TMI Blog2016 (5) TMI 1163X X X X Extracts X X X X X X X X Extracts X X X X ..... osed when all the necessary facts were not disclosed by the assessee before the assessing officer. We further noticed that when the facts was brought to the notice of the assessee, the assessee has accepted the proposal mooted by the A.O. and offered the capital gain in respect of 3 sale deeds for the assessment year 2008- 09. Therefore, the A.O. was not correct in coming to the conclusion that the assessee has concealed the particulars of income for the assessment year 2008-09. In the present case on hand, the assessee has disclosed necessary facts, before the A.O. before the assessment was reopened for the impugned assessment year. Therefore, we are of the view that it is not a fit case for levy of penalty for concealment of income or furnishing inaccurate particulars of income. Therefore, we direct the A.O. to delete the penalty levied u/s 271(1)(c) of the Act. - Decided in favour of assessee - I.T.A. No. 698/Vizag/2013 - - - Dated:- 6-5-2016 - Shri V. Durga Rao, Judicial Member And Shri G. Manjunatha, Accountant Member For the Appellant : Shri C. Subrahmanyam, AR For the Respondent : Shri A. Narayana Rao, DR ORDER Per G. Manjunatha, Accountant Member: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain has been offered to tax for the assessment year 2009-10. The A.O. after considering the explanations of the assessee held that as per sale deed the possession of the property has been handed over to the buyer as on the date of sale. Therefore, the transfer as defined under sec. 2(47)(v) had been taken place during the financial year 2007-08 and accordingly computed the capital gain for the assessment year 2008-09 for which the assessee has agreed. 3. Thereafter, the Assessing Officer issued a show cause notice u/s 271(1)(c) r.w.s. 274 of the Act and proposed to levy penalty u/s 271(1)(c) of the Act for concealment of particulars of income or furnishing inaccurate particulars of income. In response to show cause notice, the assessee submitted that he had neither concealed the particulars of income nor furnished inaccurate particulars of income, therefore, the levy of penalty u/s 271(1)(c) of the Act is not correct. The assessee further submitted that he had declared the capital gain for the assessment year 2009-10 when final sale deed is executed and also possession of the property has been handed over to the buyer, which was happened during the financial year 2008-09. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the CIT(A), the assessee submitted that the A.O. was not correct in levy of penalty u/s 271(1)(c) of the Act, as he had neither concealed the particulars of income nor furnished inaccurate particulars of income. The assessee further submitted that there is no deliberate concealment of income for the assessment year. He had voluntarily declared the resultant capital gain on transfer of immovable property during the financial year 2008-09, which was filed before issue of notice u/s 148 of the Act. It was further submitted that though the sale deeds are registered in the financial year 2007-08, the final sale deed has been executed in the financial year 2008-09 and the possession of the property has been handed over in the financial year 2008-09. Accordingly, as per the definition of transfer u/s 2(47)(v) of the Act, the transfer took place only when the possession of the property is handed over to the buyer. The CIT(A) after considering the submissions of the assessee held that the assessee has not offered any reasons for not offering the capital gain in respect of 3 sale deeds for the assessment year 2008-09. The assessee stated that he has agreed for the additions proposed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s submitted that it is mandatory that the A.O. should be specific as to which of the ingredient is lacking to impose the penalty u/s 271(1)(c) of the Act. In support of his arguments, relied upon the judgement of Hon ble High Court of Karnataka in the case of CIT Vs. Manjunatha Cotton Ginning Factory 359 ITR 565. He also relied upon the decision of ITAT, Visakhapatnam bench in the case of B. Revathi Vs. DCIT in ITA No.599/Vizag/2014. On the other hand, the Ld. D.R. strongly supported the orders of the CIT(A). 6. We have heard both the parties and perused the materials available on record. The assessee challenged the legality of penalty proceedings by stating that the A.O. has not recorded his satisfaction whether the impugned penalty is levied for concealment of particulars of income or furnishing inaccurate particulars of income. It was further contended that before levy of penalty, it is mandatory on the part of the A.O., to arrive at a satisfaction that whether the penalty is for concealment of income or furnishing of inaccurate particulars of income. We do not see any merits in the arguments of the assessee for the reason that the A.O. has issued a show cause notice and pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. The fact that the assessee has agreed for capital gains to be assessed for the assessment year 2008-09 for the reasons that it is immaterial as to the year of assessment because the capital gain has to suffer tax and the percentage of tax also same. The assessee has agreed for the proposal to buy peace and to cooperate with the department, therefore, it cannot be held that it is a willful concealment which attracts penalty u/s 271(1)(c) of the Act. On the other hand, the Ld. D.R. strongly supported the order of CIT(A). 