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2016 (9) TMI 442 - AT - Income TaxPenalty u/s 271(1)(c) - default in declaring the income - whether income is not assessable in the hands of assessee in his individual capacity at the first place and is rightly assessable in the hands of different person i.e. AOP? - Held that:- plea of the assessee that the bank statement were given to the chartered accountant and he failed to offer the impugned income is too vague and bald to be assigned any acceptance. The bounden duty of assessee to furnish true and correct particulars of income in the return of income cannot be overemphasized. This income not offered at the first instance is of sizeable amount in the context of the case of assessee and could not ordinarily be lost sight of. It is not palatable to accept that a transaction of this magnitude routed through banking channel has been overlooked while determining taxable income. Be that as it may, apart from declaring the income as aforesaid; the assessee is expected to meet advance tax and self assessment tax obligations as per the framework of law. The assessee has not shown to have paid any tax towards impugned gain. Thus, this plea of oversight on behalf of the Assessee is listless. Hence, no case of reasonable cause for omitting to include the income in the first return is successfully made out. The preponderance of probabilities is weighed against the assessee. We also wish to note here that penalty proceedings in question are governed by S. 271(1)(c) read with Explanations appended thereto. The assessee is expected to justify his bonafides in the light of Explanation 1 of S. 271(1)(c) of the Act. The condonation of penalty for compliance failure on the grounds of ‘reasonable cause’ as provided under S. 273B is foreign to the scope of S. 271(1)(c) of the Act. All the other co-owners except the assessee have discharged their tax obligations in their individual capacity. This serves as a clear indicator that while the parties may have agreed to come together for better co-operation, the parties were to bear their own losses or retain their own profits contrary to the case made out by the assessee. If the version of the Assessee is to be given any credence, one has to see the conduct of the assessee. The obligations of the Assessee as one of the members who allegedly combined to form alleged AOP is placed at par with other members to comply with tax laws. No PAN number in the capacity of AOP was reportedly obtained. The alleged AOP is also not shown to have paid any advance tax or self assessment tax which could have probably served as a guiding factor for appreciating bonafides. The return of income in the capacity of AOP for the combined income is not admittedly filed. Common bank account for alleged consortium is also not referred to. Thus, the onus of the existence of contract ( oral or written) for sale of property giving rise to impugned income in the capacity of AOP is not discharged at all. Coupled with this, the other alleged members have acted in their respective personal capacity which belies presence of any alleged understanding in the nature of purported AOP. The above is enumeration to show that no assertive justification has been advanced by the assessee to prove bonafides of plea of existence of AOP. Mere abstract reliance on case laws without any connection with the underlying facts deserves to be discredited. In the light of above discussion, the explanation offered for the default in declaring the income is palpably improbable. Omission to declare chargeable income cannot be held to be a bonafide error in the given circumstances. Hence, we find no error in the orders of the authorities below in imposing penalty under S. 271(1)(c) of the Act. - Decided against assessee
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