|Question And Answer|
|Subject:||Penalty u/s 271(1)(c) of the Income Tax Act.|
|Answered by:||Dr .K. Shivaram Senior Advocate|
|Tags:||concealment, Concealment penalty, penalty|
|Date:||June 16, 2022|
Assessee is an individual and has income from partnership firm, interest on fixed deposits. The assessee has filed the return of income for A.Y 2015-16 wherein the income on account of LTCG on sale of agricultural land and interest on savings bank account was remained to be disclosed in the return of income. Therefore assessee submitted a letter before the AO that he was under a bonfide belief that the land being agricultural land situated outside 8 kms from the local authorities, therefore has not offered the income form sale of said land in the return of income. After coming to knowledge that the aerial distance of the said land is less than 8 kms and therefore an asset is a capital asset, however, since the time limit for filing revised return was not available, assessee submitted a letter to the AO that he voluntarily wants to offer the said income and submitted revised computation.
However, the AO has not appreciated the submission and levied penalty 271(1)(c) on the following grounds:
1. The claim of the assessee about voluntarily offering the capital gains is an after thought decisions
2.Since the assessee is guided by a CA, he must have taken advise before filing the return.
3. Provision of the Act are very clear on the issue on how to calculate the distance for situation of agri land from municipal limits, the assessee has very little choice choice to get confused and not offering CG on sale of such land.
4. Had there been no scrutiny, the assessee would never had offered the CG for Tax .
CIT(A) confirmed the levy of penalty on the ground that it cannot take up plea that all the income was offered voluntarily and cannot take the shelter of ignorance and oversight.
The assessee has filed an appeal before ITAT.
Refer the show cause notice and find out whether any specific charge is mentioned in the show cause notice. If the notice is not accordance with the law ,the penalty can be deleted on technical grounds . Refer Mohd. Farhan A. Shaikh v. ACIT ( 2021 ) 434 ITR 1/ 200 DTR 65/ 320 CTR 26/ 280 Taxman 334 / 125 taxmann.com 253 (Panji ) ( FB ) ( Bom) (HC) wherein the court held that non-striking off of the irrelevant part while issuing notice under section 271(1)(c) of the Income-tax Act, order is bad in law The assessee must be informed of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. Also refer CIT v. SSA’s Emerald Meadows (SC); www.itatonline.org. In Price Waterhouse Coopers Pvt. Ltd. v. CIT (2012) 348 ITR 306/253 CTR 1/77 DTR 153/211 Taxman 40 (SC) held that inadvertent human error, due to bonafide mistake, levy of penalty held to be not leviable.