Concealment vs Inaccurate Particulars
Ms. Ila Jitendra Mehta, vs. Revenue [I.T.A. No. 5219 of 2024]
Background of the Case
The appellant, who faced a penalty imposed by the Assessing Officer (AO) under section 271(1)(c) of the Income Tax Act for allegedly furnishing inaccurate particulars of income. The penalty amount was substantial, exceeding Rs. 2.28 crores. The issue arose from the appellant’s claim of exemption under section 54F of the Income Tax Act for the assessment year 2013-14, which was later found to be erroneous. During the assessment proceedings, the appellant acknowledged this mistake and submitted a revised computation of income. Additionally, the original income tax return was filed belatedly by the appellant’s accountant using a digital signature. The AO initiated penalty proceedings on the grounds of concealment of income but subsequently levied the penalty for furnishing inaccurate particulars, which became a point of contention in this case.
Arguments by the Appellant
The Appellant contended that the claim under section 54F was made inadvertently and was a bona fide mistake that was promptly rectified during the assessment proceedings by submitting a revised computation along with an explanation for not filing a revised return due to the belated original filing. She maintained that the penalty under section 271(1)(c) should not apply in her case, as there was no deliberate attempt to conceal income or provide inaccurate information. The appellant relied on precedents and emphasized that there was a possible legal interpretation supporting her claim, especially since the Tribunal had previously passed orders favorable to her during the assessment process. She further argued that the penalty proceedings were initiated for concealment but the penalty was imposed for inaccurate particulars, a mismatch that rendered the penalty unsustainable.
Respondent’s Response
The Revenue contested the appellant’s plea by emphasizing that a rigorous application of penalty provisions was necessary and that the exemption claimed was incorrect. They argued that the penalty was rightly imposed due to the furnishing of inaccurate particulars and that the difference between concealment and inaccurate particulars did not absolve the appellant of liability. The AO also pointed to the fact that the penalty proceedings were initiated properly, and the claim of inadvertent mistake did not constitute a valid defense against penalty imposition. The Revenue highlighted that since only a small number of cases are picked up for scrutiny, strict enforcement of penalty provisions should act as a deterrent and prevent misuse of exemptions.
Court Findings and Decision
The ITAT carefully examined the facts and the legal position, noting the clear distinction between concealment of income and furnishing inaccurate particulars, as upheld by higher courts in previous judgments. It observed that the AO initiated penalty proceedings on concealment but levied the penalty on inaccurate particulars without proper satisfaction or notice for the latter. This procedural irregularity was a crucial flaw. The Tribunal accepted the appellant’s explanation that the error was inadvertent and corrected during the assessment, demonstrating bona fide conduct. It rejected the Revenue’s arguments about dilution of penalty provisions due to selective scrutiny, emphasizing that penalties must be based on facts and intention, not the number of cases scrutinized. Ultimately, the penalty was held to be unsustainable both on merit and legal grounds and was accordingly deleted, allowing the appellant’s appeal in full.
Concealment vs Inaccurate Particulars
To download official order, Click Here
“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship. The information on this site is not intended to be a substitute for professional advice.”