2022 (6) TMI 640 - AT - Income Tax

Penalty u/s 271(1)(c) - furnishing inaccurate particulars of income - addition of capital based on the particular furnished in the revised return - argument of assessee before us is that the assessee has not furnished any inaccurate of particular of income. As such the assessee voluntary before any detection or show cause notice to be issued by the Revenue disclosed correct amount of the capital gain by revising the return of income or by furnishing the revised computation of income - HELD THAT - We are in agreement with contention of the learned AR that assessee has revised the computation of income voluntary though case of the assessee at that time was selected for the limited scrutiny vide notice dated 13th September 2016 but there was not issued any notices under section 142(1) of the Act by the Revenue. The revenue authority was not even reached to the any prima facie conclusion that the amount of capital gain was not fully offered in the return of income. But the assessee voluntary revised the computation of income when issue came to his notice and paid the due taxes. Therefore it is assumed that though the assessee in original return committed mistake in furnishing inaccurate amount of capital gain but the same is bona-fide mistake which was done away filing revised computation. We also note that AO in assessment framed under section 143(3) made the addition of capital based on the particular furnished in the revised return. Therefore in the given fact and circumstances it cannot be held that the assessee has concealed the income or furnished inaccurate particular of income. We note that the Hon ble Supreme Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. 2010 (3) TMI 80 - SUPREME COURT discussed the term inaccurate particular by as the word particulars must mean the details supplied in the return which are not accurate not exact or correct not according to truth or erroneous . Thus to arrive at the conclusion that the assessee has furnished inaccurate particulars of income it has to be tested whether the detail furnished in the return of income is incorrect or erroneous or falls. In other words the element of consciousness in furnishing inaccurate particulars of income coupled with circumstantial evidences should be present in the particular case. Unless the characters of inaccurate particulars of income as discussed above are present in any particular case the penalty provisions under section 271(1)(c) of the Act cannot be attracted. - Decided in favour of assessee.

Summary

Issues:
Penalty under section 271(1)(c) of the Income Tax Act for furnishing inaccurate particulars of income.

Analysis:
The appeal was filed against the penalty order under section 271(1)(c) of the Income Tax Act for furnishing inaccurate particulars of income. The assessee contended that the penalty was unjustified as the correct income details were voluntarily disclosed before any detection by the Income Tax Department. The AO rejected the revised return, stating the original return was belated and inaccurate. The CIT-A confirmed the penalty.

The key contention was whether the assessee furnished inaccurate particulars of income. The AO held that the original return's particulars were inaccurate, leading to the penalty. The assessee argued that the revised return disclosed the correct income voluntarily, before any detection by the authorities. The Tribunal noted that the assessee rectified the mistake by revising the computation of income and paying due taxes, indicating a bona fide error.

Referring to a similar case precedent, the Tribunal emphasized the voluntary disclosure of income before detection as a crucial factor in determining penalty applicability. The term "inaccurate particulars of income" was discussed, emphasizing the need for conscious inaccuracies or errors in the details furnished. The Tribunal concluded that, in this case, the penalty under section 271(1)(c) was not warranted due to the voluntary disclosure and absence of deliberate inaccuracies.

The Tribunal set aside the CIT-A's decision and directed the AO to delete the penalty, allowing the assessee's appeal. The judgment was pronounced in Ahmedabad on 31/05/2022.