VITTHALBHAI ASHABHAI PATEL,PETLAD V. THE ITO, WARD-1(3)(1), PETLAD

ITA 222/AHD/2025

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The case involves Vitthalbhai Ashabhai Patel, the appellant, who sold an immovable property and did not initially file a return of income for the assessment year 2011-12. The Income Tax Department issued a notice under section 148 of the Income Tax Act, 1961, after which the assessee filed a return and paid the due taxes. However, a penalty was levied for concealment of income, which the assessee contested. The Commissioner of Income Tax (Appeals) upheld the penalty, leading to the current appeal before the Income Tax Appellate Tribunal. The Tribunal's decision was based on the interpretation of Explanation 3 to Section 271(1)(c), which applies when the return is not filed within the prescribed time, deeming the assessee to have concealed income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 789212 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 29-01-2025
• Other Referred Cases: Smt. Kavita Sachdev vs. ITO [2024] 162 taxmann.com 642 (Indore-Trib.)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reasonable cause; Sale consideration of property below Jantri Value; Capital Gains
• Section: 148; 271(1)(c); 139; 50C; 115JB

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH Before: DR. BRR Kumar, Vice President And Shri T. R. Senthil Kumar, Judicial Member Vitthalbhai Ashabhai Patel Moti Khadki, Dantali, Petlad, Gujarat-388450 PAN: AMEPP2640R (Appellant) Vs The ITO Ward-1(3)(1), Petlad (Respondent) Assessee Represented: Ms. Arti N Shah, A.R. Revenue Represented: Shri Rameshwar P Meena, Sr. D.R. Date of hearing : 11-11-2025 Date of pronouncement : 24-11-2025 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against the appellate order dated 20.11.2024 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), confirming the levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2011-12. ITA No: 222/Ahd/2025 Assessment Year: 2011-12 Printed from counselvise.com I.T.A No. 222/Ahd/2025 A.Y. 2011-12 Page No Vitthalbhai Ashabhai Patel vs. ITO 2 2. Brief facts of the case is that the assessee is an individual has not filed Return of Income u/s 139 of the Act. On the information collected by the Department, the assessee had sold an immovable property for a consideration of Rs.98,50,000/- relevant to the Asst. Year 2011-12 whereas no return filed. Hence a notice u/s 148 of the Act was issued on 28-03-2018. The assessee paid Income Tax of Rs.17,76,143/- on 27-03-2018 that is one day prior to the issuance of 148 notice. The assessee also paid self assessment tax and interest u/s 234A, B & C of Rs.31,43,600/- and filed the Return of Income on 22-09-2018. The assessee claimed capital gain of Rs. 62,12,850/-. The matter was referred for section 50C valuation. The District Valuation Officer determined the sale price of the property at Rs.1,01,08,000/- thereby there is a difference of Rs.2,58,000/-. Therefore the assessing officer made addition of Rs.64,70,850/- as a capital gain and demanded tax thereon. The assessing officer also initiated penalty proceedings u/s 271(1)(c) of the Act for concealment of income. The assessee explained that it has paid Income Tax of Rs.17,76,143/- well before the issuance of 148 notice. Therefore no concealment of income by the assessee and requested to delete the penalty proceedings. However the assessing officer held that whatever tax paid will be first adjusted against interest payable by the assessee u/s 140A(1) of the Act. Therefore levied a minimum penalty of Rs.18,55,865/-. 3. Aggrieved against the penalty order, assessee filed an appeal before Ld. CIT(A) who has confirmed the penalty as no reasons to interfere with the penalty order passed by the assessing officer. Printed from counselvise.com I.T.A No. 222/Ahd/2025 A.Y. 2011-12 Page No Vitthalbhai Ashabhai Patel vs. ITO 3 4. Aggrieved against the appellate order, the assessee is in appeal before us raising the following Grounds of Appeal: 1. The Hon'ble CIT(A) erred in law and facts of the case by upholding the penalty levied under Section 271(1)(c) of the Act in case of the appellant for AY 2011-12. 2. The learned AO erred by levying Penalty u/s.271(1)(c) of the Act, as addition appropos income arises out of provisions of section 50C of the Act, the same being deeming friction of law, cannot provoke penalty. 3. The appellant reserves the right to add/alter or amend any of the ground of appeal. 5. Ld. Counsel Ms. Arti N. Shah appearing for the assessee submitted before us that Explanation 4 of Section 271(1)(c) will be applicable in the present case thereby the difference of Rs. 94,714/- between the assessed tax by the A.O. namely Rs.18,55,865/- and what the Income Tax paid by the assessee of Rs.17,61,151/- against which penalty u/s 271(1)(c) leviable. In support of the same, assessee relied upon Co-ordinate Bench decision of this Tribunal in the case of Smt. Kavita Sachdev vs. ITO reported in [2024] 162 taxmann.com 642 (Indore-Trib.) 6. Per contra, Ld. Sr. D.R. Shri Rameshwar P Meena appearing for the Revenue supported the order passed by the lower authorities and requested to confirm the same. 7. We have carefully considered the submissions of rival parties and perused the materials available on record. It is undisputed fact that the assessee has not filed the original Return of Income u/s 139 of the Act for the Asst. Year 2011-12. The sale of the immovable property was on 04-03-2011 whereas assessee paid the Printed from counselvise.com I.T.A No. 222/Ahd/2025 A.Y. 2011-12 Page No Vitthalbhai Ashabhai Patel vs. ITO 4 Income Tax of Rs.17,76,143/- only on 27-03-2018 i.e. after the period of seven years and the 148 notice was issued on 28-03-2018 to file the return within 30 days. However the assessee has not filed the Return of Income within 30 days but paid the self assessment tax and interest u/s. 234A, B and C on 20-09-2018 admitting capital gain of Rs.62,12,850/-. Since the assessee neither filed the Return of Income u/s 139 of the Act nor within the time limit of 30 days prescribed u/s 148 of the Act. The Explanation 4 to Section 271(1)(c) is not applicable to the assessee’s case. Whereas Explanation 3 will be applicable to the cases where the assessee has not filed the original return u/s 139 as well as the return filed after the expiry period prescribed u/s 148 notice. For better understanding, Explanation 3 to section 271(1)(c) is reproduced as follows: Explanation 3.