TMI Blog2014 (11) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... all the return of income which remains same and, therefore, there is no change in the source of income and the category of income which is specified as capital gain from sale of paintings then even if the assessee has applied incorrect rate of tax in the revised return, it would not constitute that the assessee has changed the class/nature of income eligible for concessional tax u/s 112(1) of the Income Tax Act. When there is no attempt on the part of the assessee to show the Long Term Capital Gain in a different category then merely because a concessional rate of tax was applied in the revised return does not ipso facto lead to the conclusion that the assessee has concealed the particulars of income - all the facts and circumstances supports the explanation of the assessee that the concessional rate of tax on Long Term Capital Gain was applied on the basis of the advice of the Chartered Accountant, therefore, it was a bona fide mistake - The explanation is quite reasonable as per the Explanation 1B of section 271(1) of the Income Tax Act particularly in view of the fact that the assessee did not claim the benefit of indexed cost while computing the Capital Gain – thus, the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordingly the AO considered the first revised return filed on 08-09- 2009 for the purpose of assessment. Secondly the A.O. observed that by offering the impugned long term capital gains to tax @ 10% tax rate, assessee has given it the colour of long term capital gains on sale of Bonds, debentures, listed shares etc., noted in the proviso to sub section (1) of section 112 of the Act. In the opinion of the A.O., assessee has made a wrong claim in the revised return dated 08-09-2009 by offering the impugned capital gains at 10% tax rate instead of 20% tax rate and thus, furnished inaccurate particulars of her income in respect of the sale of paintings. Accordingly, the A.O. initiated penalty proceedings u/s. 271 (1)(c) of the Act. Before the A.O., assessee submitted that owing to the advice given by her Auditor she was under the bonafide impression that the impugned capital gains are taxable at the concessional rate of 10%. It is also submitted to the AO that on being advised by the another Auditor at a subsequent date that the concessional rate does not apply to the sale of paintings but only to the listed shares and securities, the assessee once again filed the revised return dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn on 8.09.2009 in which the assessee had offered tax on Long Term Capital Gain at a concessional rate of 10%. By doing so, the assessee has wrongly given this Long Term Capital Gain arising from sale of paintings, the colour of long term capital gains on sale of Bonds, debentures, listed shares etc., as per section 112 of the Act. Thus the Ld. DR has submitted that this is not a case of some bonafide mistake but it was claimed by the assessee to offer Long Term Capital Gain under a different category which is absolutely incorrect and false. Therefore, the assessee had made a false claim by filing inaccurate particulars of her income treating the sale of paintings wrongly under the purview of provisions of section 112 of the Income Tax Act and thereby paying less tax at the rate of 10% instead of 20%. The assessee received the refund on the revised return of income by claiming concessional rate of tax. Thereafter, the Assessing Officer issued a notice u/s 143(2) on 15.09.2010. Upon which, the assessee again re-revised her return and offered right rate of taxation as done in the original return. The Ld. DR has submitted that the second revised return is not voluntary but only after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the Ld. Authorized Representative is regarding the applicability of section 271(1)(c) only on the income disclosed in the return of income and not on the tax applied on such income. He has contended that there is no concealment or incorrect particulars of income in any of the return filed by the assessee but the only difference is the rate of tax applied by the assessee in the revised return. Therefore, without prejudice to the contention of the assessee even if the revised return is taken into account, no penalty is leviable because there is no inaccurate particulars of income but only concessional rate of tax was applied. The third argument of the Ld. Authorized Representative is regarding bonafide mistake. The Ld. Authorized Representative has submitted that the assessee is a senior citizen of 80 years old and dependent upon the advice of the Chartered Accountant so far as the income tax matters are concerned. The original return as well as revised returns were filed on the basis of the advice of Chartered Accountant, therefore, if a mistake is committed by the Chartered Accountant due to inadvertence or oversight then it cannot be said that the assessee has furnished inacc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain on sale of paintings to tax at the normal rate of 20% as applicable on such Long Term Capital Gain. Subsequently, the assessee has filed a revised return on 8.09.2009 and offered the tax at a concessional rate of 10% under the proviso to section 112(1) of the Income Tax Act. It is pertinent to note that the concessional rate of tax @ 10% as per second proviso to section 112(1) read with second proviso to section 48 is applicable on the Long Term Capital Gain arising from sale of Securities, listed Bonds, shares etc., if the assessee while computing such Long Term Capital Gain has not taken the benefit of indexed cost. Therefore, as per the provisions of section 112(1) of the Income Tax Act., an option is available to the assessee in respect of the Long Term Capital Gain arising from sale of such Listed shares, Bonds, securities etc., either to take the benefit of indexed cost or apply concessional rate of tax at 10% whichever is beneficial to the assessee. Therefore, there is no ambiguity or scope of any misunderstanding about the applicability of section 112 of the Income Tax Act only on the Long Term Capital Gain arising from sale of such Listed Shares, Securities, Bonds etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f tax on Long Term Capital Gain was applied on the basis of the advice of the Chartered Accountant, therefore, it was a bona fide mistake. This explanation, in our view is quite reasonable as per the Explanation 1B of section 271(1) of the Income Tax Act particularly in view of the fact that the assessee did not claim the benefit of indexed cost while computing the Capital Gain in question. This is not a case that the Long Term Capital Gain in question is not eligible for benefit of indexed cost. The claim of concessional tax applied on the Long Term Capital Gain, though, is against the provisions of Income Tax Act, however, it is based on the fact that the benefit of indexed cost was available to the Capital Gain in question which was not claimed by the assessee. In view of the above facts and circumstances of the case, we do not find any error or illegality in the impugned order of CIT(A) in deleting the penalty by following the Judgment of Hon ble High Court in the case of Price Watercoopers (Supra). 8. The assessee has also raised a legal point that penalty cannot be levied by considering the revised return and relied upon the decision of Hon ble Supreme Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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