2012 (5) TMI 392 - AT - Income Tax

Penalty u/s 271(1)(c) - Exemption u/s 54 - A show cause notice was issued to the assessee after recording the satisfaction to the effect that the assessee had furnished inaccurate particulars of income/concealed its income to explain the said amount - assessee was unable to prove the authenticity of the said iqrarnama before the authorities below as the transaction was executed in cash and the assessee had failed to produce the said seller - it was held that there is nothing on record to establish that the assessee had actually taken possession of the house in question as the backside of page 7 of the paper book revealed that the possession had to be given only at the time of registration, which never took place - The genuineness of the iqrarnama was in doubt and there was no material to establish that possession of the said property was taken over by the assessee and on this point also the assessee could not be held to have fulfilled the conditions of section 54 of the Act - levy of penalty confirmed - Decided against the assessee

Summary

Issues:
Appeal against penalty under section 271(1)(c) of the Income-tax Act, 1961 for assessment year 2005-06.

Detailed Analysis:
The appeal was filed against the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961, amounting to Rs. 5,61,000 for the assessment year 2005-06. The assessee had disclosed income from capital gain and claimed a deduction of Rs. 25 lakhs under section 54 of the Act for the purchase of a residential house. However, the authenticity of the iqrarnama presented by the assessee to support the claim could not be proven during the assessment proceedings. The Assessing Officer conducted inquiries and found discrepancies, leading to the denial of the exemption claimed under section 54. The Commissioner of Income-tax (Appeals) upheld the decision, stating that the assessee furnished inaccurate particulars of income by making a false claim without substantiating it with evidence. The penalty was imposed based on the conclusion that the assessee had concealed income or furnished inaccurate particulars.

The Tribunal observed that the iqrarnama was not supported by independent evidence, was not registered with any authority, and was cancelled later. The seller was not produced, and no evidence showed possession of the property by the assessee. The Tribunal held that the assessee failed to establish the purchase of the new residential house, leading to the denial of the exemption under section 54. The Tribunal further noted that the claim made by the assessee was not bona fide, as the authenticity of the iqrarnama could not be established. Therefore, the penalty under section 271(1)(c) was found to be justifiable as the conditions for concealment or furnishing inaccurate particulars were met.

The Tribunal rejected the reliance on previous court judgments cited by the assessee, emphasizing that the claim was false and unsubstantiated by evidence. The genuineness of the iqrarnama was questioned, and the possession of the property was not proven. As a result, the assessee was held liable for the penalty under section 271(1)(c) for failing to fulfill the conditions of section 54 of the Act. The Tribunal upheld the penalty, dismissing the grounds of appeal raised by the assessee.

In conclusion, the appeal filed by the assessee against the penalty under section 271(1)(c) for the assessment year 2005-06 was dismissed by the Tribunal. The decision was based on the failure of the assessee to substantiate the claim for exemption under section 54 with genuine evidence, leading to the imposition of the penalty for concealing income or furnishing inaccurate particulars.