2019 (6) TMI 927 - AT - Income Tax

Levy of penalty U/s 271(1)(c) - additions inter alia on account of undisclosed sale consideration received in cash - HELD THAT - As regards the non disclosure of the sale consideration received in cash, we find that the assessee has admitted the non disclosure of the same in the return of the income and it was detected by the AO only during the course of assessment proceedings and inquiry conducted by the AO. Therefore, the addition made by the AO on account of sale consideration received in cash which is subject matter of the appeal before us is clearly a case of concealment of particulars of income. Hence, at the time of recording the satisfaction the AO has clearly set out of the charges of major disallowance in respect of claim of deduction U/s 54B 54F which falls in the category of furnishing of inaccurate particulars of income. So far as the satisfaction recorded by the AO in view of Section 271(1B) once the AO has clearly recorded the satisfaction in the assessment order the same shall be deemed to constitute a satisfaction for initiation of penalty proceeding under clause (c) of Section 271(1). Hence, so far as the satisfaction of record by the AO in the assessment order there is no infirmity. As regards the certainty of charge since the penalty was initiated in respect of all three additions made by the AO out of which some additions fall in the category of furnishing of inaccurate particulars of income and other one which is the subject matter of the proceeding before us falls in the category of concealment of particulars of income. Therefore, the question of definite charge being furnishing of inaccurate particulars of income or concealment of particulars of income does not arise. It is a case of default on the part of the assessee falling under both limbs. In the penalty order U/s 271(1)(c) the AO has clearly made out in a case in para 3 by holding that the non disclosure of sale consideration of ₹ 59,04,000/- received in cash is clearly concealment on the part of the assessee. The AO has levied the penalty in respect of all additions on which both the limbs were attracted then we do not see any error or illegality in the order passed by the AO U/s 271(1)(c). The decision relied upon the ld. AR will not help the case of the assessee. As regards the alternate plea of the assessee that is a bonafide mistake, we find that the sale consideration in cash cannot be detected from the sale documents until and unless the assessee who was knowing a true facts disclosed the same to his tax consultant for the purpose of computing the capital gain. It is not the case of the assessee that the assessee has brought this fact to the knowledge of the tax consultant therefore, simply handing over the sale deed to the tax consultant would not discharge the assessee of his obligation to disclose the true and correct fact for the purpose of filing the return of income. Accordingly, we do not find any merit or substance in this plea of the ld. AR. Hence, the impugned order of the ld. CIT(A) sustaining the penalty levied U/s 271(1)(c) is upheld. Disallowance made U/s 54B 54F - HELD THAT - We find once the addition itself was detected and the order of this Tribunal was confirmed by the Hon ble High Court then there is no need to file the appeal against the deletion of penalty by the ld. CIT(A) as in case the Revenue succeed before the Hon ble Supreme Court in the quantum proceedings the penalty proceeding can again be initiated accordingly, the appeal of the Revenue s is dismissed.

Summary

Issues Involved:
1. Legality of the order passed under Section 271(1)(c) of the Income Tax Act, 1961.
2. Levy of penalty under Section 271(1)(c) with reference to an undisclosed sale consideration received in cash.
3. Deletion of penalty on account of disallowance made under Sections 54B and 54F of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Legality of the Order Passed Under Section 271(1)(c) of the Income Tax Act, 1961:
The assessee contested the legality of the order passed under Section 271(1)(c), arguing that it was illegal and bad in law. The assessee, an individual, jointly sold agricultural land with his brother and filed a return declaring long-term capital gain. The Assessing Officer (AO) completed the assessment by making additions, including an undisclosed sale consideration received in cash. The penalty proceedings were initiated under Section 271(1)(c) for furnishing inaccurate particulars of income and concealment of income. The Tribunal found that the AO had recorded satisfaction for initiating penalty proceedings and that the satisfaction recorded in the assessment order constituted a valid basis for the penalty proceedings under Section 271(1)(c).

2. Levy of Penalty Under Section 271(1)(c) with Reference to an Undisclosed Sale Consideration Received in Cash:
The core issue was the levy of penalty concerning an undisclosed sale consideration of ?59,04,000 received in cash. The assessee admitted the receipt of cash during the assessment proceedings but claimed it was a bona fide mistake due to the tax consultant's oversight. The AO, however, treated this as concealment of income. The Tribunal upheld the AO's decision, noting that the assessee had failed to disclose the cash receipt in the return of income and that it was detected only during the assessment proceedings. The Tribunal concluded that this constituted concealment of particulars of income, justifying the penalty under Section 271(1)(c).

3. Deletion of Penalty on Account of Disallowance Made Under Sections 54B and 54F of the Income Tax Act, 1961:
The Revenue challenged the deletion of penalty related to disallowance under Sections 54B and 54F. The CIT(A) had deleted the penalty because the additions were already deleted by the Tribunal and upheld by the High Court. The Tribunal noted that the Revenue's appeal was filed to keep the issue alive until the Supreme Court decided the quantum appeal. However, the Tribunal dismissed the Revenue's appeal, stating that once the addition was deleted and confirmed by the High Court, there was no need to file an appeal against the deletion of penalty. The Tribunal suggested that if the Revenue succeeded in the quantum proceedings before the Supreme Court, the penalty proceedings could be initiated again.

Conclusion:
The Tribunal upheld the penalty levied under Section 271(1)(c) for the undisclosed sale consideration received in cash, affirming the AO's finding of concealment of income. The Tribunal also dismissed the Revenue's appeal concerning the deletion of penalty under Sections 54B and 54F, noting that the addition had already been deleted and confirmed by the High Court. The appeals of both the assessee and the Revenue were dismissed.