2017 (3) TMI 1872

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....eedings, assessing officer made addition on account of undisclosed long term capital gains. During the course of assessing proceedings, the assessing officer found that the assesee had sold three plot of land and shown long term capital gain of Rs. 67,58,003/-. However, the assessing officer found that assesse had not shown long term capital gain according to provision of section 50C of the act. Therefore, on assessee's request a reference was made to the valuation officer for valuation of property u/s. 50C of the act. Thereafter, on the basis of valuation officer report under provision of section 50C(2) of the act, the assessing officer determined long term capital gain after indexation of Rs. 2,68,88,883/- as the assessee has already disclosed long term capital gain of Rs. 67,58,003/-. Therefore, the assessing officer has made addition of Rs. 2,01,30,880/- to the total income of the assessee on account of undisclosed long term capital gain u/s50C of the act. Thereafter, the assessing officer has levied penalty u/s 271(1)(c) of the act vide order dated 26-09-2013. Aggrieved against the order of the assessing officer, the assessee filed appeal before the Ld. CIT(A) who has sustaine....

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.... of section 143(1) at the relevant time, he has to assess the total income without requiring the presence of the assessee or production by him of any evidence that the return is correct and complete, as laid down in section 143(1). Where, however, the AO is not satisfied without the presence of the assessee or production of evidence that the return is correct and complete, he is required to issue notice enabling the assessee to produce evidence on which he may rely in support of the return. The 'total income' in such cases of regular assessment is, assessed after hearing the evidence adduced and considering all material gathered by the AO as provided in section 143(3). It, therefore, follows that in the assessment proceedings under section 143, the AO can find out whether the return of income is correct and complete. If he holds that the return of income is not correct or that it is not complete in respect: of the particulars of income which are required to be stated in the return, he will reach the correct figure of total income and determine the sum payable by the assessee or refundable on the basis or such assessment. If the income chargeable to tax has escaped assessment for an....

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....g at any stage up to and inclusive of the ultimate stage of working out of total income, would attract the penalty provision of section 271(1)(c) of the Act. Every figure in the return which is set opposite to the item of income is a particular of income, whether the figure is one which is stated independently of anything else that appears in the return or the documents accompanying it or whether it is something derived from other figures elsewhere stated in such return or documents. False result may be produced by the falsity of one or more of the constituent items in the return. The words "inaccurate particulars' would cover falsity in the final figure as also the constituent elements or items. They simply would mean inaccurate in some specific or definite respect whether in the constituent or subordinate items of income or the end result. 6.1.4 It is clear that the proceedings can be initiated under section 271(1) only if the AO is satisfied in the course of any proceedings under that any person has concealed the particulars of his income or has furnished inaccurate particulars of such income. The expression used in clause (c) is has concealed the particulars of his inc....

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....o his income shall deemed to represent the concealed income. 6.1.6 On the analysis of the provisions of section 271(1)(c) it is observed that the Explanation 1 to section 271(1) provides for the situation where no explanation for the failure is offered by the assessee or where the explanation that has been offered is found to be false or where the assessee is not able to substantiate the explanation offered by him. In all these cases, the amount added or disallowed in computing the total income of such person shall be deemed to represent the income in respect of which particulars have been concealed, As per the Proviso to this Explanation, the onus to establish that the explanation offered was bonafide and facts relating to the same and material to the computation of his income have been disclosed by him will be on the person charged for concealment. 6.1.7 As per the provisions of Explanation (1)(B),now the entire onus is on the assessee to not only offer an explanation but also to substantiate it and to prove that the presumption was bonafide. At the same time the presumption so raised by the Explanation (1) is rebuttable. 'The effect is that unless and until the....

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....the assessee offers an explanation which he is not able to substantiate. Consequentially, the provisions are intended to save such amount from imposition of penalty although the same had been added to the assessee's income in the assessment. If the assessee's explanation is found to be bonafide and all the facts relating to the same and material to the computation of his total income have been disclosed by him." 6.1.10 The views similar to the above decision of Delhi and Kerala High Courts were expressed by the Allahabad High Court in the case of Sushil Kurnar Sharad Kumar 232 1TR 588 (Alld). 6.1.11 Similarly, the Delhi High Court in the case of CIT Vs. Sohan Singh 254 ITR 170 has held that for the purpose of penalty matter has to be examined in the background of Explanation to section 271(1)(c). It has also been held that evidence recorded during the course of assessment proceedings, through not conclusive, are not totally irrelevant. They could be taken note of. According to the High Court what was required was that the assessee must offer an explanation which, if found to be untenable or unacceptable, then the penalty can be levied under section 271(1)(c) of th....