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2018 (2) TMI 1512
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....00,000/-. In the return of income filed by the assessee, it has offered long term capital gains of Rs. 3,85,600/- and while computing the said long term capital gains, assessee has claimed indexed cost of acquisition of Rs. 1,26,40,000/- and has also claimed deduction u/s 54F for Rs. 69,74,400/-. In order to verify the claim of the assessee, a show cause letter dated 04.01.2012 was issued to the assessee asking to furnish basis along with documentary evidence of cost of acquisition as well as deduction u/s 54F of the Act. Further, the assessee was also asked to furnish the proof of value of land taken as on 01.04.1981 with supporting evidence. In response to the show cause, the assessee vide his reply dated 04.03.2012 submitted a revised computation of long term capital gain along with valuation report of the registered valuer in support of value of land taken as on 1.4.1981. In the revised computation, the assessee claimed indexed cost of acquisition of Rs. 54,15,793/- as against the indexed cost of Rs. 1,26,40,000/- as claimed in the original return of income. Further, the assessee shown an investment of Rs. 1,00,00,000/- in residential building on which exemption u/s 54F was cla....
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....n the original return of income. On appeal, the ld. CIT(A) held that the investment made upto 31.3.2011 which is the date of filing of the return of income is to be considered for computing deduction u/s 54F of the Act. Accordingly the total investments of Rs. 8,12,4,915/- was considered as against Rs. 64,50,000/- by the Assessing Officer for determining the exemption u/s 54F of the Act. Therefore, another subject matter of levy of penalty relates to exemption u/s 54F of the Act as claimed in the return of income at Rs. 69,74,400/- and Rs. 58,87,385 as finally assessed and accepted by both the parties. 6. The long term capital gains were accordingly worked out by the AO at Rs. 98,22,156 as against Rs. 3,85,600 declared by the assessee in the return of income and the penalty under section 271(1)(c) was accordingly initiated during the course of assessment proceedings for showing lesser quantum of capital gains. 7. In the penalty proceedings, the AO held that assessee would have escaped the taxation on the capital gains as so computed by the AO if the matter was not taken up for scrutiny proceedings. It was further held that basis the enquiry conducted by the AO during the cour....
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.... concealment of income or furnishing of inaccurate particulars of income. Thus, in the absence of any specific charge against the assessee in the penalty notice, consequent penalty imposed by AO is illegal and bad in law. Reliance in this connection was placed on the following cases:- CIT Vs. SSA'S Emerald Meadows (2016) 242 Taxman 180 (SC): Where Tribunal relying on decision of Division Bench of Karnataka High Court rendered in case of CIT Vs. Manjunatha Cotton & Grinning Factory 359 ITR 565, allowed appeal of assessee holding that notice issued by AO u/s 274 r.w.s. 271(1)(c) was bad in law, as it did not specify under which limb of section 271(1)(c) penalty proceedings had been initiated, i.e. whether concealment of particulars of income or furnishing of inaccurate particulars of income and High Court on appeal held that matter was covered by aforesaid decision of Division Bench and therefore there was no substantial question of law arising for determination, there was no merit in SLP filed by revenue and same was liable to be dismissed. Meherjee Cassinath Holdings Pvt. Ltd Vs. ACIT ITA No.2555/Mum/2012 dt. 28.04.2017 (Mum): Sec. 271(1)(c) pena....
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.... information, facts and materials in the hands of the authority imposing the penalty at the time the order was passed and further discovery of facts subsequent to the imposition of penalty cannot validate the order of penalty which, when passed, was not sustainable. 61. The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it a case of furnishing of inaccurate particulars. The Apex Court in the case of Ashok Pai reported in 292 ITR 11 at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of MANU ENGINEERING reported in 122 ITR 306 and the Delhi High Court in the case of VIRGO MARKETING reported in 171 Taxman 156, has held that levy of penalty has to be clear as to the limb for w....
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....deed, in certain cases, it is possible for the Assessing Officer to issue a penalty notice or initiate penalty proceedings even long before the assessment is completed. There is no statutory requirement that the penalty order should precede or be simultaneous with the assessment order. In point of fact, having regard to the mode of computation of penalty outlined in the statute, the actual penalty order cannot be passed until the assessment is finalised. CONCLUSION 63. In the light of what is stated above, what emerges is as under: a) Penalty under Section 271(1)(c) is a civil liability. b) Mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities. c) Wilful concealment is not an essential ingredient for attracting civil liability. d) Existence of conditions stipulated in Section 271(1)(c) is a sine qua non for initiation of penalty proceedings under Section 271. e) The existence of such conditions should be discernible from the Assessment Order or order of the Appellate Authority or Revisional Authority. f) Ever if there is no specific finding regarding the existe....
