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Income Tax Appellate Tribunal, ‘’ SMC’’ BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED
आदेश/O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax(Appeals)-1, Vadodara, dated 16/04/2019 arising in the matter of penalty order passed under s. 271(1)(c) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2015-16.
The assessee has raised the following grounds of appeal:
The Learned Commissioner of Income Tax (Appeals) is not correct in confirming penalty u/s 271(1)(C) on Unexplained Expenditure on Stamp Duty and Registration Charges made out of Undisclosed Income inspite of all evidences were available on records at the time of assessment proceedings.
2. The Ld. AO has not unearthed anything on his own which could be inferred that appellant has bona fined intention of concealed any income. On the contrary, appellant has furnished all the documents on the basis of which Ld. AO could find out that expenditure relating to stamp duty and registration fees are not accounted by the appellant. It there was any malafide intention of the appellant, he would not have been submitted all the documents of purchase of lands. 3. Mere failure to offer an explanation or to substantiate the explanation is not enough to warrant penalty which is ignored by Id. C1T (Appeals). 4. In the appellant case, appellant has voluntarily agreed for addition, thus the addition made to the returned income, neither it is established or can be reasonably inferred, that the addition made to the income is on account of contumacious conduct of the appellant nor it is established, or can be reasonably inferred, that the appellant's conduct and explanation is not bonafied. Your Appellant Craves leave to add, alter or amend any of the grounds of appeal Mentioned above, either at or before the time of hearing.
3. The only issue raised by the assessee is that the Ld.CIT(A) erred in confirming the penalty levied by the AO under the provision of section 271(1)(c) of the Act for Rs.3,69,664/- on account of concealment of income.
The facts in brief are that the assessee in the present case is an individual and declared his income under the head salary, business, agricultural income and income from other sources. The AO during the assessment proceedings found that the assessee has purchased certain agricultural lands on which he has incurred stamp duty and registration charges amounting to Rs. 11,96,324/- only. However, the assessee has failed to explain the source of such expenditure. Accordingly, the AO proposed to make the addition of the same in the assessment proceedings for which the assessee agreed. Thus, the AO was of the view that the assessee has concealed the particulars of income representing the stamp duty and registration charges amounting to Rs. 11,96,324/- only. Accordingly, the AO initiated the proceedings u/s 271(1)(c) of the Act, by issuing the show cause notice u/s 274 of the Act, dated 05/10/2017. In response to such notice, the assessee failed to make any reply. Thus the AO concluded that in the absence of any reply, the assessee has concealed the particulars of income and levied a penalty at Rs. 3,69,664/- being 100% of the tax amount sought to be evaded.
Aggrieved assessee preferred an appeal to the Ld. CIT(A).
The assessee before the Ld. CIT(A) submitted that the stamp duty and registration charges were incurred by him in connection with the purchases of agricultural lands which were duly disclosed in the income tax return. However, the assessee inadvertently omitted to disclose the registration charges and stamp duty in the income tax return. Thus there was no mala-fide intent not to disclose the impugned expenses.
However, the Ld. CIT(A), was not satisfied with the contention of the assessee on the reasoning that the assessee has agreed for the addition of Rs. 11,19,624/- as he failed to explain the source. Thus the Ld. CIT(A), held that the assesse has concealed the particulars of the income.
Being aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us.
The Ld. A.R before us filed a paper book running from pages 1 to 35 and contended that the assessee has declared income in his income tax return for Rs. 22,65,230/- which is sufficient enough to meet the impugned expenses. Furthermore, the properties in which the impugned cost was incurred have been duly disclosed. Thus there was no mala-fide intent on the part of the assessee not to disclose the amount of expenses.
On the other hand the Ld. DR, vehemently supported the order of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. The word “conceal” refers to the deliberate act on the part of the assessee. In the light of the above discussion and on analyzing the present facts of the case we note that undeniably the impugned cost was incurred towards the purchase of the land which were duly disclosed in the income tax return.
11.1 Likewise, all the relevant property papers were duly filed by the assessee during the assessment proceedings which contains the details of the registration and stamp duty charges. The expenses which are in dispute for the imposition of the penalty have direct nexus with the cost of the properties purchased by the assessee which were duly disclosed. Thus it is transpired that there was no mala- fide intent on the part of the assessee to conceal the particulars of stamp duty and registration charges as the information for the same was available in the public domain which is directly connected with the purchase of disclosed properties. Since the purchases of properties have been disclosed in the income tax return, it cannot be inferred that the assessee had no mala-fide intent in not disclosing the connected expenses being stamp duty and registration charges.
11.2 Thus it transpires that there was no dishonest intent of the assessee particularly in the given facts and circumstances where the assessee had sufficient income i.e. exceeding the amount invested in purchases of properties. Accordingly, we are of the view that the assessee inadvertently omitted to disclose the impugned cost in the income tax return without having any dishonest intent. Thus in such facts and circumstances, we hold that the penalty u/s 271(1)(c) of the Act, is not sustainable. Hence, we set aside the findings of the Ld. CIT(A), and direct the AO to delete the penalty levied by him. Thus the ground of appeal of the assessee is allowed.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the Court on 23/03/2022 at Ahmedabad.