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2023 (5) TMI 1109 - AT - Income TaxPenalty order u/s. 271(1)(c) - assessee has not disclosed the capital gain earned on account of the JDA - HELD THAT - Admittedly the assessee has not disclosed the capital gain arose 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. Disclosure of the capital gain at the appellate stage - 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 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 assessee had concealed the capital gain income while 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.
Issues Involved:
1. Justification of the penalty order under Section 271(1)(c) of the Income-tax Act, 1961. 2. Initiation of penalty proceedings under Section 271(1)(c). 3. Levying of penalty under Section 271(1)(c). 4. Consideration of the year of taxability of capital gain in the case of Joint Development Agreement (JDA). Summary: 1. Justification of the Penalty Order under Section 271(1)(c): The assessee contested the penalty order passed by the Commissioner of Income Tax (Appeals) [CIT(A)], arguing that it was not justified both on facts and in law. The Tribunal noted that the assessee failed to disclose the capital gain arising from the Joint Development Agreement (JDA) in the return of income (ROI) for the assessment year (AY) 2014-15. The CIT(A) had issued an enhancement notice, and the assessee admitted an amount of Rs. 32,39,000/- subject to certain conditions. The Tribunal found that the disclosure of the capital gain at the appellate stage was not voluntary but was made after the receipt of the enhancement notice. 2. Initiation of Penalty Proceedings under Section 271(1)(c): The Tribunal observed that the penalty proceedings were initiated separately under Section 271(1)(c) read with Explanation 1 of the Income-tax Act for concealment of income of Rs. 32,39,000/-. The assessee was given a show cause notice and had filed a reply requesting the dropping of penalty proceedings. However, the lower authority imposed the penalty after considering the assessee's reply. 3. Levying of Penalty under Section 271(1)(c): The Tribunal upheld the CIT(A)'s decision to levy the penalty, noting that the assessee had not disclosed the capital gain on the transfer of land by virtue of the JDA either in AY 2013-14 or 2014-15. The Tribunal found that the assessee's explanation was not bona fide and that the concealment of income was established. The penalty was levied at the minimum rate of 100% of the tax sought to be evaded, amounting to Rs. 9,84,798/-. 4. Consideration of the Year of Taxability of Capital Gain in the Case of JDA: The Tribunal referred to the Hon'ble Supreme Court's decision in the case of Balbir Singh Maini, which held that the date of registration of the JDA would be relevant for determining when the capital gain was earned. In this case, the capital gain was chargeable to tax for AY 2014-15, being the year of registration of the JDA. The Tribunal concluded that the assessee was duty-bound to disclose the capital gain in this assessment year and had failed to do so. Conclusion: The Tribunal dismissed the appeal filed by the assessee, affirming the CIT(A)'s order to impose a penalty for concealment of income. The Tribunal found no merit in the assessee's arguments and held that the order passed by the CIT(A) was in accordance with law. The appeal was dismissed on 25th May 2023.
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