PENALTY U/S 271(1)(C)

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MAKARAND DAMLE (Querist)
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22 June 2009 THE ASSESSEE WHILE FILING INCOME TAX RETURN WRONGLY TOOK BENEFIT OF EXEMPTION U/S 54 i.e. INVESTMENT IN NEW PROPERTY WHEN THE ORIGINAL ASSET WAS NOT HELD FOR MORE THAN THREE YEARS. DURING THE ASSESSMENT PROCEEDINGS U/S 143(2) THE INCOME TAX OFFICER POINTED THIS AND TOOK THE CAPITAL GAIN AS SHORT TERM. ACCORDINGLY, THE DEMAND WAS PAID BY THE ASSESSEE.

NOW THE INCOME TAX OFFICER HAS INITITAED CONCEALMENT PROCEEDINGS U/S 271 (1)(c) OF THE ACT.

I WOULD LIKE TO KNOW WHETHER ABOVE TRANSACTION WILL AMOUNT TO CONCEALMENT OR MERE CLASSIFICATION UNDER WRONG HEAD OF INCOME. WHAT ARE THE CHANCES OF SUCCEDDING IF ASSESSEE GOES IN APPEAL ?

Sanjeev Jain

Sanjeev Jain (Expert)
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22 June 2009 See if you go by the spirit of Law then it would amount to Concealment of fact because change in classification would attract lower rate i.e. 20% in case of LTCG and normal rate as in case of STCG and the assesee taken the benefit of Exemption which he was not entitled to. But if you proved to the officer that the above fact was done in good faith and had assessee had no malafide intention to defeat the provision of law, then Penalty u/s 271(1)(c) can not be imposed but do remember one thing that the onus of proof is lies on the shoulder of assessee.