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2017 (9) TMI 1147 - AT - Income TaxPenalty u/s 271(1)(c) - willful evasion of tax by not furnishing accurate particulars of income - assessee did not declare the said income arising out of deemed capital gains u/s 54F(3) on the date of search also before the search party - Held that - The assessee had filed revised return of income on 22-12-2009 wherein declaration of said deemed capital gains u/s 54F(3) was made and the AO thereafter framed an assessment bringing to tax income declared in the revised return of income. It is not the case where the AO has made any additions which is not qua incriminating material but it is the assessee which when cornered by Revenue filed revised return of income declared and offered for tax deemed capital gains u/s 54F(3). The bank statements wherein the said deemed capital gains of 1, 03, 44, 000/- was found credited is itself an incriminating material which justifies the chargeability to tax of the said income which was not earlier disclosed to the Revenue. This contention of the assessee is therefore, rejected. A feeble attempt is made to contend that the said amount which was advanced to Neelkanth Mansion Private Limited was in the nature of loan and advances and hence Section 54F(3) is not applicable is a self destructible contention and is not acceptable. The assessee had in AY 2002-03 claimed exemption of 1, 03, 44, 000/- u/s 54F on account of investments made in the booking of flats bearing No. 1301 1302 1401 and 1402 at Dhawalgiri Building from Neelkanth Mansion Private Limited and claimed exemption u/s 54F of the Act of 1, 03, 44, 000/- for AY 2002-03 which was allowed by Revenue and now to contend that the said exemption was falsely and incorrectly claimed by filing incorrect return of income and fraud was perpetuated on Revenue by the assessee cannot be accepted. The assessee cannot be allowed to blow hot and cold. It is well settled that mere reflection in the account books of certain amounts in a particular manner is not decisive of the character of income of the assessee which is to be brought to tax in accordance with the provisions and mandate of the 1961 Act. Thus mere reflection of the amount as loans and advances in the books will not change the character of booking of flat made by the assessee which was earlier accepted by Revenue also to be investment made in booking of flats bearing No. 1301 1302 1401 and 1402 at Dhawalgiri Building from Neelkanth Mansion Private Limited. This contention of the assessee stood rejected. Thus we set aside the appellate order of learned CIT(A) and uphold the order of the AO levying penalty u/s 271(1)(c) of the 1961 Act for the details reasons and discussions above. - Decided against assessee.
Issues Involved:
1. Whether the assessee willfully evaded tax by not furnishing accurate particulars of income. 2. Whether the penalty under Section 271(1)(c) of the Income-tax Act, 1961, is justified. Issue-wise Detailed Analysis: 1. Willful Evasion of Tax by Not Furnishing Accurate Particulars of Income: The Revenue argued that the assessee willfully evaded tax by not declaring deemed capital gains of ?1,03,44,000/- under Section 54F(3) of the Income-tax Act, 1961, which arose from the cancellation of a flat booking within three years. The assessee had initially filed a return of income under Section 139(1) on 25-08-2005, declaring an income of ?15,90,638/-, which did not include the deemed capital gains. Even after a search and seizure action under Section 132(1) on 17-01-2008 and subsequent notice under Section 153A, the assessee did not declare the deemed capital gains in the return filed on 10-10-2008. It was only at the fag end of the assessment proceedings that the assessee filed a revised return on 22-12-2009, declaring the deemed capital gains, claiming it was a voluntary disclosure. 2. Justification of Penalty Under Section 271(1)(c): The Assessing Officer (AO) initiated penalty proceedings under Section 271(1)(c) for furnishing inaccurate particulars of income and concealing income. The AO observed that the assessee's omission to declare the deemed capital gains was deliberate and intentional. The AO rejected the assessee's contention that the revised return was voluntary and bona fide, noting that the revised return was filed only after the AO had detected the omission during the scrutiny proceedings. The AO imposed a penalty of ?23,21,194/-, being 100% of the tax sought to be avoided. The Commissioner of Income Tax (Appeals) [CIT(A)] initially deleted the penalty, accepting the assessee's claim that the revised return was a voluntary disclosure. The CIT(A) also observed that the addition was not based on any incriminating material found during the search, and the assessment was an unabated assessment as no assessment was pending on the date of the search. However, the Income Tax Appellate Tribunal (ITAT) overturned the CIT(A)'s decision, holding that the assessee's disclosure was not voluntary but was made under compulsion when cornered by the AO. The ITAT noted that the assessee had multiple opportunities to declare the deemed capital gains but chose not to do so until the AO detected the omission. The ITAT also rejected the assessee's argument that no addition could be made in the absence of incriminating material, stating that the bank statements reflecting the refund from the builder were themselves incriminating material. The ITAT concluded that the assessee's conduct was not bona fide and upheld the penalty under Section 271(1)(c), emphasizing that the assessee's actions were deliberate and aimed at evading tax. The ITAT's decision was based on the principle that mere filing of a revised return does not absolve the assessee from the presumption of concealment of income in the original return. Conclusion: The ITAT allowed the Revenue's appeal, reinstating the penalty of ?23,21,194/- under Section 271(1)(c) for willful evasion of tax by not furnishing accurate particulars of income. The ITAT's judgment emphasized the importance of truthful and timely disclosure of income by the assessee and highlighted that revised returns filed under compulsion do not negate the intent to evade tax.
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