Tribunal Upholds Penalty for Income Tax Act Violation

Narendrakumar M Patel Versus ITO, Ward 2 (3), Race Course Circle, Baroda

Narendrakumar M Patel Versus ITO, Ward 2 (3), Race Course Circle, Baroda - TMI Issues Involved:
1. Imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961.
2. Concealment of income and furnishing of inaccurate particulars.
3. Classification of land as agricultural or non-agricultural for capital gains tax.
4. Bonafide error or intentional concealment.

Issue-wise Detailed Analysis:

1. Imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961:
The primary issue in this case is the imposition of a penalty amounting to Rs. 3,06,548/- on the assessee for the assessment year 2011-12. The penalty was imposed by the Assessing Officer (AO) and upheld by the Commissioner of Income Tax (Appeals) [CIT(A)] for the concealment of income and furnishing inaccurate particulars of income under Section 271(1)(c) of the Income Tax Act, 1961.

2. Concealment of income and furnishing of inaccurate particulars:
The assessee filed a return declaring an income of Rs. 10,04,760/-. However, during scrutiny, the AO discovered that the assessee had sold two pieces of land for Rs. 87 lakhs each but failed to declare the resultant long-term capital gains (LTCG) of Rs. 19,39,327/-. The AO initiated penalty proceedings for both concealment of income and furnishing inaccurate particulars, which the assessee did not contest.

3. Classification of land as agricultural or non-agricultural for capital gains tax:
The assessee claimed that the land sold was agricultural and thus not a capital asset under Section 2(14) of the Act. However, the AO, after obtaining information from the Sub-Registrar, found that the land included non-agricultural land sold for Rs. 62,25,300/- and agricultural land for Rs. 23.79 lakhs. The AO concluded that the assessee had misled the department by claiming the non-agricultural land as agricultural to avoid capital gains tax.

4. Bonafide error or intentional concealment:
The assessee argued that the omission was a bonafide error due to the sale consideration being received in the previous year and claimed it was a mistake. However, the CIT(A) and the Tribunal found this explanation unsatisfactory. The CIT(A) noted that the assessee failed to declare the LTCG in the return for the previous year as well. The Tribunal observed that the assessee had clearly demarcated the land as non-agricultural in the sale deed but did not disclose this in the return. The Tribunal concluded that the omission was not a bonafide mistake but an intentional act to conceal income.

Conclusion:
The Tribunal upheld the penalty imposed by the AO and confirmed by the CIT(A), concluding that the assessee's actions were neither bonafide mistakes nor silly errors. The appeal was dismissed, and the penalty under Section 271(1)(c) was deemed justified. The Tribunal emphasized that voluntary disclosure of concealed income does not absolve the assessee from penalty if the explanation is not satisfactory and the income was not disclosed until detected by the AO.