S. 271(1) : Penalty-Concealment-Revaluing the asset, introducing it into the partnership, and withdrawing substantial funds, amounted to a device to evade tax rather than a genuine business transaction- The Explanation offered by the Appellant was found to be patently false -Levy of concealment penalty is affirmed. [S. 260A]
The appellant firm revalued the stock in trade and the amount was withdrawn. The AO doubted the genuineness of transaction. Quantum addition is affirmed by the Tribunal. The AO levied the penalty under Section 271(1)(c) for concealment of income. CIT(A) deleted the penalty. Tribunal affirmed the order of the AO. On appeal affirming the order of the Tribunal the Court held that the appellant’s transaction i.e. revaluing the asset, introducing it into the partnership, and withdrawing substantial funds, amounted to a device to evade tax rather than a genuine business transaction and also held that merely filing a capital account copy along with the tax return did not amount to full disclosure. Court also held that the explanation offered by the appellant was found to be patently false and the appellant failed to substantiate or demonstrate that such explanation was bona fide. (ITA No. 302 of 2002 dt. 31-1-2025. (AY. 1984-85)
Veena Estate Pvt. Ltd. v. CIT (Bom.)(HC) www.itatonline.org
(Coram : Hon’ble Shri Justice M.S. Sonak & Hon’ble Shri Justice Jitendra Jain]