2017 (8) TMI 929 - HC - Income Tax

Appeal dismissed, Assessee's claim upheld, penalty deleted, genuine explanation accepted.

The Commissioner of Income Tax Versus S.S.M. Ahmed Hussain

The Commissioner of Income Tax Versus S.S.M. Ahmed Hussain - TMI Issues Involved:1. Legitimacy of the penalty levied under Section 271(1)(c) of the Income Tax Act.2. Validity of the Assessee's claim for exemption under Section 54B of the Income Tax Act.3. Whether the High Court should entertain the appeal under Section 260A of the Income Tax Act.Detailed Analysis:1. Legitimacy of the penalty levied under Section 271(1)(c) of the Income Tax Act:The Assessee initially filed a return for the assessment year 2010-2011 admitting a total income of Rs. 7,31,554/-. The Assessee claimed an exemption of Rs. 1,90,00,000/- under Section 54B for reinvestment in agricultural land. However, a survey under Section 133A revealed that M/s. Alpha Commercials had not purchased agricultural land on behalf of the Assessee. Consequently, the Assessee filed a revised return excluding the capital gains and paid the taxes. Penalty proceedings were initiated under Section 271(1)(c) for incorrectly claiming the exemption. The Tribunal found that the Assessee had disclosed the sale proceeds and paid money to M/s. Alpha Commercials in good faith. The Tribunal held that the Assessing Officer failed to prove that the Assessee's claim was false or bogus and deleted the penalty.2. Validity of the Assessee's claim for exemption under Section 54B of the Income Tax Act:Section 54B provides for exemption from capital gains tax if the Assessee reinvests the proceeds from the sale of agricultural land into another agricultural land within two years. The Assessee claimed this exemption but later withdrew it after it was found that the reinvestment was not made as required. The Tribunal observed that the Assessee had a bona fide belief that M/s. Alpha Commercials would invest the money in agricultural land as per their agreement. The Tribunal concluded that the Assessee's explanation was bona fide and not examined properly by the Assessing Officer.3. Whether the High Court should entertain the appeal under Section 260A of the Income Tax Act:Section 260A allows an appeal to the High Court only if there is a substantial question of law. The High Court referred to the principles laid down in various Supreme Court judgments, emphasizing that a question of law must be substantial, debatable, and have a material bearing on the case. The Court found that the Tribunal's findings were factual and did not involve any substantial question of law. The Tribunal had concluded that there was no concealment of income and the Assessee's explanation was bona fide. Therefore, the appeal did not warrant interference under Section 260A.Conclusion:The High Court dismissed the appeal, holding that there was no substantial question of law involved. The Tribunal's factual findings that the Assessee's claim was bona fide and that there was no concealment of income were upheld. The penalty imposed under Section 271(1)(c) was deleted, and the Assessee's explanation was accepted as genuine.