The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) consisting of Shri Waseem Ahmed, accountant member and Ms Madhumita Roy, Judicial member has held thatinaccurate particulars of income must be coupled with circumstantial evidence and set aside the penalty u/s 271(1)(c).
The assessee engaged in the activity of consultancy services and filed a return of income declaring an income of 59,38,480/- which was subsequently revised dated 18th October 2016 by enhancing the total income at Rs. 1,28,95,558/- on account of the income under the head capital gain. The AO held that there was no provision under the Act for revising the belated return of income and rejected the revised return filed by the assessee and framed assessment under section 143(3) of the Act based on the income declared in the original return of income filed dated 25th March 2016 and assessed the income at Rs. 1,33,75,470/- after making an addition of Rs. 69,19,339/- representing the capital gain on the transfer of capital assets. The AO initiated the penalty proceedings under section 274 read with section 271(1)(c) of the Act.
The assessee contended that he has voluntary disclosed the income under the capital gain on the transfer of the property in the revised return dated 18th October 2016 and paid entire taxes. Further contended that all the material facts relating to the capital gain were duly disclosed by filing the revised return/ computations of income.
It was observed that though the assessee in the original return committed mistake in furnishing an inaccurate amount of capital gain the same was a bonafide mistake which was done away filing revised computation. Further observed that the assessee has furnished inaccurate particulars of income which has to be tested whether the detail furnished in the return of income is incorrect or falls.
The Tribunal held that the element of consciousness in furnishing inaccurate particulars of income coupled with circumstantial evidenceand the penalty provisions under section 271(1)(c) of the Act cannot be attracted. The Tribunal set aside the finding of the CIT (A) and directed to delete the penalty levied under section 271(1)(c) of the Act. The appeal filed by the assessee was allowed. Shri Deepak R. Shah appeared on behalf of the assessee and Shri V.K. Singh appeared on behalf of the revenue.
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