Varsha Rohit Ravani v. ITO, Ward-5(2), Rajkot
[Citation -2019-LL-0919-108]

Citation 2019-LL-0919-108
Appellant Name Varsha Rohit Ravani
Respondent Name ITO, Ward-5(2), Rajkot
Court ITAT-Rajkot
Relevant Act Income-tax
Date of Order 19/09/2019
Assessment Year 2011-12
Judgment View Judgment
Keyword Tags concealment of income • return of income • capital gain • sale of property • disallowance of expenditure • penalty proceeding • furnished inaccurate particulars of income
Bot Summary: Brief facts of the case are that the assessee has filed her return of income on 4.2.2012 declaring total income at Rs.7,26,800/-. Appeal to the CIT(A) did not bring any relief to the assessee. A bare perusal of this section would reveal that for visiting any assessee with the penalty, the Assessing Officer or the Learned CIT(Appeals) during the course of any proceedings before them should be satisfied, that the assessee has; concealed his income or furnished inaccurate particulars of income. The section not only covered the situation in which the assessee has concealed the income or furnished inaccurate particulars, in certain situation, even without there being anything to indicate so, statutory deeming fiction for concealment of income comes into play. This deeming fiction, by way of Explanation I to section 271(1)(c) postulates two situations; first whether in respect of any facts material to the computation of the total income under the provisions of the Act, the assessee fails to offer an explanation or the explanation offered by the assessee is found to be false by the Assessing Officer or Learned ITA No.302/RJT/2016 4 CIT(Appeal); and, where in respect of any fact, material to the computation of total income under the provisions of the Act, the assessee is not able to substantiate the explanation and the assessee fails, to prove that such explanation is bona fide and that the assessee had disclosed all the facts relating to the same and material to the computation of the total income. Under first situation, the deeming fiction would come to play if the assessee failed to give any explanation with respect to any fact material to the computation of total income or by action of the Assessing Officer or the Learned CIT(Appeals) by giving a categorical finding to the effect that explanation given by the assessee is false. In the second situation, the deeming fiction would come to play by the failure of the assessee to substantiate his explanation in respect of any fact material to the computation of total income and in addition to this the assessee is not able to prove that such explanation was given bona fide and all the facts relating to the same and material to the computation of the total income have been disclosed by the assessee.


IN INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE SHRI RAJPAL YADAV, HON BLE JUDICIAL MEMBER AND SHRI WASEEM AHMED HON'BLE ACCOUNTANT MEMBER ITA No.302/RJT/2016 Asstt. Year: 2011-12 Smt. Varsha Rohit Ravani ITO, Ward-5(2) Sarda , 12-Nutan Nagar Vs. Rajkot. Kalawad Road Rajkot. (Applicant) (Responent) Assessee by : Shri M.J. Ranpura, AR Revenue by : Shri Anil Kumar Das, DR Date of Hearing : 19/09/2019 Date of Pronouncement: 19/09/2019 ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: Assessee is in appeal before Tribunal against order of ld.CIT(A)-3, Rajkot dated 28.6.2016 2. Solitary grievance of assessee is that ld.CIT(A) has erred in confirming penalty of Rs.1,44,488/- levied under section 271(1)(c) of Income Tax Act, 1961. 3. Brief facts of case are that assessee has filed her return of income on 4.2.2012 declaring total income at Rs.7,26,800/-. On scrutiny of accounts, it revealed to AO that assessee has sold property for Rs.55 lakhs and derived short term capital gain on that transaction. ITA No.302/RJT/2016 2 assessee alleged to have purchased this property for sum of Rs.12,28,919/- and further claimed deduction of Rs.30,28,000/- on development and improvement. AO partly disallowed expenditure claimed by assessee. He initiated penalty proceedings. 4. It emerges out from record that expenditure of Rs.3,81,000/-was disallowed out of claim made by assessee, and on this amount penalty has been imposed by AO. 5. Appeal to CIT(A) did not bring any relief to assessee. 