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2023 (5) TMI 959 - AT - Income TaxLevy of penalty u/s 271(1) (c) - undisclosed investment toward purchase of the property and payment made towards interiors for purchase of villa - HELD THAT - We find the addition was not voluntary but only after the search was conducted and incriminating evidence were found and confronted to the assessee for which the assessee had no other option but to pay the tax on the said amount. Had there been no search the assessee would not have offered the above income to tax. So far as the confirmation from M/s. Trident Constructions in respect of sale of immovable property, the same cannot help the assessee since the same is undated and further the assessee has already paid an amount of Rs. 50 lacs and he was unable to explain the source of the same. Since the assessee could not explain the source of the purchase of the property at Bangalore and the payment towards interiors of villa the additions were made u/s. 69B confirmed - The addition so made was not voluntary but on being confronted during the assessment proceedings on the basis of seized material. Penalty levied by the AO and sustained by the ld.CIT(A) in our opinion is fully justified. Decided against assessee.
Issues Involved:
1. Levy of penalty under Section 271(1)(c) for concealment of income. 2. Validity of the penalty notices and recording of satisfaction. 3. Explanation and substantiation of undisclosed investments. Summary of Judgment: 1. Levy of Penalty under Section 271(1)(c) for Concealment of Income: The core issue in this appeal is the levy of a penalty of Rs. 11,27,850/- under Section 271(1)(c) of the Income Tax Act for concealment of income. The assessee had initially filed a return declaring an income of Rs. 8,50,600/-. Following a search and seizure operation under Section 132, the assessee filed a revised return declaring an income of Rs. 58,00,600/-. The Assessing Officer (AO) completed the assessment under Section 143(3) read with Section 153A, making an addition of Rs. 36,50,000/- for undisclosed investments under Section 69B, thereby assessing the total income at Rs. 94,50,600/-. The AO held that the assessee is liable for penalty under Section 271(1)(c) for concealment of income, as the undisclosed investments were admitted in sworn statements during the assessment proceedings. 2. Validity of the Penalty Notices and Recording of Satisfaction: During the appeal proceedings, the assessee contended that the penalty notices did not specify which limb of Section 271(1)(c) the penalty proceedings were initiated under. However, the CIT(A) observed that the AO had clearly mentioned in the assessment order that the penalty proceedings were initiated for concealment of income and made a specific reference to Explanation 5A. The penalty notices issued also clearly mentioned "concealment of income," thereby satisfying the requirements of Section 271(1)(c). 3. Explanation and Substantiation of Undisclosed Investments: The assessee argued that the undisclosed investments were offered to tax to avoid protracted litigation. However, the CIT(A) noted that the material seized during the search operation led to the admission of income, and it was not a voluntary disclosure. The CIT(A) cited the Supreme Court's decision in Mak Data Pvt Ltd vs. CIT, which held that voluntary disclosure does not absolve the assessee from penalty proceedings. The assessee failed to provide any documentary evidence to substantiate that the payments made for the investments were out of admitted income. The CIT(A) concluded that the assessee had concealed income and upheld the penalty levied by the AO. Tribunal's Decision: The Tribunal upheld the CIT(A)'s decision, noting that the assessee could not explain the source of the undisclosed investments and that the additions were made based on incriminating evidence found during the search. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the appeal filed by the assessee. Conclusion: The appeal filed by the assessee was dismissed, and the penalty of Rs. 11,27,850/- levied under Section 271(1)(c) for concealment of income was upheld. The Tribunal emphasized that the penalty was justified as the undisclosed investments were not voluntarily disclosed but were admitted only after being confronted with the seized material during the assessment proceedings.
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