Case Note & Summary
The appellant-assessee, along with four others, executed an agreement for sale of a plot of land at Vasai on 07.12.2004 for a total consideration of Rs.2,60,00,000. The appellant's share was 49.2%. During the financial year relevant to Assessment Year 2005-06, a sum of Rs.1,05,01,111 was received as advance, but conveyance was not executed and possession was not handed over. In the original return of income filed for AY 2005-06, the assessee did not offer this receipt to tax. The Assessing Officer, during assessment proceedings, detected the receipt and the assessee then filed a revised return offering the amount as income from capital gains. The Assessing Officer completed the assessment and also initiated penalty proceedings under Section 271(1)(c) for concealment of income. The Commissioner of Income Tax (Appeals) confirmed the penalty, and the Income Tax Appellate Tribunal upheld the same. The assessee appealed to the High Court under Section 260-A of the Act, raising the substantial question of law whether the Tribunal was right in confirming the levy of penalty. The High Court held that the assessee had concealed the receipt of advance sale consideration in the original return and only offered it after detection by the Assessing Officer. The court applied Explanation 1 to Section 271(1)(c), which deems the assessee to have concealed income if no explanation is offered or the explanation is false. The court found that the assessee's explanation that the amount was not taxable as it was only an advance and not income was not sustainable, as the amount was received and was assessable as capital gains. The court upheld the penalty, dismissing the appeal.
Headnote
A) Income Tax - Penalty under Section 271(1)(c) - Concealment of Income - The assessee failed to disclose receipt of advance sale consideration in the original return and only offered it after detection by the Assessing Officer - Held that penalty under Section 271(1)(c) is justified as the assessee concealed income and Explanation 1 to Section 271(1)(c) applies (Paras 1-10).
Issue of Consideration
Whether the Tribunal was right in law in confirming the levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961?
Final Decision
The High Court dismissed the appeal and upheld the penalty under Section 271(1)(c) of the Income Tax Act, 1961.
Law Points
- Penalty under Section 271(1)(c) of the Income Tax Act
- 1961 is leviable for concealment of income or furnishing inaccurate particulars
- even if the income is offered in revised return after detection by Assessing Officer
- Explanation 1 to Section 271(1)(c) applies.