6. We have heard both sides and gone through record. Section 271(1)(c) of Income Tax Act, 1961 has direct bearing on controversy. Therefore, it is pertinent to take note of section. "271. Failure to furnish returns, comply with notices, concealment of income, etc. (1) Assessing Officer or Commissioner (Appeals) or CIT in course of any proceedings under this Act, is satisfied that any person (a) and (b)** ** ** (c) has concealed particulars of his income or furnished inaccurate particulars of such income. He may direct that such person shall pay by way of penalty. (i)and (Income-tax Officer,)** ** ** (iii) in cases referred to in Clause (c) or Clause (d), in addition to tax, if any, payable by him, sum which shall not be less than, but which shall not exceed three times, amount of tax sought to be evaded by reason of concealment of particulars of his income or fringe benefit furnishing of inaccurate particulars of such income or fringe benefits: ITA No.302/RJT/2016 3 Explanation 1- Where in respect of any facts material to computation of total income of any person under this Act, (A) Such person fails to offer explanation or offers explanation which is found by Assessing Officer or Commissioner (Appeals) or CIT to be false, or (B) such person offers explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all facts relating to same and material to computation of his total income have been disclosed by him, then, amount added or disallowed in computing total income or such person as result thereof shall, for purposes of Clause (c) of this sub-section, be deemed to represent income in respect of which particulars have been concealed. 7. bare perusal of this section would reveal that for visiting any assessee with penalty, Assessing Officer or Learned CIT(Appeals) during course of any proceedings before them should be satisfied, that assessee has; (i) concealed his income or furnished inaccurate particulars of income. As far as quantification of penalty is concerned, penalty imposed under this section can range in between 100% to 300% of tax sought to be evaded by assessee, as result of such concealment of income or furnishing inaccurate particulars. other most important features of this section is deeming provisions regarding concealment of income. section not only covered situation in which assessee has concealed income or furnished inaccurate particulars, in certain situation, even without there being anything to indicate so, statutory deeming fiction for concealment of income comes into play. This deeming fiction, by way of Explanation I to section 271(1)(c) postulates two situations; (a) first whether in respect of any facts material to computation of total income under provisions of Act, assessee fails to offer explanation or explanation offered by assessee is found to be false by Assessing Officer or Learned ITA No.302/RJT/2016 4 CIT(Appeal); and, (b) where in respect of any fact, material to computation of total income under provisions of Act, assessee is not able to substantiate explanation and assessee fails, to prove that such explanation is bona fide and that assessee had disclosed all facts relating to same and material to computation of total income. Under first situation, deeming fiction would come to play if assessee failed to give any explanation with respect to any fact material to computation of total income or by action of Assessing Officer or Learned CIT(Appeals) by giving categorical finding to effect that explanation given by assessee is false. In second situation, deeming fiction would come to play by failure of assessee to substantiate his explanation in respect of any fact material to computation of total income and in addition to this assessee is not able to prove that such explanation was given bona fide and all facts relating to same and material to computation of total income have been disclosed by assessee. These two situations provided in Explanation 1 appended to section 271(1)(c) makes it clear that that when this deeming fiction comes into play in above two situations then related addition or disallowance in computing total income of assessee for purpose of section 271(1)(c) would be deemed to be representing income in respect of which inaccurate particulars have been furnished. 8. In light of above, if we examine facts of present case, then it would reveal that assessee has claimed expenditure towards development and improvement of Rs.30,28,000/-. Out of that, expenses to extent of Rs.3,81,000/- was disallowed. Probably, assessee might not able to produce supporting evidence to this expenditure. But it cannot be construed that explanation of assessee was false. She does not deserve to ITA No.302/RJT/2016 5 be visited with penalty on such estimated disallowance. Hence, we allow appeal of assessee and cancel impugned penalty. 9. In result, appeal of assessee is allowed. Order pronounced in Court on 19th September, 2019 at Rajkot. Sd/- Sd/- (WASEEM AHMED) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Varsha Rohit Ravani v. ITO, Ward-5(2), Rajkot
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