9. We have heard both the parties and perused the materials available on record. The factual matrix of the case is that the assessee has sold an immovable property consisting of land and building and executed four separate sale deeds. Out of the 4 sale deeds, 3 sale deeds have been executed in the financial year 2007-08 and the remaining one sale deed has been executed in the financial year 2008-09. According to the assessee, the possession of the property has been handed over in the financial year 2008-09 after execution of final sale deed, therefore, the transfer as defined u/s 2(47)(v) of the Act took place in the financial year 2008-09. The assessee further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attracts the penalty u/s 271(1)(c) of the Act. 11. The only issue which arises for our consideration is whether there is concealment of income which attracts penalty under sec. 271(1)( c) of the Act. Before, we go into the merits of this case, let us understand the position of law as enumerated u/s 271(1)(c) of the Act. Section 271(1)(c) of the Act provides for levy of penalty, in a case where the A.O. or CIT(A) is satisfied that the person has concealed the particulars of his income or furnished inaccurate particulars of such income, such person may be directed to pay penalty of a sum equal to not less than 100% and not more than 300% of tax sought to be evaded. The concealment of income and furnishing of inaccurate particulars of income should be referred to return of income filed by the assessee, books of accounts and other documents available with the authorities at the time of proceedings under this Act. In the present case on hand, admittedly, the assessee has not disclosed the capital gain in respect of 3 sale deeds, though the sale deeds are coming within the financial year 2007-08. But, he had declared the capital gain in respect of all the 4 sale deeds for the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the view that the A.O. was incorrect in coming to the conclusion that the assessee has willfully concealed the particulars of income, which attracts penalty u/s 271(1)(c) of the Act. 13. The question whether there was a reasonable cause for which the requirement of concerned provisions of section could not be complied with is primarily a essential question of fact and it has to be decided in each case on consideration of material placed before the concerned authority. The levy of penalty u/s 271(1)(c) of the Act is not automatic. Before levy of penalty, the concerned officer is required to find out that any violation referred to in the said provisions is without a reasonable cause. The initial burden is on the assessee to show that there exists a reasonable cause which was the reason for the failure referred to in the concerned provisions of the Act. Therefore, the assessing officer dealing with the matter is to consider whether the explanations offered by the assessee or the person as the case may be is reasonable and as regards the reason was on account of reasonable cause. In the present case on hand, on perusal of the available records, we find that the assessee has volunt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be held guilty of furnishing inaccurate particulars. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. Therefore, it is obvious that it must be shown that the conditions under s. 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed because that is the only document, where the assessee can furnish the particulars of his income CIT Vs. Atul Mohan Bindal (2009) 225 CTR (SC) 248 : (2009) 28 DTR (SC) 1 : (2009) 9 SCC 589 followed. Reading the words inaccurate and particulars in conjunction, they must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous. In this case, there is no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under s. 271(1)(c). A mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiate proceedings u/s 271(1)(c) is a sine qua non for the Assessment Officer to initiate the proceedings because of the deeming provision contained in Section 1(B). The said deeming provisions are not applicable to the orders passed by the Commissioner of Appeals and the Commissioner. The imposition of penalty is not automatic. Imposition of penalty even if the tax liability is admitted is not automatic. Even if the assessee has not challenged the order of assessment levying tax and interest and has paid tax and interest that by itself would not be sufficient for the authorities either to initiate penalty proceedings or impose penalty, unless it is discernible from the assessment order that, it is on account of such unearthing or enquiry concluded by authorities it has resulted in payment of such tax or such tax liability came to be admitted and if not it would have escaped from tax net and as opined by the AO in the assessment order. Only when no explanation is offered or the explanation offered is found to be false or when the assessee fails to prove that the explanation offered is not bonafide, an order imposing penalty could be passed. If the explanation offered, ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has offered the explanation. The said explanation is not found to be false. On the contrary, it is held to be bonafide. In fact in the assessment proceedings there is no whisper about these concealment. The very fact that the assessee agreed to pay tax and did not challenge the assessment order, it is clear the conduct of the assessee cannot be construed as malafide. Therefore, the Tribunal was justified in setting aside the orders passed by the Appellate Authority as well as the Assessing Authority. In so far as the imposition of penalty is concerned, it is not in accordance with law. No fault could be found with the Tribunal for deleting the penalty. 16. In the present case on hand, the assessee has disclosed necessary facts, before the A.O. before the assessment was reopened for the impugned assessment year. Therefore, we are of the view that it is not a fit case for levy of penalty for concealment of income or furnishing inaccurate particulars of income. Therefore, we direct the A.O. to delete the penalty levied u/s 271(1)(c) of the Act. 17. In the result, the appeal filed by the assessee is partly allowed. The above order was pronounced in the open court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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