CIT vs. SSA’s Emerald Meadows (Supreme Court) The Karnataka High Court had to consider the following question of law. “Whether, omission if assessing officer to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or that for concealment of income makes the penalty order liable for cancellation even when it has been proved beyond reasonable doubt that the assessee had concealed income in the facts and circumstances of the case?” The High Court ruled in favour of the assessee with the following observations:
Penalty
Ms.Prema Gopal Rao v DCIT (I.T.A. No.8653/Mum/2011 dated 07.01.2015) Mumbai ITAT Background: The assessee filed original return of income on 10.09.2004 declaring total income of Rs.12,16,600/-, which included Long Term Capital Gain on sale of Shares of Rs.3,60,305. The case was selected for scrutiny vide issue of notice u/s 143(2). After the receipt of the said notice, the assessee filed revised return of income, wherein the assessee revised the Long term Capital gains upwards to Rs.14,87,789/-. The AO completed the assessment as per the Revised return of income by making certain disallowances. In the penalty proceedings, the AO took the view that the assessee has revised the return of income only after the enquiry was initiated by him and accordingly, levied penalty on the upward adjustment of long term capital gains. CIT(A) also confirmed the penalty on the reasoning that filing of revised return of income was not voluntary, since it was filed after selection of the original return of income for scrutiny.
No penalty even if the return is revised after issue of notice u/s 143(2) wherein ...
ACIT v Sunland Metal Recycling (ITA NO.6454/Mum/2011 dated 10.12.2014) Mumbai ITAT Background: The assessee sold office premises to its sister concern for a sale consideration of Rs. 1.55 crores. The Assessing Officer considered the full sale consideration as per stamp duty authority valuation at Rs. 2,00,08,000/- in accordance with the provisions of section 50C of Income Tax Act. Accordingly, the Assessing Officer made an addition to the Short term Capital Gain. Subsequently, the Assessing Officer initiated penalty proceedings u/s 271(1)(c) for levy of penalty against the addition made to the Short term Capital Gain and levied a penalty of Rs. 22,12,069. The CIT(A) deleted the penalty by following the various decisions of Mumbai Tribunal on the point and held that there is no concealment of any particulars of income on the part of the assessee.
Penalty not applicable for addition on account of deeming provisions of section 50C – Mumbai ...
ACIT v Smt. Cecilia Haresh Chaganlal [ITA NO. 2661/Mum/2013 dated 05.11.2014] (Mumbai ITAT) Background: The assessee is an individual and a senior citizen of 80 years age. Assessee filed the return of income declaring long term capital gains on sale of paintings and the same were offered to tax at the normal tax rate of 20% applicable to the long term capital gains under the Act. Thereafter, the assessee filed revised return wherein the aforesaid long term capital gains are offered to tax at the concessional tax rate of 10% under proviso to sub section (1) of section 112 of the Act. The AO held that assessee has made a wrong claim in the revised return 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 and imposed penalty u/s. 271 (1 )(c) of the Act. The CIT(A) was satisfied with the explanation of the assessee and deleted penalty levied under section 271(1)(c).
Penalty cannot be levied merely because of differential rate of tax and mistake in advice ...
CIT v Chittorgarh Kendriya Sahakari Bank Ltd (SLP – CC No(s). 8127/2014 dated 02.07.2014) Supreme Court dismissed the SLP filed by Tax Authorities against the Rajasthan High Court ruling in the case of Chittorgarh Kendriya Sahakari Bank Ltd [2014] 41 taxmann.com 11 wherein it was held penalty under section 271(1)(c) levied upon the assessee on incorrect claim for deduction was not justifiable as the same was on account of change of law and therefore, a matter of bona fide mistake.
Penalty u/s 271(1)(c) not applicable in case of bonafide mistake on account of change in ...
MAK Data P. Ltd vs. CIT [CIVIL APPEAL NO. 9772 OF 2013 (dated 30/10/2013)] – Supreme Court Background: Assessee filed his return of income for the AY 2004-05 declaring an income of Rs.16,17,040. During the course of assessment proceedings, AO sought specific information regarding the documents pertaining to share applications found in the course of survey, particularly, bank transfer deeds signed by persons, who had applied for the shares. The assessee made an offer to surrender a sum of Rs.40.74 lakhs with a view to avoid litigation and buy peace and to make an amicable settlement of the dispute. AO after verifying the details and calculations of the share application money completed the assessment and a sum of Rs.40,74,000/- was brought to tax, as “income from other sources”. The department initiated penalty proceedings for concealment of income and not furnishing true particulars of its income under Section 271(1)(c) of the Income Tax Act and imposed a penalty of Rs.14,61,547. The assessee challenged that order before the CIT (Appeals) which was dismissed.
Income offered to “buy peace” no longer a pretence to avoid penalty – Supreme Court
CIT v M/s MANSUKH DEYING & PRINTING MILLS (Income Tax Appeal No.1133 of 2008 dtd 24/06/2013) Bombay High Court Background: During the assessment proceeding for the AY 1992-93, the AO had assessed an amount of Rs.2.63 Crores being goodwill as chargeable to capital gain tax on account of the fact that the above amount was debited to partners capital accounts during the AY 1992-93. The AO while passing the assessment order also directed that penalty proceedings be initiated under Section 271(1)(c) of the said Act against the assessee.
Penalty cannot be imposed merely on account of a different interpretation of provisions – Bom ...
CIT v Fortis Financial Services Ltd [ITA Nos.243/2011 & 244/2011] (Delhi HC) Background: The assessee was engaged in business of providing financial services. During the assessment proceedings, the AO observed that an amount of interest of Rs 46,63,619/- was not included in the return. Similarly, Rs.4,13,82,323/- and Rs.5,28,16,681/- towards ‘bill discounting charges’, in respect of assessment years 1996-97 and 1997-98 were not included and therefore, added these amounts in his assessment order. Simultaneously, penalty proceedings were initiated for concealment and/or furnishing of inaccurate particulars. AO levied penalty, in respect of two assessment years and after considering the reply, passed two orders under Section 13 of the Act imposing the penalty for concealment or furnishing accurate particulars of chargeable interest. The CIT (A), deleted the said penalty on the ground that the issue/question raised related to honest and bona fide difference of legal opinion on whether bill “discounting charges” should be treated as interest or not for the purpose of the said Act. The tribunal upheld the said decision.
Penalty – Where two legal views are not plausible, assessee cannot contend it to be ...
CIT vs. Nalwa Sons Investment Ltd (Supreme Court) Explanation 4 to section 271(1)(c) of the Income-tax Act, 1961 provides for levy of penalty even in a situation which has the effect of reducing the loss declared in the return or converting that loss into income. The Apex Court in the ruling of Gold Coin Health Food (P.) Ltd. [2008] 304 ITR 308 (SC) had laid laid down the rationale that ‘the tax sought to be evaded’ will mean the tax chargeable not as if it was the total income.