2011 (7) TMI 1242 - AT - Income Tax

Summary

Issues involved:
The issue in this case revolves around the penalty levied u/s.271(1)© of the Income Tax Act on the appellant for deleting the penalty amount of &8377; 39,26,914, which was initially imposed due to the revised return filed by the assessee after scrutiny was initiated.

Details of the Judgment:

1. Facts and Background:
The appellant, a company engaged in investment business, initially filed a return declaring a loss of &8377; 1,15,64,770. Subsequently, the case was selected for scrutiny, and notices were issued by the Income Tax Officer. The appellant then filed a revised return declaring a total income of &8377; 1,01,644. The Assessing Officer (AO) initiated penalty proceedings u/s.271(1)© contending that the revised return was filed only after the issue of notice u/s.143[2].

2. Penalty Proceedings:
During the penalty proceedings, the appellant explained that the revision was made to correct the treatment of capital expenditure as business loss, emphasizing that it was not a deliberate attempt to conceal income. The AO, however, was not convinced and imposed the penalty, stating that the revision was not voluntary and amounted to a deliberate mistake.

3. Decision of CIT(A):
The Commissioner of Income Tax (Appeals) observed that the AO's contention that no error was discovered in the original return was incorrect. The CIT(A) noted that the claim of expenses as business expenditure was debatable, and the revision was made in accordance with the provisions of sec.139[5]. Citing relevant case laws, the CIT(A) deleted the penalty, considering it a bona fide claim.

4. Appellate Tribunal's Decision:
The Appellate Tribunal upheld the CIT(A)'s decision, emphasizing that the appellant voluntarily revised the return without being coerced by the scrutiny notices. The Tribunal noted that there was no intention to claim the loss, as evidenced by the subsequent return filed without the claim for brought forward losses. Referring to precedents, the Tribunal concluded that the revision was not a deliberate attempt to evade tax, thereby dismissing the Revenue's appeal.

In conclusion, the Appellate Tribunal affirmed the decision to dismiss the Revenue's appeal, highlighting that the revision of the return was not a deliberate act to evade tax liability.