Appeal allowed, penalty deleted under Income Tax Act. Revised return not in response to notice.

The ITAT allowed the appeal of the assessee and deleted the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. The ITAT held that the penalty was not justified as the revised return disclosing capital gains was not filed in response to the department's notice and there was no evidence that the assessee was aware of the reason for the assessment proceedings. The decision overturned the CIT(A)'s confirmation of the penalty, emphasizing the lack of voluntary disclosure before detection by the assessing officer.

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Issues:
The appeal involves issues related to penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for non-disclosure of long-term capital gains in the original return of income and subsequent filing of a revised return.

Summary of Judgment:

Issue 1: Validity of Penalty under Section 271(1)(c)

The assessee contended that the penalty of Rs. 10,67,798/- was erroneously confirmed by the CIT(A) as the notice under section 271(1)(c) was issued without specifying the grounds for the penalty. The assessing officer imposed the penalty for non-disclosure of long-term capital gains in the original return of income. The CIT(A) upheld the penalty order, stating that the revised return filed by the assessee was invalid as it was beyond the due date and the disclosure of capital gains was made only after a notice under section 142(1) was issued. The CIT(A) found that the disclosure by the assessee was not voluntary and justified the penalty based on the decision of the Hon. Gujarat High Court in a similar case.

Issue 2: Voluntary Disclosure by Assessee

The assessee argued that the revised return disclosing the capital gains was filed voluntarily before detection by the assessing officer and should not warrant a penalty under section 271(1)(c). The CIT(A) noted that the sole reason for scrutiny was the non-declaration of income from capital gains, and the department had information about the transaction. The CIT(A) found that the revised return was not filed voluntarily before detection by the AO and relied on the decision of the Hon. Gujarat High Court to confirm the penalty.

Issue 3: Appeal Against Penalty

The assessee appealed the CIT(A)'s decision, arguing that the revised return was not filed in response to the notice issued by the department and that the penalty was unjustified. The Department contended that the revised return was filed beyond the due date and the assessment proceedings were initiated to inquire into the taxability of the undisclosed capital gains. The ITAT considered the facts and held that the revised return was not filed in response to the department's notice, and there was no evidence that the assessee was aware of the reason for the assessment proceedings. Relying on legal precedents, the ITAT concluded that the penalty under section 271(1)(c) was not justified in this case.

Conclusion:

In light of the above observations, the ITAT allowed the appeal of the assessee and deleted the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961.

This summary provides a detailed overview of the judgment, addressing each issue raised in the appeal regarding the penalty imposed on the assessee for non-disclosure of capital gains in the original return of income and the subsequent filing of a revised return.

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