2014 (12) TMI 1178 - AT - Income Tax

Penalty u/s 271(1)(c) - Long Term Capital Gain on sale of shares offered by the assessee for tax as Income from other sources pursuant to a survey action u/s. 133A - Held that - Held that - t is an undisputed fact that in the original return of income filed on 12.8.2005, the assessee has returned only ₹ 954,828/-. It is also an undisputed fact that after the survey operation conducted at the premises of the assessee, the assessee agreed for declaring Long Term Capital gains of ₹ 44,83,268/- and ₹ 20,00,000/- on account of gifts received as income from other sources. It is also an undisputed fact that the revised computation of income, the assessee has offered only ₹ 12,00,000/- as gifts and during the course of the assessment proceedings, the assessee further agreed for the addition of ₹ 2,00,000/- out of the balance gift amount. The explanation of the assessee that the amount has been offered to purchase peace of mind and to avoid unnecessary litigation is not a valid reason as per the decision of the Hon ble Delhi High Court in the case of MAK Data ltd. (2013 (1) TMI 574 - DELHI HIGH COURT ) which has been subsequently confirmed by the Hon ble Supreme Court 2013 (11) TMI 14 - SUPREME COURT . Considering all these facts in totality, we do not find any reason to interfere with the findings of the Ld. CIT(A). - Decided against assessee.

Summary

Issues:
1. Deletion of penalty under section 271(1)(c) of the Income Tax Act in respect of Long Term Capital Gain on sale of shares.
2. Confirmation of penalty under section 271(1)(c) of the Income Tax Act in relation to gifts received by the assessee.

Analysis:

Issue 1: Deletion of penalty under section 271(1)(c) for Long Term Capital Gain:
The appeal by the Revenue was against the deletion of the penalty imposed under section 271(1)(c) of the Act regarding Long Term Capital Gain on the sale of shares by the assessee. The Counsel for the assessee pointed out a similar case decided by the Jurisdictional High Court where the penalty deletion was upheld. The Departmental Representative failed to provide any distinguishing facts or decisions. The Tribunal, following the High Court's decision, dismissed the Revenue's appeal, as per the common order.

Issue 2: Confirmation of penalty under section 271(1)(c) for gifts received:
The assessee's appeal was against the confirmation of the penalty under section 271(1)(c) for gifts received. The facts revealed that during a survey, it was found that the assessee had received gifts and had voluntarily offered them for taxation to avoid litigation. The Assessing Officer (AO) imposed a penalty under section 271(1)(c) for concealing income. The CIT(A) deleted the penalty for Long Term Capital Gains but confirmed it for the gifts received, relying on a decision of the Delhi High Court. The Tribunal upheld the CIT(A)'s decision, emphasizing that the explanation given by the assessee was not valid as per the legal precedents cited. The Tribunal found no reason to interfere with the CIT(A)'s findings and dismissed the assessee's appeal.

In conclusion, the Tribunal upheld the deletion of the penalty for Long Term Capital Gain but confirmed the penalty for gifts received, based on the legal precedents cited. The appeals by both the Revenue and the assessee were disposed of accordingly.