2023 (5) TMI 695 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - Non disclosing capital gains on sale of goodwill - HELD THAT:- We find that the assessee has not shown any capital gains on sale of goodwill inspite of the fact that the transferee company had already recorded goodwill in their books. The peculiar facts in this case are that the Chairman is common for both the assessee company as well as transferee company M/s. Pentafour Technologies Ltd. The transferee company, in its published accounts, recognized goodwill and it cannot be said that the assessee was not aware of the goodwill. Thus, we are of the opinion that it is a clear case of concealment of income by filing inaccurate particulars.

As assessee has deliberately made an attempt not to disclose true facts before the Assessing Officer, thereby, concealed the income by filing inaccurate particulars. Thus, the provisions of section 271(1)(c) of the Act clearly applies to the present case.

As argued penalty proceedings was initiated as per assessment order u/s 143(3) whereas, no penalty was initiated in view of the order u/s 143(3) r.w.s. 263 and therefore, penalty cannot be levied under section 271(1)(c) - AO has initiated penalty proceedings for concealment of goodwill. Subsequently, in his revision order u/s 263 CIT enhanced the quantum, which is continuation of the proceedings. The concealment of income and furnishing of inaccurate particulars has been considered by the AO by passing assessment order under section 143(3) of the Act dated 31.03.2003. It is not the case that the concealment started after passing order under section 143(3) r.w.s. 263 - Therefore, the argument of the ld. Counsel no penalty was initiated in view of the order u/s 143(3) r.w.s. 263 is rejected.

Issue of limitation to pass penalty order u/s 271(1)(c) - In the present case, the assessee has not filed any additional ground and no reason was given and the ld. Counsel has raised this issue for the first time while arguing the case. In our opinion, only based on the argument, legal issue cannot be decided unless there is a ground raised in the appeal. Since no such ground was raised in the appeal, the argument of the ld. Counsel is rejected.

Addition on the ground that there was deliberate attempt on the part of the assessee company not to disclose the sale of goodwill and non-disclosure of goodwill tantamount to concealment of income and furnishing of inaccurate particulars of income by adopting colourable device stating that the payments were made towards non-compete fee, IPR on brand value, IPR on brand, etc - Decided against assessee.