2019 (9) TMI 482 - AT - Income Tax

Penalty u/s 271(1)(c) - capital gains earned by the assessee on the sale of property - non-disclosure of the second sale deed - HELD THAT - We not convinced with the arguments that the assessee inadvertently failed to disclose the second sale deed in the return of income. There is no plausible explanation offered by the assessee in this respect. Had the AO not got the information from Departmental sources the assessee would have left un-assessed in respect of the second sale deed and thereby evasion of due taxes. So far as the contention that section 50C of the Act is deeming provision that the penalty should not be levied on the difference of amount of actual receipt of consideration and that has been assessed u/s 50C of the Act the assessee deserves relief on this issue. There is no evidence on the file that the assessee has received any amount more than that has been mentioned in the sale deed itself. The assessee has to pay extra taxes because of the valuation adopted by the Assessing officer as per the provisions of section 50C of the Act. However this in my view cannot be said to be a case of concealment of particulars of income or furnishing of inaccurate particulars of income. Though as pointed out by the Ld. DR the assessee to escape the rigour of the penalty in the revised return filed u/s 148 of the Act has shown the capital gains as equivalent at the collectorate rate and also put a claim of exemption u/s 54F of the Act but could not succeed in this respect - interest of justice will be best served if the penalty is restricted to the extent of non-disclosure of the second sale deed to be calculated @100% of the tax sought to be evaded on the capital gains computed as per the actual sale price mentioned in the sale deed. Appeal of the assessee is treated as partly allowed.

Summary

Issues Involved:
Penalty under section 271(1)(c) of the Income-tax Act for concealment of income and furnishing inaccurate particulars.

Detailed Analysis:

1. Issue: Concealment of Income
The assessee sold a plot of land through two sale deeds but declared only one in the return of income. The Assessing officer reopened the assessment and found discrepancies in the declared capital gains. Penalty proceedings were initiated under section 271(1)(c) for concealment of income. The assessee argued that there was no intentional concealment and that the second sale deed was inadvertently not disclosed. The Assessing officer imposed a penalty at 100% of the tax sought to be evaded. The assessee contended that the penalty should not be levied as the actual amount received was not more than the sale deed amount, despite later admitting to the revised return. The Tribunal held that there was no plausible explanation for not disclosing the second sale deed, which could have led to unassessed income and tax evasion. However, considering the overall circumstances, the penalty was restricted to non-disclosure of the second sale deed.

2. Issue: Furnishing Inaccurate Particulars
The Assessing officer assessed the capital gains based on the Collector rate due to discrepancies in the declared sale price. The assessee argued that the valuation under section 50C should not lead to penalty as no additional amount was received beyond the sale deed value. The Tribunal agreed that the valuation method under section 50C did not amount to concealment or furnishing inaccurate particulars. The penalty was restricted to the non-disclosure of the second sale deed, calculated at 100% of the tax sought to be evaded based on the actual sale price mentioned in the deed.

Conclusion:
The Tribunal partially allowed the appeal, restricting the penalty to the non-disclosure of the second sale deed. The decision highlighted the importance of disclosing all relevant information to avoid tax evasion penalties, even when valuation methods differ. The judgment emphasized the need for accurate reporting and compliance with tax laws to avoid penalties for concealment or inaccuracies in income disclosure.