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2017 (5) TMI 16 - AT - Income TaxPenalty u/s.271(1)(c) - long term capital gains addition - nature of land sold - Held that - There is no dispute that assessee s land in question sold was both agricultural and non agricultural whereas he had converted the same in latter category. There is further no quarrel that the assessee had clearly demarcated the necessary dimensions of the land sold in the two categories. And also that he thereafter did not disclose the non agricultural lands consideration for the purpose of computing capital gains in original return of income. The same position continues even after Assessing Officer s specific query regarding omission of taxable income in notice dated 08.10.2013 (supra). The assessee rather went step further in claiming all of his land measuring 11534 sq.mtr. to be agricultural not forming a capital asset in spite of the fact of having executed sale deed specifying the same as non agricultural. There is further no evidence that he declared the capital gains in question in the year of receiving sale consideration; if any. It therefore emerges that assessee s above attempts were neither bonafide mistakes nor silly ones so as to be condoned. We thus conclude that the learned CIT(A) has rightly confirmed the impugned penalty in above narrated facts of the case. - Decided against assessee.
Issues Involved:
1. Imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961. 2. Concealment of income and furnishing of inaccurate particulars. 3. Classification of land as agricultural or non-agricultural for capital gains tax. 4. Bonafide error or intentional concealment. Issue-wise Detailed Analysis: 1. Imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961: The primary issue in this case is the imposition of a penalty amounting to ?3,06,548/- on the assessee for the assessment year 2011-12. The penalty was imposed by the Assessing Officer (AO) and upheld by the Commissioner of Income Tax (Appeals) [CIT(A)] for the concealment of income and furnishing inaccurate particulars of income under Section 271(1)(c) of the Income Tax Act, 1961. 2. Concealment of income and furnishing of inaccurate particulars: The assessee filed a return declaring an income of ?10,04,760/-. However, during scrutiny, the AO discovered that the assessee had sold two pieces of land for ?87 lakhs each but failed to declare the resultant long-term capital gains (LTCG) of ?19,39,327/-. The AO initiated penalty proceedings for both concealment of income and furnishing inaccurate particulars, which the assessee did not contest. 3. Classification of land as agricultural or non-agricultural for capital gains tax: The assessee claimed that the land sold was agricultural and thus not a capital asset under Section 2(14) of the Act. However, the AO, after obtaining information from the Sub-Registrar, found that the land included non-agricultural land sold for ?62,25,300/- and agricultural land for ?23.79 lakhs. The AO concluded that the assessee had misled the department by claiming the non-agricultural land as agricultural to avoid capital gains tax. 4. Bonafide error or intentional concealment: The assessee argued that the omission was a bonafide error due to the sale consideration being received in the previous year and claimed it was a mistake. However, the CIT(A) and the Tribunal found this explanation unsatisfactory. The CIT(A) noted that the assessee failed to declare the LTCG in the return for the previous year as well. The Tribunal observed that the assessee had clearly demarcated the land as non-agricultural in the sale deed but did not disclose this in the return. The Tribunal concluded that the omission was not a bonafide mistake but an intentional act to conceal income. Conclusion: The Tribunal upheld the penalty imposed by the AO and confirmed by the CIT(A), concluding that the assessee's actions were neither bonafide mistakes nor silly errors. The appeal was dismissed, and the penalty under Section 271(1)(c) was deemed justified. The Tribunal emphasized that voluntary disclosure of concealed income does not absolve the assessee from penalty if the explanation is not satisfactory and the income was not disclosed until detected by the AO.
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