2019 (9) TMI 680 - AT - Income Tax

Penalty u/s 271(1)(c) - bonafide belief - addition was made on enhancement u/s. 251(1) of the Act for the benefit of telescoping of income/outgoings - undisclosed transactions have been admitted to be undisclosed and he was ready to pay tax on it - scope of amendment - HELD THAT - The position now is that unless and until the assessee substantiates the explanation and proves that such an explanation was bonafide, the addition made to his income shall deemed to represent the concealed income. As per the proviso to this Explanation, the onus to establish that the explanation offered was bonafide facts relating to the same and material to the computation of his income have been disclosed by him will be on the person charged for concealment. Now the entire onus is on the assessee to not only offer an explanation but also to substantiate it and to prove that the presumption was bonafide. CIT(A) has rightly observed that assessee had deliberately and intentionally not disclosed the true and correct income with the intention to evade tax to the extent of ₹ 2,28,90,500/- on account of undisclosed sale of property and bank transaction and the Assessee himself has not filed any return of income and has admitted the transaction to be undisclosed. Even otherwise, we note that the Tribunal in quantum appeal vide its order dated 06.6.2019 in assessee s own case in the same assessment year i.e. 2009-10 has upheld the action of the Ld. CIT(A) for enhancement of income. No infirmity in the impugned penalty order of the Ld. CIT(A), hence, we uphold the penalty order of the Ld. CIT(A) and reject the ground raised by the Assessee.

Issues Involved:
1. Penalty levied under Section 271(1)(c) of the Income Tax Act for concealment of income.
2. Non-disclosure of capital gains from the sale of property.
3. Non-reflection of credit entries in a bank account in the return of income.
4. Enhancement of income by the CIT(A) and subsequent penalty proceedings.

Issue-wise Detailed Analysis:

1. Penalty under Section 271(1)(c) for Concealment of Income:
The primary issue revolves around the penalty levied under Section 271(1)(c) of the Income Tax Act for the concealment of income. The CIT(A) observed that the assessee "deliberately and intentionally" did not disclose the true and correct income, aiming to evade tax. The penalty was levied because the assessee failed to file any return of income and admitted the transactions as undisclosed only when confronted with evidence. The Tribunal upheld the penalty, emphasizing that voluntary disclosure does not absolve the assessee from penalty if the disclosure is made under compulsion or after detection by the authorities.

2. Non-disclosure of Capital Gains from the Sale of Property:
The assessee sold a property to M/s Shradha Developers for ?1.90 crores but did not disclose the capital gains in the return of income. The assessee admitted to selling the property and not paying tax on the capital gains during the remand report proceedings. The Tribunal noted that the transaction was not recorded in the books of accounts, and no return of income was filed by the assessee, thus confirming the non-disclosure of capital gains.

3. Non-reflection of Credit Entries in Bank Account:
The assessee had a bank account with Surat People's Co-operative Bank Ltd., which had total credit entries of ?2.71 crores that were not reflected in the return of income. The amount included ?1.90 crores received from M/s Shradha Developers and other amounts transferred from accounts of family members. The Tribunal found that the assessee failed to provide sufficient evidence to substantiate the sources of these credits, including a cash deposit of ?24,05,500, which remained unexplained.

4. Enhancement of Income and Penalty Proceedings:
The CIT(A) enhanced the income of the assessee by ?2,28,90,500, which included ?1.90 crores from the sale of property and ?38,90,500 from undisclosed bank transactions. Penalty proceedings under Section 271(1)(c) were initiated due to the non-disclosure of these amounts. The Tribunal noted that the assessee's explanation for the undisclosed income was not bona fide and lacked substantiation. The Tribunal upheld the enhancement and the penalty, stating that the assessee's conduct showed an intention to evade tax.

In conclusion, the Tribunal dismissed the appeal of the assessee, upholding the penalty levied by the CIT(A) for concealment of income, non-disclosure of capital gains, and unexplained credit entries in the bank account. The Tribunal emphasized that voluntary disclosure after detection does not exempt the assessee from penalty under Section 271(1)(c).

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