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2016 (11) TMI 792 - HC - Income TaxPenalty imposed under section 271(1)(c) - Unexplained investment under section 69B - business income claim rejected - Surrender of income - Held that - There are not only documents of several unrecorded purchases coupled with the statements of not only the employees and key persons who had purchased the properties but also of the three directors accepting in unequivocal terms the undisclosed investment and detailing by way of separate annexures, the manner in which undisclosed investment was made year-wise. Therefore, the judgment of MAK Data P. Ltd. (2013 (11) TMI 14 - SUPREME COURT ) is squarely applicable wherein held that had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount which was surrendered later during the course of the assessment proceedings. Thus in our view it is a proved case of concealment of income and we are also of the view that penalty was rightly imposed by the Assessing Officer and has rightly been upheld by both the appellate authorities in unison based on evidence and is a finding of fact. - Decided against assessee
Issues Involved:
1. Whether the addition of undisclosed income should be categorized as "business income" or "unexplained investment" under section 69B of the Income-tax Act, 1961. 2. Whether the revised return filed by the assessee was voluntary or a result of the survey operation. 3. Whether the penalty under section 271(1)(c) of the Income-tax Act, 1961 for concealment and furnishing inaccurate particulars of income was justified. Issue-wise Detailed Analysis: 1. Categorization of Undisclosed Income: The assessee, a private limited company engaged in developing farmhouses, filed a return declaring an income of ?1,87,697. During a survey operation, incriminating documents revealing undisclosed investments were found. The assessee filed a revised return declaring additional income of ?3,02,33,672. The Assessing Officer added this amount as unexplained investment under section 69B, but the Commissioner of Income-tax (Appeals) directed it to be taxed as "business income" since the only activity of the assessee was trading in real estate. This appellate order was not challenged by either party, thus becoming final. 2. Voluntariness of Revised Return: The assessee contended that the revised return was filed voluntarily. However, the Assessing Officer and the Tribunal found that the revised return was filed only after the survey operation and the discovery of incriminating documents. The Tribunal's Judicial Member and the Third Member observed that the revised return was not voluntary but was filed after the detection of discrepancies during the survey. The Vice-President of the Tribunal noted that the revised return was a result of the survey findings and not a voluntary act to buy peace with the Income-tax Department. 3. Justification of Penalty under Section 271(1)(c): The penalty under section 271(1)(c) was imposed by the Assessing Officer, upheld by the Commissioner of Income-tax (Appeals), and further upheld by the Tribunal. The Judicial Member and the Third Member of the Tribunal found ample evidence of concealment, including incriminating documents and statements from employees and directors. The Tribunal's Accountant Member's view that there was no documentary evidence was deemed perverse and contrary to the material on record. The High Court agreed with the Tribunal's finding that the assessee's revised return was a result of the survey and not voluntary, thus justifying the penalty. The High Court referred to several cases, including MAK Data P. Ltd. v. CIT, where the Supreme Court held that voluntary disclosure does not absolve the assessee from penalty if the disclosure is made after detection by the authorities. The High Court concluded that the penalty was rightly imposed based on the evidence and findings of fact, and no substantial question of law arose from the Tribunal's order. Conclusion: The High Court dismissed the appeal, upholding the Tribunal's decision that the revised return was not voluntary and the penalty under section 271(1)(c) was justified based on the concealment of income detected during the survey.
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