2015 (10) TMI 741 - AT - Income Tax

Penalty U/s 271(1)(c) - undisclosed salary received from RMC Gems Thai Co. Ltd., Bangkok - assessee disclosed salary receipt after search proceeding carried out in case of assessee and return filed U/s 153A - assessee had shown long term capital gain on sale of agricultural land, Kalyan colony plot and plot of Chitrakoot in the computation of income and taxable long term capital gain was also claimed by the assessee exempted by making investment in residential house - Held that - The argument of the assessee that the assessee had disclosed salary received from RMC Gems Thai Co. Ltd., Bangkok voluntarily has not substantiated with any evidence. The Assessing Officer issued notice U/s 153A to file the return in response to survey proceedings. Thereafter, the assessee has disclosed the salary received in Thai Bhat in Bangkok in global income. Similarly the excess claim of exemption U/s 54F had also not been revised even notice U/s 153A was issued to the assessee. The assessee was availing expert opinion on taxation matter as he was filing return since long and had number of businesses. Therefore, the assessee s claim that he was ignorant about legal position of salary received in Bangkok and second house purchased during the year under consideration and claimed deduction U/s 54F by not disclosing the facts of the another house purchased in the return, proved that the assessee s action was not bonafide. We have considered view that the assessee has concealed the particulars of income and furnished inaccurate particulars of income. The case law cited by the assessee are not squarely applicable on it. Action of the assessee was neither bonafide nor voluntary, therefore, penalty is liable. Voluntary disclosure does not release the assessee from the mischief of penal proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he has to be absolved from penalty. Therefore, we have considered view that the ld CIT(A) was right to confirm the penalty on given circumstances. Accordingly, we uphold the order of the ld CIT(A) - Decided against assessee.

Summary

Issues Involved:
1. Penalty under Section 271(1)(c) of the Income Tax Act, 1961 for concealment of salary income.
2. Penalty under Section 271(1)(c) of the Income Tax Act, 1961 for disallowance of wrong claim under Section 54F.

Detailed Analysis:

1. Penalty for Concealment of Salary Income:
The assessee did not disclose salary income of Rs. 3,53,599 received from M/s RMC Gems Thai Co. Ltd., Bangkok in the original return filed under Section 139(1). This income was later declared in the return filed under Section 153A after a search and seizure operation. The assessee claimed that he was under a bona fide belief that the salary income, on which tax was already paid in Thailand, was not required to be included in the Indian return. However, the Assessing Officer (AO) did not find this explanation convincing, citing Explanation 1 of Section 271(1)(c), which states that concealment of income or furnishing inaccurate particulars attracts penalty. The AO emphasized that ignorance of law is not an excuse and imposed a penalty of Rs. 7,11,833.

The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO's decision, noting that the assessee was regularly assessed to tax and assisted by tax experts, making it unlikely that the omission was unintentional or bona fide. The CIT(A) referenced case laws, including CIT Vs. Rakesh Suri and Union of India Vs. Dharmendra Textile Processors, to support the imposition of penalty for concealment of income.

2. Penalty for Disallowance of Wrong Claim under Section 54F:
The assessee claimed an exemption under Section 54F for the entire long-term capital gain of Rs. 34,74,458 by investing in a new residential property. However, the AO found that the assessee had also purchased another residential flat for Rs. 24,72,700 within the stipulated period, violating the conditions of Section 54F. Consequently, the AO allowed only a proportionate exemption and disallowed Rs. 17,64,952, initiating penalty proceedings under Section 271(1)(c) for furnishing wrong particulars.

The CIT(A) confirmed the AO's decision, stating that the assessee's claim was not genuine and that the omission was not unintentional or bona fide. The CIT(A) noted that the assessee's explanation of ignorance of law was not acceptable given his regular tax assessments and professional assistance. The CIT(A) referenced case laws, including CIT Vs. Sushma Devi Agarwal and CIT Vs. Atul Mohan Jindal, to support the penalty imposition.

Tribunal's Decision:
The Tribunal upheld the CIT(A)'s decision, stating that the assessee had not substantiated his claim of voluntary disclosure of salary income. The Tribunal noted that the disclosure was made only after the issuance of notice under Section 153A. Similarly, the excess claim under Section 54F was not revised even after the notice. The Tribunal concluded that the assessee's actions were not bona fide and constituted concealment of income and furnishing of inaccurate particulars. The Tribunal referenced the Supreme Court's decision in Mak Data Pvt. Ltd. Vs. CIT, which held that voluntary disclosure does not absolve the assessee from penalty proceedings.

Conclusion:
The Tribunal dismissed the assessee's appeal, confirming the penalty of Rs. 7,11,833 under Section 271(1)(c) for both concealment of salary income and disallowance of the wrong claim under Section 54F. The Tribunal emphasized that ignorance of law is not an excuse and that the assessee's actions were not bona fide.