2016 (6) TMI 371 - AT - Income Tax

Penalty proceedings u/s 271(1)(c) - undisclosed brokerage income - Held that - Merely because the income was offered by M/s Sandhya Prakash Ltd. in its return would not exonerate the assessee from declaring such income in its return, which was earned and received by it for the services rendered by it to the sellers for sale of their land. Transferring of money to its sister concern M/s. Sandhya Prakash Ltd. at the most can be said to be an application of income. Thus, it was an income of the assessee earned by it for A.Y. 2008-09 chargeable to tax. But the assessee had concealed the particulars of this income by not offering for tax the amount of income of ₹ 1,92,00,000/- earned by it in its return of income. Therefore, considering the facts and circumstances of the case and legal position on the issue, we are in full agreement with the A.O. that the assessee had concealed particulars of income of ₹ 1,92,00,000/- on account of brokerage earned and received by it by not offering the same as its taxable income in the return of income furnished for A.Y. 2008-09. Therefore, the assessee was liable for penalty u/s 271(l)(c) of the Act for concealment of its income to the tune of ₹ 1,92,00,000/- as brokerage income. - Decided against assessee.

Summary

Issues:
Assessment of brokerage income not offered for taxation, Concealment of income, Penalty under section 271(1)(c) of the Income-tax Act, 1961.

Assessment of Brokerage Income:
The case involved an appeal by the assessee against the order of CIT(A)-I, Bhopal, for the assessment year 2008-09. The assessee, engaged in advertisement business, had also earned brokerage income of &8377; 1,92,00,000 from the sale of land but did not declare it for taxation. The AO found that the assessee had rendered services and earned the brokerage, rejecting the explanation that it was done on behalf of a sister concern. The ITAT upheld the AO's decision, stating that the mere signing of an MOU with the sister concern did not absolve the assessee from declaring the income earned. The ITAT concluded that the brokerage income was chargeable to tax for the assessment year 2008-09.

Concealment of Income:
The assessee argued that there was no concealment of income as all facts were on record, and no evidence was hidden. The ITAT, however, found that the assessee had concealed the particulars of income by not offering the brokerage income for taxation. It emphasized that the assessee's act of not declaring the income amounted to concealment, leading to the imposition of a penalty under section 271(1)(c) of the Income-tax Act, 1961.

Penalty under Section 271(1)(c):
The ITAT confirmed the penalty imposed by the AO under section 271(1)(c) amounting to &8377; 58,00,000 for the assessment year 2008-09. It held that the assessee's failure to declare the brokerage income for taxation constituted concealment of income, justifying the penalty. The ITAT rejected the argument that the transaction was camouflaged or that the real owner of income was a sister concern, emphasizing that the assessee had earned and concealed the income, making it liable for the penalty.

In conclusion, the ITAT upheld the decision of the authorities below, dismissing the appeal of the assessee and confirming the penalty for concealment of brokerage income not offered for taxation for the assessment year 2008-09.