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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
PER S. BALAKRISHNAN, Accountant Member :
This appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [Ld. CIT(A)-NFAC] in DIN & Order No. ITBA/NFAC/S/250/2022-23/1051660563(1), dated 30/03/2023
2 arising out of the order passed U/s. 271(1)(c) of the Income Tax Act, 1961 [the Act] for the AY 2011-12.
Briefly stated the facts of the case are that the assessee, an individual, has not filed her return of income U/s. 139(1) of the Act for the AY 2011-12. As per the information available with the Department, the Ld. AO noted that during the AY 2011-12 the assessee, along with two others, sold land admeasuring 500 sq yds on 6/7/2010 for a consideration of Rs. 42,50,000/-. The Ld. AO after recording the reasons and taking approval from the competent authority issued a notice U/s. 148 of the Act and called for the assessee to file ITR. The assessee did not respond to the notice. Subsequently, during the assessment proceedings, the Ld. AO issued notices U/s. 142(1) of the Act on 8/5/2018 & 21/8/2018. In response, the Authorized Representative of the assessee submitted the computation of total income of the assessee before the Ld. AO on 28/11/2018. On perusal of the same, the Ld. AO observed that the assessee did not consider the sale consideration U/s. 50C of the Act. The Ld. AO further noted that the cost of construction and deduction U/s. 54G was wrongly claimed by the assessee. Therefore, the Ld. AO considered the sale consideration U/s. 50C of the Act and 3 disallowed the excess cost of construction & deduction U/s. 50G of the Act. Accordingly, the Ld. AO passed the assessment order on 10/12/2018 determining the total income at Rs. 15,63,290/-.
Further, penalty proceedings U/s. 271(1)(c) of the Act were also initiated for concealment of income. Against the addition made by the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A), Vijayawada who rejected the appeal of the assessee and sustained addition made by the Ld. AO vide his order dated 23/7/2019. Later on, the penalty proceedings were taken up by the NaFAC and issued show cause notices U/s. 271(1)(c) of the Act on two occasions ie., on 29/12/2021 and 4/1/2022 through emails. Considering the assessee’s non-compliance to the show cause notices, the Ld. AO discussed the issues at length vide para 4.2 & 5 of the penalty order dated 01/02/2022 and came to a conclusion that the assessee has concealed the income to the tune of Rs. 15,63,290/- within the meaning of section 271(1)(c) of the Act and levied the penalty of Rs. 2,82,897/-. Aggrieved by the penalty order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A)-NFAC. On appeal, the Ld. CIT(A)-NFAC dismissed the appeal of the assessee. Aggrieved by the order of the Ld. CIT(A)-NFAC, the assessee filed the present appeal before the Tribunal by raising the following grounds of appeal:
4 “1. The order of the Ld. CIT(A)-NFAC is contrary to the facts and also the law applicable to the facts of the case. 2. The Ld. CIT (A) ought to have quashed the order passed U/s. 271(1)(c) of the Act as invalid as it was passed on the basis of ambiguous notice. 3. The Ld. CIT(A) is not justified in confirming the penalty of Rs. 2,82,897/- levied by the AO U/s. 271(1)(c) of the Act. 4. Any other grounds may be urged at the time of hearing.”
At the outset, the Ld. Authorized Representative [Ld. AR] argued that the provisions of section 50C of the Act was applied by the Ld. AO and hence it is only an estimation which does not attract the penalty proceedings U/s. 271(1)(c) of the Act.
Further, the Ld. AR also submitted that the assessee has not concealed any income attracting the provisions of section 271(1)(c) of the Act. He therefore pleaded that the penalty amount of Rs. 2,82,897/- may be deleted.
On the contrary, the Ld. DR submitted that the assessee is a non-filer and has not filed her return of income for the impugned assessment year even though the assessee had taxable income.
The Ld. DR further submitted that the assessee did not also furnish any explanation before the Ld. AO during the penalty proceedings. The Ld. DR therefore submitted that the assessee
5 had no explanation and hence did not appear before the Ld. AO and pleaded that the order of the Ld. AO be confirmed.
