Devi Dass Sukhani Vs. Income Tax Officer - Court Judgment

Excerpt:
1. this is an appeal of the assessee for asst. yr. 2001-02, filed in relation to a penalty imposed under section 271(1)(c) of the act which was confirmed by the learned cit(a) vide order dt. 10th march, 2005.2. the facts leading to the levy of penalty under section 271(1)(c) of the act are that the assessee filed return of income showing an income of rs. 3,14,840, but during the course of assessment proceedings, a revised return was also filed showing an income of rs. 12,59,075. the assessee had disclosed all the facts regarding the sale of a house in the original return itself. in the computation of total income under the capital gains, it was narrated by the assessee that deduction allowed in asst. yr. 1999-2000 against investment of proceeds/gains of house sold in purchase of new house withdrawn due to sale of the house at rs. 9,44,232. the assessee again purchased a new residential house and invested the amount and claimed a deduction although he had already withdrawn the same as mentioned above. the ao ignored the revised return having been filed beyond the permitted time and levied a penalty under section 271(1)(c) of the act for concealment of income chargeable to tax. the learned cit(a), also confirmed the penalty of rs. 3,31,425.the assessee is aggrieved and has assailed the levy of penalty in this second appeal.3. we have heard the rival submissions and perused the evidence available on record.4. the undisputed facts of the case are that the assessee had withdrawn the deduction allowed in the asst. yr. 1999-2000 and had claimed the same again in this year under section 54 of the act. this is a case of deduction having been claimed under a bona fide misconception and belief. there seems to be no evidence on record, which can establish any wilful attempt to evade tax by the assessee. when the assessee claims a deduction, which is not permitted by the act, it does not tantamount to concealment.5. we have perused the assessment order, a copy of which is placed at page no. 22 of the assessee's paper book. the perusal of this order does not reveal that the assessee had knowingly concealed taxable income. moreover, no satisfaction recorded by the ao that the assessee has consciously concealed the taxable income.6. the hon'ble jurisdictional high court in the case of chandra pal bagga v. itat and anr. , a copy of which has been placed at p. 30 of the assessee's paper book, has held that in case any wrong claim for exemption is made by the assessee but he discussed the basic facts regarding the sale of house property and do not offer the capital gain for tax, under bona fide mistake, it would amount only to a technical fault and not a concealment of taxable income therefore, no penalty for concealment under section 271(1)(c) was leviable. the facts of this case are mutatis mutandis identical to the above case of the hon'ble high court and therefore, by following the above decision it can be safely held that when a bona fide mistake is committed by the assessee, no penalty for concealment can be levied.7. we have also seen the finding of the learned cit(a) on which the learned departmental representative has placed heavy reliance. the finding of the learned cit(a) that the assessee had deliberately furnished inaccurate particulars and claimed the deduction which he was not entitled to, is not supported by any evidence, fact or circumstance on record. rather the sum-total of the evidences and circumstances go to establish that it was a bona fide mistake committed by the assessee.therefore, in view of our foregoing discussion we cancel/delete the penalty of rs. 3,31,425 levied upon the assessee. we set aside the findings of both the lower authorities and accept the appeal.

Judgment:
1. This is an appeal of the assessee for asst. yr. 2001-02, filed in relation to a penalty imposed under Section 271(1)(c) of the Act which was confirmed by the learned CIT(A) vide order dt. 10th March, 2005.

2. The facts leading to the levy of penalty under Section 271(1)(c) of the Act are that the assessee filed return of income showing an income of Rs. 3,14,840, but during the course of assessment proceedings, a revised return was also filed showing an income of Rs. 12,59,075. The assessee had disclosed all the facts regarding the sale of a house in the original return itself. In the computation of total income under the capital gains, it was narrated by the assessee that deduction allowed in asst. yr. 1999-2000 against investment of proceeds/gains of house sold in purchase of new house withdrawn due to sale of the house at Rs. 9,44,232. The assessee again purchased a new residential house and invested the amount and claimed a deduction although he had already withdrawn the same as mentioned above. The AO ignored the revised return having been filed beyond the permitted time and levied a penalty under Section 271(1)(c) of the Act for concealment of income chargeable to tax. The learned CIT(A), also confirmed the penalty of Rs. 3,31,425.

The assessee is aggrieved and has assailed the levy of penalty in this second appeal.

3. We have heard the rival submissions and perused the evidence available on record.

4. The undisputed facts of the case are that the assessee had withdrawn the deduction allowed in the asst. yr. 1999-2000 and had claimed the same again in this year under Section 54 of the Act. This is a case of deduction having been claimed under a bona fide misconception and belief. There seems to be no evidence on record, which can establish any wilful attempt to evade tax by the assessee. When the assessee claims a deduction, which is not permitted by the Act, it does not tantamount to concealment.

5. We have perused the assessment order, a copy of which is placed at page No. 22 of the assessee's paper book. The perusal of this order does not reveal that the assessee had knowingly concealed taxable income. Moreover, no satisfaction recorded by the AO that the assessee has consciously concealed the taxable income.

6. The Hon'ble Jurisdictional High Court in the case of Chandra Pal Bagga v. ITAT and Anr. , a copy of which has been placed at p. 30 of the assessee's paper book, has held that in case any wrong claim for exemption is made by the assessee but he discussed the basic facts regarding the sale of house property and do not offer the capital gain for tax, under bona fide mistake, it would amount only to a technical fault and not a concealment of taxable income therefore, no penalty for concealment under Section 271(1)(c) was leviable. The facts of this case are mutatis mutandis identical to the above case of the Hon'ble High Court and therefore, by following the above decision it can be safely held that when a bona fide mistake is committed by the assessee, no penalty for concealment can be levied.

7. We have also seen the finding of the learned CIT(A) on which the learned Departmental Representative has placed heavy reliance. The finding of the learned CIT(A) that the assessee had deliberately furnished inaccurate particulars and claimed the deduction which he was not entitled to, is not supported by any evidence, fact or circumstance on record. Rather the sum-total of the evidences and circumstances go to establish that it was a bona fide mistake committed by the assessee.

Therefore, in view of our foregoing discussion we cancel/delete the penalty of Rs. 3,31,425 levied upon the assessee. We set aside the findings of both the lower authorities and accept the appeal.