Where assessee claimed loss on sale of assets in profit and loss account and in return of income then penalty for concealment shall be levied. Hence, concealment penalty levied if mistake in return not voluntarily revised.   

Case: Commissioner of Income Tax vs. NG Technologies Ltd.

Facts:

The assessee being a company sold plant and machineries during the year. The assessee incurred loss on this transaction. The loss incurred was debited to the Profit and Loss Account. In addition, the schedule of Fixed Asset reduced for the asset disposed off. In the said schedule, assessee deducted the Written Down Value of the asset sold from the block of assets.

In the return of income, the assessee had claimed business loss amounting to Rs. 2,33,07,349 on account of sale of fixed assets under the head profit and loss.

The chartered accountant, who prepared the audit report and the return of income, did not deduct the loss from the profit as per the profit and loss account to reflect the correct state of loss in the computation of total income. The assessee has changed the chartered accountant since then, which is an admitted fact as per record.

During the assessment proceedings, the assessee was required to file tax audit report and depreciation chart. Further, the assessee was required to furnish details of all exemptions and deductions together with details of addition to fixed assets. The assessee filed revised return indicating the loss of Rs. 2,33,07,349 on account of sale of fixed assets not as “business loss”, alternatively as capital loss.

A penalty proceedings for concealment under section 271(1)(c) of the Act were initiated and penalty equal to 100 per cent of the tax payable was imposed.

On appeal, the Tribunal deleted the penalty imposed. Aggrieved by the order, Revenue appealed to the High Court.

Held:

The Court highlighted that the assessee did not filed the return voluntarily. During the assessment proceedings, AO confronted the assessee and asked to explain the reason for debiting profit and loss account for loss on sale of assets. After such action, assessee revised the return and showed the loss as capital loss. Thus, the revised return was filed after the notice of the inaccurate particulars by the AO.

It was concluded that as the assessee did not disclosed the sale of asset as a capital loss on its own, it was considered as a concealed income. Hence, penalty shall be levied on such income.

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