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2011 (3) TMI 606 - AT - Income TaxPenalty - Search and seizure - Capital gain - Part performance of the contract - assessee received the part consideration of Rs. 6 crores on 21-3-2002 on which date the possession of the land was also handed over to the developer - assessee however did not declare any capital gain in respect of the transfer of land in the return of income filed for assessment year 2002-03 on 31-10-2002 - The disclosure of capital gain in assessment year 2006-07 also does not prove the bona fides of the assessee as the said return had been filed after the search had been conducted - In the present case addition has not been made because of disallowance of any claim in the return of income. The addition has been made for not disclosing the income in the return and such addition as we have held earlier amounts to deemed concealment of particulars of income as per Explanation 1 to section 271(1)(c) - Decided against the assessee
Issues Involved:
1. Deletion of penalty levied under section 271(1)(c) of the Income-tax Act. 2. Determination of the year of taxability for capital gain from the transfer of development rights. 3. Evaluation of whether the assessee's actions constituted concealment of income or furnishing of inaccurate particulars. Detailed Analysis: 1. Deletion of Penalty Levied under Section 271(1)(c): The appeal by the revenue contested the deletion of the penalty imposed by the Assessing Officer (AO) under section 271(1)(c) of the Income-tax Act. The AO had levied a penalty of Rs. 3,44,40,616, asserting that the assessee had concealed particulars of income by not declaring the capital gain in the assessment year 2002-03. The CIT(A) deleted the penalty, accepting the assessee's explanation that there was no intention to evade tax and that the year of taxability was debatable. The CIT(A) noted that the assessee had taken legal opinions and had revised returns for subsequent years, indicating no concealment of income. 2. Determination of the Year of Taxability for Capital Gain: The assessee had entered into a Memorandum of Understanding (MOU) with a developer for the transfer of development rights in land, receiving an upfront consideration of Rs. 6 crores and 40% of the sale proceeds from the sale of units. The AO determined that the transaction was covered under section 2(47)(v) as a transfer by way of part performance of a contract, supported by the judgment in Chaturbhuj Dwarkadas Kapadia v. CIT. The AO concluded that the capital gain was chargeable in the assessment year 2002-03, the year in which possession was handed over and part consideration was received. The assessee initially declared the capital gain in the assessment year 2006-07 but revised it to 2002-03 after legal advice and the initiation of proceedings under section 153C. 3. Evaluation of Concealment of Income or Furnishing Inaccurate Particulars: The AO contended that the assessee had concealed particulars of income by not offering the capital gain in the assessment year 2002-03. The assessee argued that the issue was debatable and that there were differences of opinion among legal counsels. The CIT(A) accepted the assessee's explanation, noting that the total consideration was not determinable at the time of filing the return for 2002-03. However, the Tribunal found that the assessee had not disclosed all material facts fully and truly. The Tribunal noted that the assessee had shown the Rs. 6 crores as an advance in the balance sheet, which was misleading, and had not revised the return even after the relevant High Court judgment. The Tribunal concluded that the non-disclosure was not bona fide and upheld the penalty, reversing the CIT(A)'s decision. Conclusion: The Tribunal allowed the revenue's appeal, upholding the penalty under section 271(1)(c), determining that the assessee's actions amounted to deemed concealment of income as per Explanation 1 to section 271(1)(c). The Tribunal emphasized that each case must be evaluated on its own facts and found that the assessee's explanation was not bona fide, thus justifying the penalty.
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