—Where any person fails, without reasonable cause, to furnish within the period specified in sub-section (1) of section 153 a return of his income which he is required to furnish under section 139 in respect of any assessment year commencing on or after the 1st day of April, 1989, and until the expiry of the period aforesaid, no notice has been issued to him under clause (i) of sub-section (1) of section 142 or section 148 and the Assessing Officer or the 99[Joint Commissioner (Appeals) or the] Commissioner (Appeals) is satisfied that in respect of such assessment year such person has taxable income, then, such person shall, for the purposes of clause (c) of this sub-section, be deemed to have concealed the particulars of his income in respect of such assessment year, notwithstanding that such person furnishes a return of his income at any time after the expiry of the period aforesaid in pursuance of a notice under section 148. 8. As per Explanation 3 that the assessee herein failed to file the return u/s 139 or within the period specified u/s 153(1) of the Act. Printed from counselvise.com I.T.A No. 222/Ahd/2025 A.Y. 2011-12 Page No Vitthalbhai Ashabhai Patel vs. ITO 5 Therefore for the purpose of section 271(1)(c) the assessee be deemed to have concealed the particulars of his income (capital gain) in respect of Assessment Year 2011-12, notwithstanding the assessee furnished the Return of Income on 22-09-2018 after the expiry of 30 days from 28-03-2018 given in the notice issued u/s 148 of the Act. Thus it makes clear mere payment of tax is not sufficient enough for the department to identify the tax is relating to which heads of income (namely salary or house property or Business or Capital gains or other sources). Unless a Return of Income filed by the assessee explaining the correct head of income. In this case admittedly income tax was paid on 27-03-2018 which is seven years after the assessment period, but one day before issuance of 148 notice. This late filing of Return of Income pursuant to 148 notice will clearly falls under Explanation 3 to Section 271(1)(c) of the Act. Therefore the penalty of Rs.18,55,865/ levied u/s. 271(1)(c) by the assessing officer is correct in law. 8.1. The assessee’s claim that Explanation 4 to Section 271(1)(c) is applicable to the assessee’s case. For better understanding, Explanation 4 to Section 271(1)(c) is reproduced as follows: Explanation 4.—For the purposes of clause (iii) of this sub-section,— (a) the amount of tax sought to be evaded shall be determined in accordance with the following formula— (A - B)+ (C - D) where, A = amount of tax on the total income assessed as per the provisions other than the provisions contained in section 115JB or section 115JC (herein called general provisions); B = amount of tax that would have been chargeable had the total income assessed as per the general provisions been reduced by the amount of income in respect of which particulars have been concealed or Printed from counselvise.com I.T.A No. 222/Ahd/2025 A.Y. 2011-12 Page No Vitthalbhai Ashabhai Patel vs. ITO 6 inaccurate particulars have been furnished; C = amount of tax on the total income assessed as per the provisions contained in section 115JB or section 115JC; D = amount of tax that would have been chargeable had the total income assessed as per the provisions contained in section 115JB or section 115JC been reduced by the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished: Provided that where the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished on any issue is considered both under the provisions contained in section 115JB or section 115JC and under general provisions, such amount shall not be reduced from total income assessed while determining the amount under item D : Provided further that in a case where the provisions contained in section 115JB or section 115JC are not applicable, the item (C - D) in the formula shall be ignored; 8.2. This Explanation is for the purpose of Clause (iii) of Sub- section 271(1)(c). Clause (iii) deals with the imposition of penalty from 100% to 300% and for that purpose, the method of calculation given in Explanation 4 to Section 271(1)(c) of the Act. Thus in our considered view, the Ld. A.R’s Claim that Explanation 4 to Section 271(1)(c) is not be applicable to the present case. 9. Further, the case law relied by the assessee namely Smt. Kavita Sachdev (cited supra) is a case where tax was paid on 29-07-2011 by the assessee during the Assessment Year 2011-12 itself and pursuant to the 148 notice dated 31-03-2018, that assessee filed the Return of Income and paid the self assessment tax and interest. Thus the ratio arrived in that case is clearly distinguishable to the facts of the present assessee case. Thus the ground raised by the assessee is devoid of merits and the same are liable to be rejected. Printed from counselvise.com I.T.A No. 222/Ahd/2025 A.Y. 2011-12 Page No Vitthalbhai Ashabhai Patel vs. ITO 7 10. In the result, the appeal filed by the assessee is hereby dismissed. Order pronounced in the open court on 24-11-2025 Sd/- Sd/- (DR. BRR KUMAR) (T.R. SENTHIL KUMAR) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad : Dated 24/11/2025 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद Printed from counselvise.com "