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TMI Blog2023 (5) TMI 1109X X X X Extracts X X X X X X X X Extracts X X X X ..... hile filing the ROI before the AO. Order passed by the Ld. CIT(A) is in accordance with law as there was lack of bona fideness and voluntaryness in declaring the capital gain in the return of income and thereafter also. Decided against assessee. - ITA No.444/Hyd/2019 - - - Dated:- 25-5-2023 - Shri Rama Kanta Panda, Accountant Member AND Shri Laliet Kumar, Judicial Member For the Assessee : Shri K.A.Sai Prasad, CA For the Revenue : Shri K.P.R.R.Murthy, Sr.AR ORDER PER SHRI LALIET KUMAR, JM. This appeal filed by the assessee is directed against the order dated 28.02.2019 of Learned Commissioner of Income Tax (Appeals), Tirupati relating to AY 2014-15. 2. The assessee raised the following grounds of appeal: 1. The penalty order u/s. 271(1)(c) passed by the learned Commissioner of Income tax (Appeals), in the facts and circumstances, is not justified both on facts and in law. 2. The learned Commissioner of Income tax (Appeals), in the facts and circumstances of the case, is not justified in initiating penalty proceedings u/s. 271(1)(c) of the Income-tax Act, 1961 3. The learned Commissioner of Income tax (Appeals), in the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime of JDA is not justifiable. While passing the exparte assessment order the AO has taken the proportionate of land as cost or acquisition for deriving the capital gains which is not justifiable. In detail, it is to submit that the appellant along with the other has given their total land of 6933 sq.ft, to the Developer on JDA for construction of Flats and divisible in 60%-40% sharing ratio. As per the assessment order, the AO's contention is the landlords have received back 40% of flats which includes undivided share of land [2772sq.ft] and hence this is not available as cost of acquisition for calculating the Capital Gains. In this connection, it is to submit that if the total land is not given for development, the entire apartment building could not be constructed by the developers and the undivided share of land pertaining to the landowners are not identifiable and inseparable from the flats received by them. in other words, the landowners cannot retain the undivided share of land and sell the flats to the third parties. This undivided share of land may pertain to common area such as the land occupied by lifts, stair case, walking path within the compound etc. On the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents 21,90,000 Cost of acquisition as per JDA as adopted by Assessing Officer 17,08,672 4,81,328 Total short term capital gains 37,20,328 However, the indexation benefit shall be made available to the appellant as per the law. The Assessing Officer is directed to recompute the capital gains as directed above and enhance the assessable income accordingly. 5.4 Penalty proceedings are initiated separately u/s.271(1)( c) read with explanation 1 of the I.T.Act for concealment of income of Rs.32,39,000/- 5. The assessee was given the show cause notice for imposition of penalty on 16 August 2018. The assessee had filed the reply to the said show cause notice and requested for dropping the penalty proceedings against the assessee. The lower authority after considering the reply of the assessee, in the detail ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of computation sheet furnished, while disposing the appeal for AY 2013-14, enhancement notice has been given. Hence, the details of capital gains was worked out and submitted voluntarily and finally consented for enhancement with an intention to purchase peace. Hence, requested to drop the proceedings. The assessee mainly contended that he has not concealed the particulars of income and voluntarily consented for enhancement though possession was not given to the developer as per the clauses. The contention of the assessee is strange. Without giving possession to the developer, how come the assessee got super built up area and sold two flats out of the same and also offered short term capital gains for AY 2014-15. This itself shows the hollowness in the arguments of the assessee that no possession was given to the builder/ developer. As per Explanation 1 of Sec.271 (1 )(c) of the Act, penalty is leviable. Explanation 1 is as under: '[Explanation 1.-Where in respect of any facts material to the computation of the total income of any person under this Act,- (A) such person fails to offer an explanation or offers an explanation which is found by the [Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itially raised/ assessed the capital gains on account of JDA registration in the AY 2014-15 in view of various Clauses of the agreement. Hence, it was contended that capital gain is not liable for taxation in the AY 2014-15 and the concealment of income was not established. In this connection, on perusal of the assessment order, it is noticed that the AO considered supplementary agreements and brought certain amounts to tax in the said AY and nowhere the clauses of the agreement as claimed by the assessee were discussed. The assessee has not furnished the required details to compute capital gains on transfer of the land to the developer. The concealment of Income was established beyond doubt in the appellate proceedings. Vide letter filed on 27.2.2019, the assessee contended that all the material I documents were furnished before the AO at the time of assessment for the AY 2014-15. The AO called for the details for examining the claim of shortage of capital gains of the assessee for the AY and the assessee has not furnished the details required for computing capital gains on the transfer of land. During the appellate proceedings for the AY 2014-15, enhancement notice was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is distinction between concealment of particulars of income and furnishing of inaccurate particulars of income. It 's necessary to understand the distinction between the two charges on the basis of which penalty can be levied i.e (1) concealment of particulars of income and (2) furnishing of inaccurate particulars of income. It is the particulars of income which is the common subject matter of both the charges which will be discussed later. The word 'conceal' as per Webster's Dictionary means to hide, withdraw, or remove from observation; cover or keep ,from sight; to keep secret; to avoid disclosing or divulging. That means non disclosure of particulars of income. On the other hand, where particulars are disclosed but such disclosure is not correct, true or accurate, it would amount to furnishing of inaccurate particulars of income. For example, in case of businessman, if a particular transaction of sale is not shown in the books, it would amount to concealment of particulars of income while Sale is shown but at a lesser value, it would amount to furnishing of inaccurate particulars of income. It is pertinent to note that thrust of the legislature is upon the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olved from penalty. Reliance is also placed on the decision of the Hon'ble High Court of Madras in the case of Khandelwal Steel Tube Traders (256 taxman'305) for the proposition that Department is not precluded from initiating penalty proceedings even when assessee agreed for the addition with a condition that penalty could not be imposed. In view of this, the assessee's claim that he has disclosed material facts cannot be accepted. Moreover, as discussed above, the assessee has not filed the details of JDA with return of income for the AY 2014-15. In view of this also, it cannot be held that he has furnished information required for assessment. The income particulars were concealed and not disclosed to the Department. Moreover, as the explanation submitted by the assessee is not substantiated, the same is attracted the provisions of Explanation 1 to Sec.271(1)(c) of the Act. The penalty proceedings were initiated on the charge of concealment of income and the concealment was established. As per the provisions of the said section, the minimum penalty leviable is 100% tax sought to be evaded i.e., Rs. 9,84,798/- and maximum penalty leviable is 300% of the tax soug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to him on account of the JDA in ROI/assessment proceedings. In fact as rightly pointed out by the Ld.DR that the assessee has not disclosed the capital gain in any of the two assessment years. The Hon ble Supreme Court in the case of Balbir Singh Maini(supra) has held that the date of registration of JDA would be relevant for the purpose of determining as to when the capital gain was earned by the assessee. In the present case admittedly the capital gain was chargeable to tax for the assessment year 2014-15 being the year of registration of JDA and therefore the assessee was duty-bound to disclose the capital gain in this assessment year. Having failed to disclose the capital gain in the assessment year and filing the return of income disclosing capital gain and paying the due taxes, the Ld. CIT(A) had issued the enhancement notice to assessee. The additions were admitted by the assessee and thereafter the ld.CIT(A) had made the addition in the hands of the assessee. The disclosure of the capital gain at the appellate stage, was thus not voluntary as the said admission of capital gain only happened after receipt of the enhancement notice from the office of the CIT(A). Thus, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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