The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that Penalty u/s 271(1)(c) was not leviable when the Revised computation was filed to correct the Bonafide Mistake committed in furnishing inaccurate amount of capital gain.
The assessee, Kiritkumar Fakirchand Mehta alleged that the CIT-A erred in confirming the penalty levied by the AO for Rs. 14,25,383/- under the provisions of section 271(1)(c) of the Act on account of furnishing inaccurate particulars of income.
The assessee engaged in the activity of consultancy services and has filed his return of income dated 25th of March 2016 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 is no provision under the Act for revising the belated return of income and rejected the revised return filed by the assessee. Further 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 asset.
The AO initiated the penalty proceedings under section 274 read with section 271(1)(c) of the Act because the revised return filed by the assessee was invalid and therefore no credence could be given to the such return of income. CIT-A on appeal confirmed the order of the AO.
Shri Deepak R. Shah appeared for the assessee and contended that the assessee has made voluntary disclosure of the capital gain income before the detection by the Income Tax Department. On the other hand, Shri V.K. Singhappeared for the departmentand supported the order of the authorities below.
A Coram of Shri Waseem Ahmed, accountant member and Ms Madhumita Roy, judicial member observed that the assessee voluntary revised the computation of income when the issue came to his notice and paid the due taxes.
It was held that, though the assessee in the original return committed a mistake in furnishing an inaccurate amount of capital gain the same is a bonafide mistake which was done away with filing revised computation.
The Tribunal viewed that it cannot be held that the assessee has concealed the income or furnished inaccurate particular of income and the penalty provisions under section 271(1)(c) of the Act cannot be attracted. The bench set aside the finding of the CIT (A) and directed the AO to delete the penalty levied by him under section 271(1)(c) of the Act. The appeal filed by the assessee is allowed.
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