2016 (5) TMI 148 - AT - Income Tax

Penalty u/s 271(1)(c) - additions made on account of Long Term Capital Gain - Assessing Officer has held that the assessee has failed to established the genuineness of the cost of acquisition adopted by him and claimed of unexplained transfer fees and thereby suppress the Long Term Capital - Held that - The assessee filed the return for the A.Y. 1994-95 on 24.07.1995 declaring total income of ₹ 1,50,200/-. When the survey action u/s. 133A of the Act was taken at the residence of the assessee then it came into notice that the assessee received the sum of ₹ 1.36 crores on sale of flat which he had not offered for taxation in the A.Y.1994- 95 except this an amount of ₹ 2.13 crores was also found in his three bank accounts. Apparently the sale transaction of the sale of flat of the assessee was not offered as tax on Long Term Capital Gain / Short Term Capital Gain if any in the relevant assessment year. After the survey assessee offered the capital gain to the tune of ₹ 77,55,636/- on account of sale proceed received by him at ₹ 19,37,250/- in respect of residential flat. It is correct that if the case of assessee is based upon only on the facts that the demand of the valuation report can be treated levy the penalty. But in this case the facts are otherwise. It is clear case of concealment of particulars of his income received on account of above mentioned flat and furnishing inaccurate particulars by not disclosing the transaction in his return filed on 24.07.1995 declaring his total income to the tune of ₹ 1,50,200/-. Transaction was came in to the notice after the survey report. In view of the said circumstances we are of the view that it is not the case of assessment by the Assessing Officer on the basis of valuation report or market rate infact it is the case of concealment of particulars of his income and furnishing inaccurate his particulars. - Decided against assessee

Summary

Issues:
Levy of penalty without appreciating facts and circumstances, fair market valuation for penalty, deductibility of transfer fees, passing order ex-parte, calculation of penalty with surcharge and cess.

Analysis:
1. Levy of Penalty without Appreciating Facts and Circumstances:
The case involved the imposition of a penalty of ?5,69,296 on the assessee for the assessment year 1994-95. The penalty was imposed by the Assessing Officer due to the failure of the assessee to establish the genuineness of the cost of acquisition and the claimed unexplained transfer fees, resulting in the suppression of Long Term Capital Gain. The penalty was confirmed by the learned CIT(A), leading to the appeal before the tribunal.

2. Fair Market Valuation for Penalty:
The Assessing Officer disallowed the excess claim on transfer fees and computed the Long Term Capital Gain differently from what the assessee had offered. The issue revolved around the fair market valuation of the flat as on 01.04.1981. The assessee argued that the penalty should not be based on the different fair market value used by the Assessing Officer. However, the tribunal upheld the penalty, stating that the case was not merely about valuation but about the concealment of income particulars and furnishing inaccurate information.

3. Deductibility of Transfer Fees:
The Assessing Officer disallowed certain transfer fees claimed by the assessee, leading to a discrepancy in the Long Term Capital Gain calculation. The tribunal found that the disallowance of transfer fees was justified based on the investigation conducted. The issue of deductibility of transfer fees was one of the grounds on which the penalty was imposed and subsequently confirmed.

4. Passing Order Ex-parte:
One of the grounds raised by the appellant was that the penalty was confirmed based on an ex-parte order. The tribunal, after considering the arguments from both parties, found that the penalty was imposed due to the concealment of income particulars and furnishing inaccurate information, rather than being solely based on an ex-parte assessment.

5. Calculation of Penalty with Surcharge and Cess:
The appellant contested the calculation of the penalty, which included surcharge and cess. However, the tribunal upheld the penalty amount, considering the suppression of Long Term Capital Gain and the failure to disclose accurate particulars of income. The tribunal dismissed the appeal, affirming the penalty imposed by the Assessing Officer and confirmed by the learned CIT(A).

In conclusion, the tribunal dismissed the appeal filed by the assessee, upholding the penalty imposed for the assessment year 1994-95. The decision was based on the concealment of income particulars and furnishing inaccurate information, rather than solely on valuation discrepancies or ex-parte assessments.