We have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities. Admittedly, the assessee has not filed her return of income despite having taxable income during the impugned assessment year. Further, we also find that the assessee computed the capital gains based on the value in the registered sale deed and not by adopting the provisions of section 50C of the Act. Accordingly, the Ld. AO has considered that the assessee has concealed the particulars of income while filing the return of income which attracts the penal provisions as per section 271(1)(c) of the Act. Further, we also find that in response to the show cause notices issued by the Ld. AO, the assessee has neither filed any explanation nor appeared before the Ld. Revenue Authorities during the penalty proceedings. It is also found that the assessee has not furnished any reasonable cause either for non-filing of return of income or for non-appearance or non-furnishing of explanation during the assessment or penalty proceedings. The Ld. CIT(A)-NFAC has considered all the above facts and observed in 4.2 of his order as under:
“4.2. The issues were considered. Relevant penalty orders, written submissions, relevant provisions of law and case law relied upon were carefully perused. The appellant has contended that the notice U/s. 271(1) is not valid because it has not been specified whether it was issued for concealment of income or furnishing inaccurate particulars of income and the specific item have not been ticked. However, it is seen from the penalty order that the penalty has been initiated for specific reason of concealment of income which is categorically mentioned in the order. Section 292B of the IT Act is relevant in the circumstances of any defect in the notice, if any, which reads as under:
292B. No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act.
In view of the provisions of the IT Act U/s. 292B, the claim of the appellant is not tenable. Moreover, the appellant has placed reliance on the judgment of Hon’ble Karnataka High Court in the case of CIT vs. Majunatha Cotton and Ginning Factory [2013] 359 ITR 565 along with the Hon’ble Supreme Court order in the case of SSA Emeralds Meadows (CC No. 11485/2016) vide order dt 5/8/2016 order of the Hon’ble High Court of Andhra Pradesh in ITTA No. 684/2016 in the case of Principal CIT, Visakhapatnam vs. Smt. Baisetty Revathi and two orders of Hon’ble ITAT, Visakhapatnam. Ratios of the two decisions are not applicable as the facts are clearly distinguishable. In the instant case, penalty proceedings have been initiated specifically for concealment of income and the same was held to be established in the penalty order. On perusal of the penalty order, it is evident that the appellant was required to take the value adopted by the stamp valuation authority as sale consideration U/s. 50C of the Act for computing the capital gains as per the provisions of section 48 of the Act in the condition where sale consideration is less than stamp value. But, the appellant did not follow the provisions of section 50C of the Act. The penalty order is self-explanatory itself needs no further explanation. It is pertinent to mention here that the first appeal preferred against the assessment order of the AO was dismissed by the first appellate authority confirming the decision of the AO by observing that there is no error in the computation of long term capital gains made by the AO in the assessment order. The appeal order is based upon various judgments and case laws favouring the decision of the AO. Hence, the case laws relied upon by the appellant in the written submission were found not tenable in view of the clear cut violation of section 50C of the Act and wrong deduction claimed u/s. 54G of the Act by the appellant.
7 The penalty order passed by the Assessing officer is a speaking order wherein the concealment of income by the appellant has been established by discussing the issue threadbare in the light of facts brought out by the AO in the course of assessment proceedings also deliberation of the first appellate authority. There is not even an iota of doubt that the appellant was required by the provisions of section 50C to take the value adopted by the stamp valuation authority as sale consideration which has not been done, thus there was a concealment to the extent of income U/s. 139(1) of the Act nor in response of notice U/s. 148 of the Act, the income under the head capital gain calculated stood undisclosed falling under the meaning of concealment of income. Moreover, the addition was confirmed by the first appellate authority further establishing the concealment of income. Therefore, the penalty imposed U/s. 271(1)(c) cannot be faulted. Hence, I am not inclined to interfere with the decision of the AO and the penalty order is hereby confirmed and the above grounds of appeal are dismissed.”
Further, we observed that the assessee has not filed her return of income U/s. 139(1) of the Act but has filed in response to the notice U/s. 148 of the Act without considering the provisions of section 50C of the Act, which in our considered opinion amounts to concealment of income. Even before us, no proper explanation was provided by the assessee either for not filing the return of income or for non-appearance before the Ld. Revenue Authorities.
Considering all the above facts and circumstances of the case, we are of the opinion that the Ld. CIT (A)-NFAC has discussed the issue at length and rightly adjudicated the matter while dismissing the appeal of the assessee. Hence, we find no reason to interfere with the order of the Ld. CIT(A)-NFAC in this regard and accordingly, the grounds raised by the assessee are dismissed.
8 6. In the result, appeal of the assessee is dismissed.
Pronounced in the open Court on 22nd January, 2024.