2022 (4) TMI 666 - AT - Income Tax

Penalty u/s 271(1)(C) - Unexplained Expenditure on Stamp Duty and Registration Charges made out of Undisclosed Income - HELD THAT - The word conceal refers to the deliberate act on the part of the assessee. In the light of the above discussion and on analyzing the present facts of the case we note that undeniably the impugned cost was incurred towards the purchase of the land which were duly disclosed in the income tax return. Likewise, all the relevant property papers were duly filed by the assessee during the assessment proceedings which contains the details of the registration and stamp duty charges. The expenses which are in dispute for the imposition of the penalty have direct nexus with the cost of the properties purchased by the assessee which were duly disclosed. Thus it is transpired that there was no malafide intent on the part of the assessee to conceal the particulars of stamp duty and registration charges as the information for the same was available in the public domain which is directly connected with the purchase of disclosed properties. Since the purchases of properties have been disclosed in the income tax return, it cannot be inferred that the assessee had no mala-fide intent in not disclosing the connected expenses being stamp duty and registration charges. There was no dishonest intent of the assessee particularly in the given facts and circumstances where the assessee had sufficient income i.e. exceeding the amount invested in purchases of properties. Accordingly, we are of the view that the assessee inadvertently omitted to disclose the impugned cost in the income tax return without having any dishonest intent. Thus in such facts and circumstances, we hold that the penalty u/s 271(1)(c) of the Act, is not sustainable. - Decided in favour of assessee.

Summary

Issues:
- Appeal against penalty order under section 271(1)(c) of the Income Tax Act, 1961 for Assessment Year 2015-16.

Detailed Analysis:

1. Grounds of Appeal by Assessee:
- Assessee contested penalty under section 271(1)(c) for Unexplained Expenditure on Stamp Duty and Registration Charges, despite providing evidence during assessment proceedings.
- Argued lack of malicious intent as all documents were submitted voluntarily.

2. Issue Raised by Assessee:
- Assessee challenged the confirmation of penalty by CIT(A) for concealing income related to stamp duty and registration charges.

3. Facts and Assessment:
- Assessee, an individual, declared income from various sources but failed to explain expenditure on stamp duty and registration charges for agricultural lands.
- AO proposed addition of the expenditure, to which the assessee agreed, leading to penalty proceedings under section 271(1)(c).
- Assessee's non-response to show cause notice led AO to conclude concealment of income and impose penalty.

4. Arguments Before CIT(A):
- Assessee explained the omission of expenses in tax return as inadvertent, with no intention to conceal.
- CIT(A) upheld penalty citing the agreed addition of expenditure as evidence of concealment.

5. Appellate Tribunal Decision:
- Tribunal analyzed the deliberate act of concealment and found disclosed property purchases related to disputed expenses.
- Noted all relevant documents were submitted during assessment, indicating no malicious intent.
- Concluded no dishonest intent in omitting expenses from tax return, as they were directly linked to disclosed property purchases.
- Tribunal held penalty under section 271(1)(c) not sustainable, directing AO to delete the penalty.

6. Outcome:
- The appeal by the assessee was allowed, and the penalty was set aside by the Tribunal.

This detailed analysis of the legal judgment highlights the grounds of appeal, issues raised, facts of the case, arguments presented, and the ultimate decision of the Appellate Tribunal in favor of the assessee, emphasizing the lack of dishonest intent in omitting expenses from the tax return.