2010 (5) TMI 942 - AT - Income Tax

Summary

Issues Involved:
1. Levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961.
2. Concealment of income and furnishing of inaccurate particulars.

Summary:

Issue 1: Levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961

The assessee challenged the order of the CIT(A) confirming the levy of penalty of Rs. 11,23,906 u/s 271(1)(c) of the Income-tax Act, 1961. The assessment was completed u/s 143(3) r.w.s. 147, determining the income at Rs. 55,13,070 against the returned income of Rs. 5,04,570, with an addition of Rs. 50,08,496 on account of capital gain on the sale of a plot of land at Vasai. The assessee did not appeal the assessment order, and the Assessing Officer initiated penalty proceedings u/s 271(1)(c).

Issue 2: Concealment of income and furnishing of inaccurate particulars

The assessee argued that the capital gain on the sale of Vasai land was declared in the original returns for A.Y. 2005-06 to A.Y. 2007-08 on a receipt basis, as payments were received in those years. The Assessing Officer rejected this argument, noting that the assessee declared 'nil' capital gain despite a significant transaction of Rs. 2.6 crores. The officer concluded that the assessee deliberately tried to evade tax by spreading the capital gain over three years, which is not permissible under the law, and levied a penalty of Rs. 11,23,906.

The CIT(A) upheld the penalty, stating that the entire gain should have been offered to tax in the year of the sale agreement (2004). The CIT(A) found no ambiguity in the Act regarding the computation of capital gain and concluded that the assessee concealed particulars of income. The assessee's reliance on various judicial decisions was distinguished as not applicable to the facts of the case.

The Tribunal considered the rival submissions and found that the assessee did not act in a bona fide manner. The assessee failed to disclose the method of accounting for capital gain in the original return and did not file a revised return until the mistake was detected by the Assessing Officer during the A.Y. 2007-08. The Tribunal upheld the CIT(A)'s order, concluding that the assessee concealed particulars of income and furnished inaccurate particulars, justifying the penalty u/s 271(1)(c).

Conclusion:

The appeal filed by the assessee was dismissed, and the penalty u/s 271(1)(c) was upheld. The Tribunal found that the assessee had concealed particulars of income and furnished inaccurate particulars, warranting the levy of penalty.