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2016 (11) TMI 1631 - AT - Income TaxLevy of penalty u/s 271(1)(c) - unexplained investment in jewellery - assessee has admitted undisclosed income under VDIS Scheme in 1997 - HELD THAT - Though the assessee admitted jewellery of ₹ 2.23 crores and the cash of 3.00 crores under VDIS, she has not filed the wealth tax returns which implies that the wealth declared under VDIS has been exhausted and nothing is carried forward for subsequent year. The assessee is from the educated and from affluent family, assisted by the legal counsels and aware of the wealth tax provisions. In the absence of any evidence for purchase of jewellery from the explained sources, and in the absence of wealth tax returns, we are unable to accept the source of jewellery was from explained sources/VDIS. The assessee cannot take an advantage of VDIS disclosure for explaining the source of investment in jewellery by evading wealth tax. We are of the considered opinion that the explanation of investment out of VDIS and Stridhan, gifts is nothing but an afterthought. Even if the assessee acquires the gold from VDIS, and gifts she is bound to declare in wealth tax returns and pay wealth tax failing which it remains unaccounted. Therefore, we hold that this is clear case of penalty under section 271(1)(c) of act. The facts of the assessee s case are squarely covered by Hon ble Supreme Court judgement in the case of MAK Data (P) Ltd. Vs. CIT II 2013 (11) TMI 14 - SUPREME COURT and this is a clear case for penalty under section 271(1)(c). Accordingly we set aside the order of the Ld.CIT(A) and confirm the penalty levied by the Assessing Officer and dismiss the cross objections filed by the assessee. - Decided in favour of revenue.
Issues:
Challenge to deletion of penalty under section 271(1)(c) of Income Tax Act. Analysis: 1. The Revenue appealed against the deletion of penalty under section 271(1)(c) of the Income Tax Act by the Commissioner of Income Tax (Appeals-18), Chennai. The grounds of appeal were related to the levy of penalty u/s 271(1)(c) of the act. 2. The search and seizure action conducted in the Sarvana group led to the discovery of gold and jewellery belonging to the assessee, valued at ?47,37,496. The Assessing Officer initiated penalty proceedings under section 271(1)(c) after the assessee failed to include the value of the jewellery in the return of income. 3. The Assessing Officer, not satisfied with the explanation provided by the assessee, levied a penalty of ?14,51,713, considering it a clear case of concealment of income. The Assessing Officer relied on the judgment of the Supreme Court in the case of MAK Data Pvt. Ltd. Vs CIT-II. 4. The assessee, during the appeal before the Ld.CIT(A), argued that most of the jewellery found was declared under VDIS and acquired through legitimate means. The CIT(A) canceled the penalty imposed by the Assessing Officer. 5. The Revenue, aggrieved by the CIT(A) decision, contended that the assessee failed to explain the source of acquiring the jewellery, leading to a clear case of concealment of income. The AR argued that the jewellery was acquired through legitimate means and presented evidence of declaration under the VDIS Scheme. 6. The Ld.DR argued that the assessee did not declare the jewellery in the Wealth Tax returns, suggesting a contradiction in the assessee's stance for Wealth Tax and Income Tax purposes. This was deemed as a clear case for penalty under section 271(1)(c) of the Income Tax Act. 7. The tribunal found that the assessee failed to provide a satisfactory explanation for the source of investment in the jewellery. Despite claiming the jewellery was acquired through VDIS and gifts, the absence of wealth tax returns raised doubts. The tribunal held that the explanation provided by the assessee was an afterthought, leading to a clear case for penalty under section 271(1)(c). 8. The tribunal set aside the CIT(A) order, confirming the penalty levied by the Assessing Officer and dismissing the cross objections filed by the assessee. The appeal of the Revenue was allowed, and the cross objections by the assessee were dismissed.
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