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....., whether it is for concealment of income or for furnishing of incorrect particulars of income q) Sending printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law. r) The assessee should know the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee. s) Taking up of penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law. t) The penalty proceedings are distinct from the assessment proceedings. The proceedings for imposition of penalty though emanate from proceedings of assessment, it is independent and separate aspect of the proceedings. u) The findings recorded in the assessment proceedings in so far as "concealment of income" and "furnishing of incorrect particulars" would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings on merits. However, the validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter of pen....
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....ouse thereon before filing of return i.e. up to 31-03-2011. For this he has withdrawn sum of Rs. 94,50,090/- out of the bank account (Rs.81,24,915/- up to 31-03-2011 and 13,25,175/- up to 12-09-2012). The balance expenditure was incurred out of the contribution and saving of various family members. Since the work has been completed up to 31-03- 2011, assessee has claimed deduction on entire amount though part of the payment of work completed up to 31-03-2011 was made subsequently. The assessee restricted the deduction with reference to investment of Rs. 64,50,000/- by holding that assessee has withdrawn this amount only upto 31.07.2010 i.e. before the date of filing of the return. The Ld. CIT(A) held that investment made upto 31.03.2011 (date of filing of belated return) is to be considered for computing the deduction u/s 54F and accordingly he computed the deduction with reference to investment of Rs. 81,24,915/-. Thus, assessee on bonafide belief claimed higher amount of indexed cost of acquisition and deduction u/s 54F. There is no falsity in the claim made by the assessee and therefore, for reduction in the claim of deduction, no penalty is leviable. 11. It was further submi....
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....roneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. Equest India (P) Ltd. Vs. ITO (2011) 136 TTJ 574/48 DTR 386 (Mum): Merely because the assessee has a different perception of the situation than the AO, even though, in the ultimate analysis, the stand of the AO is to be upheld, it cannot be said that the assessee has concealed any particulars. The admission or rejection of a claim is a subjective exercise and whether a claim is accepted or rejected has nothing to do with furnishing of inaccurate particulars of income. What is a correct claim and what is an incorrect claim is a matter of opinion. Raising a legal claim, even if it is ultimately found to be legally unacceptable, cannot amount to furnishing of inaccurate particulars of income. The development of law is a d....
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.... that it was purchased prior to 01.04.1981 and thereafter when enquired accepted that property was not purchased prior to 01.04.1981. On these facts it was held that it was not a case of suo moto explanation and therefore, levy of penalty was confirmed. As against this, in the case of the assessee the property was acquired prior to 01.04.1981. While filing the return assessee estimated the FMV of the property as on 01.04.1981 at Rs. 20 lacs but when it was got valued from the registered valuer, the same was determined at Rs. 8,55,206/-. It is for this reason that there is a violation in the capital gain offered in the return and that computed in course of assessment proceedings. It is not the case of the department that any particulars in respect of the properties has been concealed or inaccurately furnished. Thus, this case is not applicable on facts rather the principle laid down by the Calcutta High Court in case of Udayan Mukherjee Vs. CIT 291 ITR 318 is applicable where the Court clarified that there is a distinction between furnishing of wrong particulars and making a wrong calculation. In the case of former, there is case for imposition of penalty but in case of latter, ther....
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....e shows that the charge being made against the assessee qua 271(1)(c) is not firm, shows non-application of mind on the part of the AO, and the vagueness and ambiguity in the notice has thus prejudiced the right of reasonable opportunity to the assessee in as much as the assessee is not made aware as to which of the two charges, he has to submit his defence. 16. Here, we refer to the decision of Hon'ble Supreme Court in case of Dilip N Shroff reported in 161 Taxman 218 where it was held as under: "83. It is of some significance that in the standard proforma used by the Assessing Officer in issuing a notice despite the fact that the same postulates that inappropriate words and paragraphs were to be deleted, but the same had not been done. Thus, the Assessing Officer himself was not sure as to whether he had proceeded on the basis that the assessee had concealed his income or he had furnished inaccurate particulars. Even before us, the learned Additional Solicitor General while placing the order of assessment laid emphasis that he had dealt with both the situations. 84. The impugned order, therefore, suffers from non-application of mind. It was also bound to comp....