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D. Prasad Versus ITO, Ward-1 (4) , Visakhapatnam

2016 (7) TMI 503 - ITAT VISAKHAPATNAM

Penalty u/s 271(1)(c) - assessee has failed to offer short term capital gains derived from the property given for development and called the explanation - Held that:- We find that though the assessee has not disclosed short term capital gains in the original return filed, however, the assessee along with the return of income filed a balance sheet as on 31.3.2009, wherein he specifically mentioned, the amount received from the developer (paper book page no.14) and the same was explained before th .....

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ssessee has concealed the income. We find that there is a lot of force in the argument of Ld. Counsel for the assessee. That apart the assessee has disclosed the amount received by him along with the return of income, which was also explained to the A.O. Keeping in view of the above, by considering the facts and circumstances of the case, we are of the opinion that it is not a fit case to impose penalty u/s 271(1)(c) of the Act. - Decided in favour of assessee - I.T.A.No.51/Vizag/2016, S.A. No.4 .....

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in the name and style of Krishna Priya Constructions . The assessee filed a return of income for the assessment year 2009-10 on 30.3.2010, admitting a total income of ₹ 8,51,809/-. The A.O. has completed the assessment u/s 143(3) of the Income-Tax Act, 1961 (hereinafter called as the Act ) by determining total income of ₹ 9,51,809/-. 3. Subsequently, there was a survey conducted in the case of M/s. VNC-GEV Housing Limited, it was found that assessee along with two others purchased tw .....

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15.7.2008 received a refundable deposit of ₹ 2,25,00,000/-. Subsequently, the A.O. has issued show cause notice u/s 148 of the Act dated 12.7.2012 on the ground that there is an escapement of income in the hands of the assessee. Meanwhile, the assessee filed a revised return on 16.7.2012 by revising his total income at ₹ 2,01,62,545/- admitting short term capital gain at ₹ 1,92,10,735/-. The A.O. after verification of the details furnished by the assessee during the re-assessme .....

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t penalty proceedings may be dropped. However, the A.O. has not accepted the explanations given by the assessee and he has observed that the assessee has not disclosed the facts voluntarily and consequent to the detection by the department, assessee admitted the fact that he had earned the capital gains, it is a clear case of concealment. Accordingly, penalty u/s 271(1)(c) of the Act was levied. 5. On being aggrieved, assessee carried the matter in appeal before the CIT(A). 6. It was submitted b .....

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in voluntarily and the revised return filed by the assessee was accepted by the A.O. and capital gains offered by the assessee was also accepted, therefore, since the assessee has offered capital gains voluntarily, there is no concealment and section 271(1)(c) of the Act has no application in the assessee s case. 8. The CIT(A) after considering the explanation of the assessee, he has observed that there is lot of force in the argument of Ld. Counsel for the assessee. However, the unimpeachable f .....

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. The Ld. Counsel for the assessee has submitted so far as admission of capital gains is concerned whether capital gain can be charged on the date of execution of development agreement or receipt of sale consideration, there are two views possible and therefore the assessee is having a doubt in his mind to declare the capital gains for the assessment year under consideration. However, assessee has filed a revised return on 16.7.2012 and thereafter notice u/s 148 of the Act was received by the as .....

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eived from the developer (paper book page no.14). The Ld. Counsel for the assessee has also pointed out from the paper book page no.35 that in response to A.O s question no.4 it is replied that all the books of accounts were filed for his verification on balance sheet and also profit & loss account were already submitted vide letter dated 22.2.2011. The Ld. Counsel for the assessee has relied on the following case laws to substantiate the above arguments:- 1) CIT Vs. Najoo Dara Deboo 218 Tax .....

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rders of the authorities below. The assessee had filed a return of income originally on 30.3.2010. The return filed by the assessee was processed u/s 143(1) of the Act, thereafter a notice u/s 143(2) of the Act was issued to the assessee on 24.8.2010 and filed all the details in response to the notice issued by the A.O. In the assessment order, the A.O. has observed that books of accounts along with bills & vouchers were called for and the same were verified and accordingly assessment was co .....

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g short term capital gain and the same was accepted by the A.O. and assessment was completed u/s 143(3) r.w.s. 147 of the Act by order dated 12.3.2014. 14. Subsequently, A.O. has initiated the penalty proceedings u/s 271(1)(c) of the Act for concealment of income on the ground that the assessee has failed to offer short term capital gains derived from the property given for development and called the explanation. The assessee has explained before the A.O. that the short term capital gain offered .....

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Ld. CIT(A). The Ld. CIT(A) after considering the explanation given by the assessee, he has observed that there is a lot of force and merit in the contentions of the Ld. Counsel for the assessee, however, it is an impeachable fact which remains that assessee having entered into a development agreement with a builder for the development of the land, which clearly raised to the capital gains in the hands of the assessee, the same was not admitted in the original return filed and therefore it is a c .....

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e assessee that notice u/s 148 of the Act was served on the assessee on 20.7.2012. However, the revised return of income filed on 16.7.2012 before receiving the notice issued by the A.O. u/s 148 of the Act and it is submitted that the revised return filed by the assessee is voluntary. The A.O. has acted upon the return filed by the assessee accepted the capital gains. Therefore, the A.O. cannot initiate the proceedings on the ground that assessee has concealed the income. We find that there is a .....

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ged only on receipt of sale consideration or from the date on which development agreement was entered. In this context, the Hon ble Allahabad High Court in the case of CIT Vs. Najoo Dara Deboo (supra) has held that the Capital gains can be charged only on receipt of the sale of consideration and not otherwise, when only the agreement is signed and no money is received. 16. The Hon ble Bombay High Court in the case of Metal Rolling Works Ltd. Vs. CIT (supra) has considered the penalty u/s 271(1)( .....

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