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Pr. Commissioner of Income Tax-4 Versus M/s. Minitechs Aerotools Pvt. Ltd.,

2016 (5) TMI 794 - KARNATAKA HIGH COURT

Capital gain not offered in original return of income - whether the Tribunal is justified in holding that the explanation offered by the assessee for not offering the capital gain in the original return on income was bonafide explain, when the fact and circumstances revealed that the assessee has declared the concealed income only on the detection of the same during the course of survey in the premises of developer? - Held that:- Two authorities one CIT(Appeals) and another, Tribunal, after unde .....

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on of fact and not a question of law. The second, is that it is not a matter where the Tribunal has not considered the entire facts and circumstances of the case under which the income was offered by the assessee as the income from house property by submission of revised returns and payment of tax even before the proceedings were initiated by the department after survey. - Apart from the above, the additional aspect is that the view of the Tribunal on acquiring property under barter system c .....

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. 714/2015 - Dated:- 1-4-2016 - JUDGMENT The appellant-revenue has preferred the present appeal raising following substantial questions of law:- Whether on the facts and in the circumstances of the case, the Tribunal is justified in holding that the explanation offered by the assessee for not offering the capital gain in the original return on income was bonafide explain, when the fact and circumstances revealed that the assessee has declared the concealed income only on t .....

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ous year relevant to A.Y. 2007-08 i.e., on 1.11.2006. The share of property which the assessee received from the builder was let out by the assessee and income from such letting was offered to tax by the assessee under the head income from house property . The return of income was filed by the assessee for A.Y.2007-08 on 24.10.07 declaring total income of ₹ 36,04,060 comoprising of income from property of ₹ 33,88,276 and income from business of ₹ 2, 15, 779. The return was proc .....

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ing of long term capital gain arising from transfer of the property, even without any proceedings having been initated against the Assessee. The assessee filed only a computation of long term capital gain computing the same at ₹ 2,14,42,340, but did not file a revised return of income because the time limit for filing revised return of income had also expired by that time. The above circumstances explained by the Assessee cannot be ignored and was rightly treated by the CIT(A) .....

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ain tax in a Joint Development Agreement is not free from doubt and is always controversial. 13. The subsequent conduct of the Assessee in not raising any legal issue with regard to the year of taxability of capital gain and validity of initiation of reassessment proceedings was also rightly treated as a circumstance showing the bonafides of the assessee by the CIT(A). It was open to the Assessee to have taken a stand that in view of the decision of the Hon ble Karnataka High Court c .....

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ssessee that the capital gains are also attracted on taking possession of the built up area . As already stated, the issue was debatable and the belief entertained by the Assessee in this regard cannot be said to be unreasonable. The levy of penalty with regard to computation of long term capital gain by disallowing part of cost of acquisition, in our view, cannot lead to concealmen t and it, at best, could be an error in computation. The primary facts with regard to the computation .....

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to total expenditure to be bogus. The labour component is major expenditure of the Assessee. The CIT(A) has examined the labour payments of ₹ 17,59,087 made to various parties and the mode of payment and has found that labour charges for ₹ 1759087/- have been discharged through bank barring a small expenditure of ₹ 3224/- by cash. It appears to us that the Assessee in order to avoid any litigation with the department has accepted the addition and did not file any appeal on the .....

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e of assessment, it came to light that a survey under section 133A was conducted on the assessee on 16.12.2003. During the course of survey, certain documents comprising share application forms, bank statements, memorandum of association of certain companies, affidavits, copies of income-tax return and blank share transfer deeds were impounded. The Assessing Officer sought specific information pertaining to blank share transfer deeds by means of show cause notice. The assessee-company surrendere .....

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sessing Officer initiated proceedings for levy of penalty towards concealment of income. The Hon ble Delhi High Court applied clause (A) of Explanation 1 and held that the assessee has not offered any explanation and therefore upheld the levy of penalty. On appeal by the Assessee, the Hon ble Supreme Court held that Explanation to section 271(1) raises a presumption of concealment, when a difference is noticed by the Assessing Officer between the returned income and assessed income. .....

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ized type of defence under Explanation 1 to section 271(1)(c) of the Act. It held that the law does not absolve the assessee from concealment penalty merely because a voluntary disclosure of concealed income is made. 16. The Hon ble Supreme Court held that the surrender of income in this case is not voluntary and the surrender was in view of the detection made by Assessing Officer. It is not surrender of income on voluntary basis. The survey was conducted 10 months before .....

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h the income from the property which the Assessee received under the Joint Development Agreement was offered to tax. After survey in the case of the Property Developer, the Assessee file a revised computation of total income offering capital gain to tax and also paid taxes due thereon. We have already found that the explanation offered by the Assessee for not offering the capital gain in the original return of income a s bonafide explanation. In the circumstances, we are of the view that the CIT .....

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lanation is accepted. As such, the aforesaid finding of fact should rest with the conclusion of the Tribunal since the judicial scrutiny by this Court is limited to only substantial questions of law. 5. However, Mr.Sanmathi, learned counsel appearing for the appellant-revenue attempted to contend that the requisite documentary evidence with regard to any opinion by a lawyer had not come on record and therefore, it can be said that the finding recorded by the Tribunal for the bonafide .....

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