Vitthalbhai Ashabhai Patel Vs ITO (ITAT Ahmedabad)
No Return u/s 139 & Return Filed Long After Sec.148 Deadline — Explanation 3 to Sec.271(1)(c) Automatically Deems Concealment; Penalty of ₹18.55 Lakh Upheld
In this appeal, Vitthalbhai Ashabhai Patel challenged the penalty of ₹18,55,865/- levied u/s 271(1)(c) for AY 2011-12. The Assessee had sold an immovable property for ₹98,50,000/- on 04.03.2011 but did not file the return u/s 139. Based on information received, the Department issued notice u/s 148 on 28.03.2018. Interestingly, the Assessee deposited ₹17,76,143/- as tax on 27.03.2018—one day before the 148 notice—but still did not file the return within 30 days as required. Instead, the return was filed only on 22.09.2018 along with self-assessment tax of ₹31,43,600/-, declaring LTCG of ₹62,12,850/-.
The matter was referred to the DVO u/s 50C; value was enhanced by ₹2,58,000/-, resulting in assessed LTCG of ₹64,70,850/-. The AO initiated penalty u/s 271(1)(c) on grounds that the Assessee neither filed a voluntary return nor complied with the statutory 148 notice timeline, and mere pre-payment of tax without disclosure of income cannot prevent concealment. Penalty was imposed at the minimum rate.
CIT(A) confirmed the penalty, holding that non-filing of return for seven years & filing only after DVO proceedings clearly established concealment.
Before the Tribunal, the Assessee argued that Explanation 4 to section 271(1)(c) should apply, restricting penalty computation to the difference between tax assessed & tax voluntarily paid. Reliance was placed on Kavita Sachdev (Indore ITAT).
Tribunal rejected this argument outright & held that Explanation 4 applies only to quantify penalty where concealment is already established—whereas the triggering provision here is Explanation 3. Tribunal held that:
— The Assessee failed to file return u/s 139;
— Also failed to file within the 30-day period under 148;
— Therefore, Explanation 3 deems concealment automatically, irrespective of tax payment;
— The Indore ITAT decision was distinguishable because, in Kavita Sachdev, tax had been paid within the assessment year & return was filed promptly after 148.
Tribunal emphasized that mere payment of tax, without filing a return, does not disclose the nature & source of income & therefore cannot defeat the deeming fiction of Explanation 3. Thus, the penalty u/s 271(1)(c) was correctly levied & confirmed. The appeal was dismissed.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
