INCOME TAX ACT, 1961

Section 271(1)(c), Expln. 5A

Penalty under section 271(1)(c) - Concealment or furnishing of inaccurate particulars - Evidence found during search exhibiting receipt of on-money on sale of agricultural land - Assessee pleaded that agricultural land was not capital asset and, therefore, no capital gain was taxable

During search at assessee's premises evidence exhibiting receipt of cash over and above sale consideration of land as stated in the sale deed was found. Assessee in the statement recorded under section 132(4) admitted undisclosed income received as sale consideration in cash and not disclosed in regular return as well as accounted for in books of account. In response to notice under section 153A, assessee filed his return and included the amount declared statement under section 132(4). AO held that penalty was imposable upon assessee, considering Explanation 5A appended to section 271(1)(c). Assessee contended that agricultural land sold by him was not a capital asset and no capital gain tax was imposable upon assessee. It was a different matter that he has paid capital gain tax but that admission could not be accepted even for visiting assessee with penalty. Held: Even if assessee had filed return of income and declared certain income, but penalty proceeding was an independent proceeding. If on account of any legal or factual ground, assessee was able to absolve himself from levy of penalty, then all such rights were available in penalty proceedings. Stand taken by assessee that since no capital gain tax was leviable, therefore, no penalty was imposable was an independent plea and same ought to have been examined and adjudicated by AO in penalty proceedings. In case it was found that land sold by assessee was not a capital asset, then assessee would not be visited with penalty.

REFERRED :

FAVOUR : Matter remanded.

A.Y. :

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