The Mumbai Income Tax Appellate Tribunal (ITAT) ruled that concealed income under Section 271(1)(c) is not leviable if it is offered under the Income Disclosure Scheme (IDS) and ruled in favor of an assessee who claimed long-term capital gains on the sale of shares of a penny stock company, M/s Sun Asian.
The assessee, Sanchit Vinod Jain, filed her 2014-15 income return declaring a long-term capital gain of Rs.12,90,884/- on the sale of shares of M/s Sun Asian. However, the Assessing Officer (AO) found she had not offered the full sale consideration, adding Rs.35,884/- to her income and imposing a penalty of Rs.11,088/- for concealment of income details. The assessee appealed to the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal.
The assessee claimed to have disclosed the LTCG on the sale of Sun Asian shares in her income return, and that the AO did not provide evidence of deliberate concealment. She also argued that the penalty under Section 271(1)(c) should not be imposed if concealed income was offered under the IDS.
The revenue argued that the assessee did not provide the full sale consideration of the shares in the IDS and that she did not disclose the true nature of the transaction in her income return. They also suggested imposing a penalty under Section 271(1)(c).
The Tribunal found that the assessee disclosed the LTCG on the sale of M/s Sun Asian shares in her income return, and the AO did not provide evidence of deliberate concealment. The ITAT also ruled that the penalty under Section 271(1)(c) should not be imposed if concealed income was offered under the IDS.
The Two member bench comprising ABY T. Varkey (Judicial Member) and Amarjit Singh (Accountant Member) ruled that the penalty under Section 271(1)(c) should not be imposed in this case, as the assessee had already disclosed the LTCG on the sale of Sun Asian shares in her income return. The ITAT also ruled that the IDS is a voluntary disclosure scheme that allows taxpayers to disclose undisclosed income without penalty, and concealed income under the IDS will not be penalized.
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