INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Concealment of income - Difference in computation of cost of acquisition - Validity

A search under section 132 was conducted in case of a group concern. Assessee was also covered under search operation and notice under section 153A was issued to assessee, and in response to this notice, he filed return of income declaring total income. Thereafter, AO passed assessment order under section 143(3) read with section 153A. There was difference of opinion between assessee vis-a-vis AO qua cost of acquisition taken for this property. Assessee took cost of acquisition at a certain amount which was scaled down by AO. Accordingly, he made an addition of difference amount. Penalty proceedings under section 271(1)(c) read with section 274 were initiated against assessee. Held: Nowhere had AO made reference to any seized material. Assumption of AO that assessee had concealed the income was misplaced. Assumption for considering it as concealed income could only be made if incriminating material qua that was found during the course of search. If in response to a notice under section 153A the assessee furnishes a return disclosing higher income, it could be considered as concealed income only if some incriminating material representing that higher income was found during the course of search. Therefore, the penalty was to be deleted.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2008-09 & 2010-11

INCOME TAX ACT, 1961

Section 153A

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