2009 (3) TMI 228 - AT - Income Tax

Tribunal rules in favor of assessee in penalty dispute over capital gain computation.

The Tribunal allowed the appeal, ruling in favor of the assessee, holding that there was no intention to furnish inaccurate particulars regarding the ... Concealment Issues involved: Appeal against penalty imposed u/s 271(1)(c) of the Income Tax Act for assessment year 2006-07.Summary:The assessee, engaged in the business of running a petrol pump, filed its income tax return declaring income. Dispute arose regarding the computation of capital gain on the sale of goodwill. The Assessing Officer (AO) disagreed with the assessee's computation, leading to penalty imposition u/s 271(1)(c) of the Act. The penalty was upheld by the Commissioner of Income Tax (Appeals) [CIT(A)]. The assessee contended that there was no actual transfer of goodwill, only a change in partnership, and it was entitled to indexation benefit. The Tribunal, considering the facts and Board's circular, held that there was no intention to furnish inaccurate particulars and allowed the appeal.The AO's view was that the goodwill fell under s. 55(2)(a) of the Act, with cost of acquisition at nil, denying indexation benefit. The assessee argued that it had not transferred goodwill but admitted a new partner, maintaining business continuity. The Tribunal, referring to the Board's circular, concluded that the assessee did not act with mala fide intent and had disclosed complete facts. The difference of opinion between the assessee and the AO did not warrant penalty imposition.The Tribunal noted that the assessee disclosed all relevant details and adopted a specific computation method for capital gain, which was not accepted by the AO. However, this disagreement did not amount to furnishing inaccurate particulars. The Tribunal allowed the appeal, ruling in favor of the assessee.