2012 (3) TMI 467 - AT - Income Tax

Penalty proceedings u/s. 271(1)(c) - sale proceeds offered under the head Short Term Capital Gains - additional income has come to light only as a result of the search action - Held that - The assessees have shown one of the reasons for declaring the gain as Short Term Capital Gain in their returns filed u/s. 153A deviating from their earlier declaration as Long Term Capital Gain in their original return filed u/s. 139(1) of the Act is that they were not sure of getting the third party confirmation support and personal appearance of the brokers from whom the shares were purchased in April 2001. There is nothing on record to doubt such explanation of the assessees for showing the gain as Short Term Capital Gain in their return filed u/s. 153A to attract penal provision u/s. 271(1)(c ) of the Act. Under these circumstances it cannot be inferred beyond doubt that the assessees had furnished inaccurate particulars of income in their original returns of income filed u/s. 139 of the Act declaring the sale proceeds of the shares as Long Term Capital Gain. We thus while setting aside the orders of the authorities below direct the A.O to delete the penalty - Decided in favour of the assessee.

Summary

Issues involved:
Penalty under section 271(1)(c) for concealment of income in original vs. revised returns.

Detailed Analysis:

1. Issue of Penalty Imposition: The case involved the imposition of penalties under section 271(1)(c) of the Income Tax Act for concealment of income by the assessees in their original returns. The penalties of Rs. 2,75,400 and Rs. 5,57,500 were levied on the assessees P.P. Ashtekar and P.B. Ashtekar, respectively, by the Assessing Officer and upheld by the CIT(A).

2. Facts and Circumstances: The search and seizure action under sections 132 and survey under section 133A revealed discrepancies in the assessees' declarations of Long Term Capital Gains as Short Term Capital Gains in their revised returns filed in response to notice under section 153A. The assessees had initially declared the gains differently in their original returns filed under section 139.

3. Arguments and Submissions: The appellate tribunal considered the arguments presented by the parties. The Appellant's representative contended that the actions were voluntary and not detected during the search, thus warranting no penalty. The Departmental Representative argued that the concealment of income was evident post search proceedings.

4. Precedents and Case Laws: The tribunal referred to a similar case where penalties were deleted due to voluntary corrective actions by the assessee and lack of incriminating evidence. The Appellant's representative highlighted the purchase and sale details of shares and reasons for the revised declarations.

5. Decision and Rationale: The tribunal analyzed the explanations provided by the assessees for the revised declarations and found no concrete evidence to support the imposition of penalties under section 271(1)(c). The tribunal, therefore, set aside the penalties imposed on the assessees P.P. Ashtekar and P.B. Ashtekar, directing the Assessing Officer to delete the penalties.

6. Conclusion: Ultimately, the appeals were allowed in favor of the assessees, and the penalties under section 271(1)(c) were revoked. The tribunal's decision was based on the lack of conclusive evidence supporting the concealment of income by the assessees in their original returns.

This detailed analysis encapsulates the legal judgment involving penalty imposition for income concealment and the subsequent tribunal decision to revoke the penalties based on the presented evidence and arguments.