TaxTMI 
TaxTMI 
2014 (3) TMI 17
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....cted in the business premises of M/s. Badam Balakrishna Hotels Pvt. Ltd., Lakdikapul, Hyderabad on 19.3.2008. 3. During the course of survey it is noticed that assessee has not filed his returns of income since Asst. Year 2002-03. It also came to light during the course of survey that assessee in his individual capacity, along with a co-owner, M/s. Badam Srikrishna Hotels Pvt. Ltd. of which assessee is also the Managing Director, have entered into a development agreement with M/s. Ashoka Builders on 02.09.2005 for construction of apartments in land admeasuring 2700 sq. yards. Assessee and his co-owner hold the land in the ratio of 80:20 with 80% belonging to the assessee. The sharing ratio of built up area is 48:52 with 48% belonging to the land owners. Accordingly, the land owner's share of built up area worked to 18791 sq.ft. and assessee's share works out to 15032 sq. ft. Assessee, during the previous year has sold an apartment falling to his share and admitted capital gains arising out of the said sale of one apartment but failed to offer capital gains on the transfer of undivided share of land. Accordingly, assessment was completed by making addition on account of long term....
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....ncome tax returns in the same month of survey itself i.e. March 2008. In the year 2010, fortunately I could locate the file and I could find all the information relevant to filing of the returns in that file. I have filed the returns for all pending years. I have already paid Rs.60 lakhs towards taxes and the remaining Rs. 10 lakhs, I will be paying shortly. There was no intention on my part not to file the Income tax returns or not to pay the taxes. As the relevant file containing all the important information pertaining to capital gains was missing, I could not file the income tax returns in time, however I have paid taxes even before filing of the Income tax returns. b) In the course of assessment proceedings, I have fully co-operated with the department and agreed to pay the taxes as proposed by the Assessing Officer. I have accepted the construction rate per sq.ft, at Rs.800/- though the builder M/s. Ashoka Builders has given to me a certificate that cost of construction is Rs.7251- per sq. ft.. This has resulted in more income tax liability, however I have agreed for the same in order to buy peace with the department. c) Though ....
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....copies of the relevant documents from the Sub-Registrar office concerned. That apart, this ground fails for the reason that Asst. Year 2006-07 is not only year where assessee failed to file the returns of income. Assessee has not filed returns of income even for Asst. years 2002-03 to 2005-06 till date of survey. It is also pertinent to mention here that the return of income for Assessment Year 2006-07 of M/s. Badam Srikrishna Hotels Pvt. Ltd., the co-owner holding 20% share was filed on 20.6.2011, i.e., a day before the hearing in connection with the present penalty proceedings. Assessee is the Managing Director of his Company and also responsible for filing this return of income. From this return, it is noticed that the assessee has not paid the tax due on the income returned. Assessee's version of misplacement of records/documents being the sole reason for non-filing of Return of Income does not hold good in view of what is stated above. Assessee had multiple options to enable him to file return of income in time and assessee cannot get away with the reason that the records were misplaced. 8. The above conduct of the assessee demon....
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....hough two were used by him does not stand on firm ground. The claim is allowable in respect of a residential house. In the instant case, the residential house can only be equated to an apartment which is an independent dwelling unit. The Assessing Officer, in support of the above conclusions, relied on the following decisions : (1) Dilip N. Shroff (291 ITR 519)- SC (2) CIT vs. Suresh Chandra Mittal (251 ITR 9)-SC (3) CIT vs. Mussadilal Ram Bharsose (1987) 165 ITR 14 (SC), (4) CIT vs. A. Sreenivas Pai (2000) 242 ITR 29, 26 (Kerala) (5) CIT vs. Drapco Electric Corporation (1980) 122 ITR 341 (Guj.) (6) CIT vs. M. George & Bros. (1986) 160 ITR 511(Ker.) (7) CIT vs. Hari Ram Sri Ram (1987) 167 ITR 578 (All.) (8) CIT vs. Saraf Trading Corporation (1987) 167 ITR 909 (Ker.) (9) CIT vs. India Sea Foods (1996) 218 ITR 629 (Ker.)-F.B The Assessing Officer, thus, held that the penalty is leviable in this case, and accordingly imposed a minimum penalty of Rs.16,65,027/-, vide order dated 28.6.2011, passed under S.271(1)(c) of the Act. 6. Aggrie....
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....he issue of determination of capital gain in a situation where a development agreement was entered into is not still free from doubt as divergent view were expressed as mentioned in the opinion obtained by the appellant. Therefore, inspite of the fact that the appellant paid Rs. 60 lakhs towards self assessment tax, he was not in a position to file the return of income correctly. However, when the Assessing Officer proposed to tax the capital gain arising on entering into the development agreement for the assessment year 2006-07 the appellant readily agreed and did not contest. ...." 7. The CIT(A) was not convinced with the arguments of the assessee against the penalty levied. He noted that notice u/s 148 was issued by the Department. However, even while filing the return in response to the said notice u/s 148, the assessee has not taken into account the capital gains arising on account of transfer of the undivided share of land in lieu of built up area and it was only when the AO during the assessment proceedings raised the issue of capital gains on the transfer the assessee has admitted the capital gains arising on account of transfer of the land to the developer in lieu of th....
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.... conscious concealment. 6.2 The question of concealment of income and filing of true and complete particulars of income is a question of fact to be examined and decided upon the facts and circumstances of each case, and from the conduct of the appellant as discussed above, there appears gross negligence on his part in not filing the return till survey took place and even thereafter till notice u/s 148 was issued and added to that, not offering full and true disclosure of income. Hence, the AO, is justified in levying the penalty u/s. 271(1)(c) of the IT Act, and the same is accordingly confirmed." 8. Aggrieved, the assessee is in appeal before us. 9. Learned Counsel for the assessee reiterating the submissions made before the lower authorities, submitted that it is not a fit case for the levy of penalty for concealment. He submitted that the assessee was under a bona fide impression that the long term capital gains on transfer of undivided share of land transferred are not liable to assessment in the year under appeal. He submitted that there were divergent views on this issue pronounced by various courts and benches of the Tribunal, and the issue, therefore, ....
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....rth with the reasons for the default as submitted before the CIT(A), viz. the issue of taxability debatable, in his explanations and arguments before the assessing officer in the penalty proceedings, but had stated some other reason and hence, the assessee's intention was clearly to conceal the income in order to avoid payment of tax. 12. We have heard both the parties and perused the orders of lower authorities and other material available on record, including the decisions cited by the parties before us. Admittedly, assessee has not been filing returns of income since 2002-03, and consequent upon on the survey action on the business premises of the assessee, when the development agreement in question was found, notice under S.148 was issued to the assessee. Even in the return filed in response to the said notice, assessee has not disclosed the capital gains arising on the transfer of the undivided share of land belong to the assessee, though the same in respect of an apartment admeasuring 2757 sq. ft. was claimed, duly claiming exemption under S.54F in respect thereof. It was only when the assessing officer during the assessment proceedings raised the issue of capital gains on....