2014 (3) TMI 17 - AT - Income Tax

Penalty u/s 271(1)(c) of the Act Inaccurate particulars furnished - Held that - The conduct of the assessee demonstrates conscious disregard to his obligation - Payment of resultant taxes, consequent to survey and detection by the Department of the tax liability, does not absolve the assessee from the penal consequences u/s 271(1)(c) of the Act - Assessee has not been filing returns of income since 2002-03, and consequent upon on the survey action on the business premises of the assessee, when the development agreement in question was found, notice u/s 148 was issued to the assessee - assessee has not disclosed the capital gains arising on the transfer of the undivided share of land belong to the assessee - though the exemption u/s 54F has been claimed - the contentions of the assessee as to the debatable nature of taxability of the capital gains in respect of undivided share of land in the year under appeal, as also debatable nature of the computation of exemption under S.54F of the Act, has to be considered as mere afterthoughts. The plea of bona fide view nursed by the assessee about the non-taxability in the year of signing the development agreement also stands defeated in view of the contention as to the existence of two views on these issues - the assessee during the penalty proceedings before the assessing officer has given entirely different reason for the default committed by him, clearly shows that did not come out clean with all the facts and particulars of the income even in the return filed in response to notice u/s 148 of the Income-tax Act, or in the assessment proceedings thereafter, which shows that the assessee has deliberately tried to evade tax on capital gains - It was a clear cut case of concealment by the assessee to evade tax the penalty levied by the CIT(A) is upheld Decided against Assessee.

Issues Involved:
1. Confirmation of penalty under Section 271(1)(c) for concealment of income.
2. Non-filing of returns and non-payment of taxes.
3. Assessment of capital gains on the transfer of undivided share of land.
4. Bona fide belief and debatable nature of taxability.
5. Claim for relief under Section 54F.

Detailed Analysis:

1. Confirmation of Penalty under Section 271(1)(c) for Concealment of Income:
The appeal was filed by the assessee against the confirmation of a penalty of Rs. 16,65,027 under Section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 2006-2007. The penalty was imposed for furnishing inaccurate particulars which resulted in the concealment of income.

2. Non-Filing of Returns and Non-Payment of Taxes:
The assessee, deriving income from various sources including salary and capital gains, had not filed returns since the assessment year 2002-03. A survey conducted under Section 133A revealed the non-filing and led to the discovery of a development agreement entered into by the assessee. The assessee admitted capital gains from the sale of one apartment but failed to declare gains from the transfer of undivided land share. The assessment determined a total income significantly higher than what was initially declared by the assessee.

3. Assessment of Capital Gains on the Transfer of Undivided Share of Land:
During the assessment, it was found that the assessee did not declare capital gains arising from the transfer of an undivided share of land in exchange for built-up area. The assessing officer added the capital gains to the income, which the assessee did not contest, making the addition final. Penalty proceedings were initiated for furnishing inaccurate particulars, leading to the concealment of income.

4. Bona Fide Belief and Debatable Nature of Taxability:
The assessee argued that the non-filing was due to the misplacement of crucial documents needed to calculate capital gains. The assessee also claimed a bona fide belief that no capital gains tax was due at the time of the development agreement due to conflicting judicial decisions. However, the assessing officer and CIT(A) found these explanations to be unconvincing and inconsistent. The CIT(A) noted that the assessee did not disclose the capital gains even in the return filed in response to the notice under Section 148, indicating a deliberate attempt to evade tax.

5. Claim for Relief under Section 54F:
The assessee claimed relief under Section 54F only for one flat despite using two, based on the assessing officer's advice. The assessing officer and CIT(A) found this claim to be baseless and noted that the assessee's cooperation during the assessment did not absolve the concealment of income.

Conclusion:
The Tribunal upheld the penalty, agreeing with the CIT(A) that the assessee had deliberately tried to evade tax on capital gains. The Tribunal noted that the assessee's arguments about the debatable nature of the taxability of capital gains and the claim under Section 54F were mere afterthoughts and not supported by evidence. The appeal was dismissed, and the penalty order was confirmed.

Order Pronounced:
The appeal of the assessee was dismissed on 10.1.2014.

← Previous Next →