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2015 (1) TMI 1308 - AT - Income TaxPenalty u/s 271 - contention of the assessee that there was no mala fide intention on the part of the assessee to justify the levy of penalty - Held that:- It is now settled principle that penalty u/s. 271(1)(c) of the Act is a civil liability and mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities and willful concealment is not an essential ingredient for attracting civil liability. In the case of CIT V Manjunatha Cotton & Ginning Factory (2013 (7) TMI 620 - KARNATAKA HIGH COURT ), cited by the assessee, it has been held that willful concealment is not an essential ingredient for attracting penalty u/s. 271(1)(c) of the Act. This view of the matter, this ground of appeal is not sustainable and is accordingly dismissed. Penalty on cost of improvement - whether the failure to discharge the onus of proving the claim of expenditure being incurred would entail levy of penalty u/s. 271(1)(c) - Held that:- The levy of penalty has its origin in the return of income filed by the assessee and the inability of the assessee to furnish evidence to support the claim made in the return of income and which has no relation whatsoever to any agreement between revenue and the assessee on this point. In the case on hand, the penalty has not been levied because the addition was an agreed addition but because the assessee could not furnish any evidence to substantiate its claim of having incurred the expenditure, thus we are of the considered view that the decision of the learned CIT(A) in confirming the levy of penalty u/s.271(1)(c) of the Act on this point does not call for any interference by us. Penalty levied with respect to the disallowance of the claim of exemption under section 54B - Held that:- It is not in dispute that the assessee had not been able to furnish any evidence to substantiate the claim of reinvestment to the extent of ₹ 3,68,14,038 made by him. We find that the disallowance of ₹ 3,68,14,038 was made only because the assessee could not substantiate the claim of reinvestment by producing any material evidence in this regard. The contention that the assessee is unable to produce any evidence because of litigation in the property is hard to accept. As pointed out by the Assessing Officer and the learned CIT (Appeals), the assessee could not furnish any details at all. In the absence of a shred of evidence, it is not possible to accept the contentions of the assessee on the claim of making reinvestment to the extent of ₹ 3,68,14,038. From the above factual matrix, it is amply clear that the assessee has failed to discharge the onus on him to establish with material evidence the claim of having incurred the expenditure on reinvestment. Interest on repayment of Housing Loan - Held that:- It is not in dispute that the claim for deduction on account of interest on housing loan made in the return of income was admittedly erroneous and this erroneous claim was detected by the Assessing Officer in the course of assessment proceedings. For the reasons discussed and the reasoning given earlier in this order, while dealing the earlier grounds of appeal (supra), the levy of penalty u/s. 271(1)(c) of the Act on this issue is justified. Assessment of income from layout formation as ‘income from business - Held that:- In the case on hand, the assessee's decision to declare the income from layout formation in the return of income filed on 30.6.2008 as ‘income from capital gain’ was a conscious one. The assessee has not been able to furnish any explanation, supported by material evidence, for the same and therefore, in our view, has not been able to rebut the presumption of concealment. In this view of the matter, we are of the considered opinion that the learned CIT (Appeals) was correct in upholding the action of the Assessing Officer in levying penalty u/s.271(1)(c) of the Act. As regards the issue of the quantum of income to be considered for levy of penalty u/s. 271(1)(c) of the Act, in our view, the Assessing Officer is wrong in considering the entire assessed income for levy of penalty. The only issue of dispute is the income from Singapore Layout formation; whether the income is to be assessed as ‘business income’ or ‘income from capital gain’ and which was only declared in the belated return of income filed on 30.6.2008 after the survey action on 1.2.2008; when actually return of income for Assessment Year 2007-08 was due by 31.7.2007 Therefore, in our view, it is not appropriate for the Assessing Officer to have considered the entire income, which included income from other activities, as concealed income, as there was no dispute with respect to those items of income declared. Thus the penalty leviable u/s.271(1)(c) of the Act should be on the assessed income, as reduced by commission income and other income, if any, declared in the return of income in respect of which there is no dispute. The Assessing Officer is directed accordingly.
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