2018 (11) TMI 1245 - AT - Income Tax

Penalty u/s 271(1)(c) - suppression of Long term Capital gain arising from the sale of the subject property by understating the consideration received - Held that - We are unable to comprehend that now when the assessee on the one hand had acknowledged receipt of an amount of ₹ 7,00,00,000/- vide nine account payee cheques drawn on Union Bank Of India, Oshiwara Branch, from the aforesaid purchasers, than how a claim raised by her to the contrary that she had only received an amount of ₹ 6,25,00,000/- would survive. We are of the considered view that as the explanation of the assessee which clearly militates against the material available on record is found to be false, thus the CIT(A) had rightly sustained the penalty imposed by the A.O under Sec. 271(1)(c) for suppression by the assessee of the long term capital gain arising from the transfer of her leasehold rights in the subject property. We thus, finding no infirmity in the order of the CIT(A) sustaining the penalty imposed by the A.O under Sec. 271(1)(c) of the Act, uphold the same. - decided against assessee.

Issues Involved:
1. Assessment of Long Term Capital Gains (LTCG)
2. Levy of Penalty under Section 271(1)(c) of the Income Tax Act, 1961
3. Validity of Jurisdiction for Imposing Penalty

Issue-Wise Detailed Analysis:

1. Assessment of Long Term Capital Gains (LTCG):
The primary issue pertains to the assessment of LTCG arising from the transfer of residuary rights in a property. The assessee claimed that the capital asset transferred was the residuary right, title, and interest in the immovable property received as a gift. The Assessing Officer (A.O.) observed that the assessee sold the property for ?7,00,00,000 but computed the LTCG by adopting the sale consideration at ?6,25,00,000, arguing that ?75,00,000 had been received earlier by her mother and offered for tax. However, the assessee failed to provide documentary evidence to support this claim. Consequently, the A.O. reworked the LTCG at ?1,28,92,569 and initiated penalty proceedings under Section 271(1)(c).

2. Levy of Penalty under Section 271(1)(c) of the Income Tax Act, 1961:
The A.O. imposed a penalty under Section 271(1)(c) for furnishing inaccurate particulars of income and concealing income. The assessee contended that the penalty was unwarranted as she computed the LTCG based on a bona fide belief that the sale consideration was ?6,25,00,000. The CIT(A) upheld the penalty, and the Tribunal found that the assessee's explanation was not substantiated by evidence. The Tribunal noted that the assessee acknowledged the receipt of ?7,00,00,000 in the deed of conveyance, contradicting her claim of receiving only ?6,25,00,000. Thus, the penalty was rightly sustained for suppression of LTCG.

3. Validity of Jurisdiction for Imposing Penalty:
The assessee challenged the validity of the jurisdiction assumed by the A.O. for imposing the penalty, arguing that the "Show Cause" notice did not specify the default for which the penalty was sought. The Tribunal noted that this issue was raised for the first time and was not a specific ground of appeal. The Tribunal referred to Rule 11 of the Appellate Tribunal Rules, 1963, which requires specific grounds to be set forth in the memorandum of appeal. Additionally, the assessee did not provide complete facts, including the subsequent "Show Cause" notice issued by the A.O. Therefore, the Tribunal refrained from adjudicating this issue.

Conclusion:
The Tribunal dismissed the appeal, upholding the penalty of ?16,99,500 imposed under Section 271(1)(c) for suppression of LTCG. The Tribunal found no infirmity in the CIT(A)'s order and concluded that the assessee's explanation was false and contradicted by the material on record. The validity of jurisdiction for imposing the penalty was not adjudicated due to the lack of specific grounds and complete facts.

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