delete the penalty levied under Section 271(1)(c). Consequently, all appeals were allowed, and the penalties were deleted.