2016 (4) TMI 851 - AT - Income Tax

Penalty u/s 271(1)(c) - unexplained investment under section 69 - Held that - From the facts of the case it is apparent that the assessee has agreed to purchase the land at ₹ 1,28,86,000/- as per sale agreement dated 15.03.2004. Subsequently, in the sale deed only ₹ 49,53,978/- is mentioned as the sale consideration. The assessee has explained before the Revenue that the difference between the amount ie., as per the sale agreement and the registered deed, was due to certain considerations for future commitments such as to assist the assessee in purchasing additional land adjacent to the land purchased. It was further explained that, since the vendors failed to carry out their commitments, no additional amount was paid. We do not find this reason submitted by the assessee to be genuine which is neither based on any evidence or admissions of the vendors. Hence, we do not find any merit in the order of the learned Commissioner of Income Tax (Appeals) for deleting the penalty. It is apparent from the transaction that the assessee has paid on-money of ₹ 79,32,020/-. The assessee has not come out with any reasonable explanation with cogent evidence to prove his case otherwise. Hence, it is evident from the transaction that additional investment made by the assessee amounting to ₹ 79,32,020/- has been concealed in the return of income filed by the assessee. Therefore, we hereby reinstate the order of the learned Assessing Officer by confirming the penalty levied by him and thereby set aside the order of the learned Commissioner Of Income Tax(Appeals).- Decided against assessee.

Summary

Issues:
- Appeal against deletion of penalty under section 271(1)(c) of the Act by the Commissioner of Income Tax (Appeals).

Detailed Analysis:
1. Background: The appeal was filed by the Revenue against the deletion of a penalty of Rs. 29,02,524/- imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act. The case involved the concealment of income related to an unaccounted investment in an agricultural land by the assessee.

2. Revenue's Grounds: The Revenue contended that the Commissioner of Income Tax (Appeals) erred in deleting the penalty. They argued that the assessee had agreed to pay Rs. 1,28,86,000/- as per a sale agreement, but only Rs. 49,53,978/- was mentioned in the registered sale deed. The Revenue claimed that this difference indicated undisclosed investment by the assessee.

3. Arguments Before ITAT: The Revenue representative highlighted the apparent undisclosed investment by the assessee based on the sale agreement and the registered deed. On the other hand, the Authorized Representative supported the Commissioner's order, emphasizing the explanations provided by the assessee.

4. ITAT Decision: After considering the submissions and evidence, the ITAT found that the explanation provided by the assessee for the difference in amounts was not supported by sufficient evidence or vendor admissions. The ITAT concluded that the assessee had indeed made an additional investment of Rs. 79,32,020/- beyond what was disclosed in the return of income. Therefore, the ITAT reinstated the penalty imposed by the Assessing Officer, setting aside the Commissioner's order.

5. Legal Analysis: The ITAT's decision was based on the lack of credible evidence supporting the assessee's explanation for the undisclosed investment. The ITAT emphasized the need for cogent evidence to substantiate claims in tax matters, especially regarding unaccounted investments. The decision reaffirmed the importance of proving transactions and income sources to avoid penalties for concealment or inaccurate reporting.

6. Conclusion: The ITAT allowed the Revenue's appeal, reinstating the penalty under section 271(1)(c) of the Act. The judgment highlighted the significance of providing verifiable evidence in tax cases to support claims and avoid penalties for concealment of income.