INCOME TAX ACT, 1961

--Penalty under section 271(1)(c)--Concealment of particulars of incomeBona fide belief regarding taxability of capital gain--AO levied penalty under section 271(1)(c) for concealment of income in respect of addition made in assessment on account of capital gain arising from transfer of land as per agreement entered with developer, where possession of property was transferred in assessment year 2002-03. Assessee contended that it had not declared capital gain in year 2002-03 under bona fide belief on basis of some court decisions. It was under impression that capital gain was to be taxed in year of completion of construction, i.e., 2006-07 and had showed such long-term capital gain in return filed for 2006-07, therefore, it had not concealed particulars of income and penalty should not be levied. AO held that case of assessee was covered under section 2(47)(v) as per decision in case of Chaturbhuj Dwarkadas Kapadia v. CIT (2003) 260 ITR 491 (Bom) : 2003 TaxPub(DT) 1029 (Bom-HC) dated 13-2-2003 and accordingly capital gain should have been taxed in assessment year 2002-03. As assessee had not disclosed income in return and did not revise the return even after decision in Chaturbhuj Dwarkadas Kapadia (supra) case and revised the return only after proceedings were initiated under section 153C, therefore, addition made was deemed concealment of particulars of income and penalty levied was correct. Held: The plea of assessee that it was of bona fide belief on the basis of Tribunal decision that no capital gain was chargeable cannot be accepted. The assessee had not disclosed truly and fully all the material facts relating to the transfer in the return of income for assessment year 2002-03. In the balance sheet for assessment year 2002-03 and also in the audit note, the sum received by assessee had been shown as advance which is quite misleading as the sum was not advance but part of the sale consideration. Assessee thus in the return of income had hidden the facts that it had already received part of the sale consideration. The fact that possession of the land had been handed over within the year had also not been disclosed. Assessee thus had not disclosed truly and fully all material facts relating to the computation of income as required in the Explanation 1 to section 271(1)(c). Assessee in the return of income had also not stated that it was making the claim on the basis of some Tribunal decisions. On the facts of the present case non-disclosure by assessee of the capital gain in assessment year 2002-03 was not bona fide. Thus the addition made for not-disclosing income in return amounts to deemed concealment of particulars of income as per Explanation 1 to section 271(1)(c) and therefore penalty levied under section 271(1)(c) was justified. [Para 9.5]