2018 (8) TMI 1555 - HC - Income Tax

Tribunal Decision Upheld: No Concealment of Income, Penalty Not Justified

The High Court upheld the Tribunal's decision, dismissing the Revenue's appeal. It affirmed that the respondent assessee had not concealed income or ... Penalty u/s 271(1)(c) - statutory claim under Section 54/54F - Held that:- The Appellate Tribunal observed that the respondent assessee had computed the capital gain and disclosed the capital gain, but claimed exemption under Section 54/54F for investment in another land and property, which, according to the assessee, was a residential house. The Revenue claimed that the reinvestment was in agricultural land and not residential house. It was not the case of the Assessing Officer that the respondent assessee had concealed any part of the sale proceedings and thereby concealed the capital gain that had accrued to him. Making of a statutory claim under Section 54/54F of the 1961 Act could not be said to be concealment of particulars of income. An appeal lies under Section 260A of the 1961 Act, only when there is a substantial question of law. We find that there is no question of law involved in this appeal much less any substantial question of law. The learned Tribunal, which is the highest fact finding body, has found on facts that the respondent assessee had neither concealed his income nor furnished inaccurate particulars of income. Such factual findings cannot be interfered with in an appeal under Section 260A of the 1961 Act. Right of appeal is not automatic. Right of appeal is conferred by statute. When statute confers a limited right of appeal restricted only to cases which involve substantial questions of law, it is not open to this Court to sit in appeal over the factual findings arrived at by the Appellate Tribunal. Issues Involved:1. Validity of exemption claim under Section 54 of the Income Tax Act, 1961.2. Imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961.3. Determination of substantial question of law under Section 260A of the Income Tax Act, 1961.Detailed Analysis:1. Validity of Exemption Claim under Section 54 of the Income Tax Act, 1961:The respondent assessee filed a return of income for the assessment year 2011-2012, declaring a total income of Rs. 7,745/- and claiming an exemption of Rs. 3,27,06,437/- under Section 54 of the Income Tax Act, 1961. The Assessing Officer scrutinized the return, noting that the property sold (Injambakkam property) was received as a gift and had been used for commercial purposes, evidenced by an electricity bill showing a commercial connection from 2009 to 2012. Consequently, the Assessing Officer disallowed the exemption claim, reclassifying the capital gain at Rs. 3,49,33,220/-. The assessee accepted the order and paid the tax but contested the penalty proceedings initiated under Section 271(1)(c).2. Imposition of Penalty under Section 271(1)(c) of the Income Tax Act, 1961:The Assessing Officer imposed a penalty of Rs. 71,64,880/- under Section 271(1)(c) for alleged concealment of income and furnishing inaccurate particulars. The respondent assessee appealed the penalty imposition. The Appellate Tribunal found that the assessee had disclosed all details of the transactions and the sale of the Injambakkam property for Rs. 4,00,00,000/-. The Tribunal held that claiming a deduction under Section 54/54F could not be construed as concealment of income. It emphasized that the assessee had not concealed any part of the sale proceedings or the capital gain accrued. The Tribunal referenced the Supreme Court's judgment in CIT v. Reliance Petroproducts Pvt. Ltd., which stated that making an incorrect claim in law does not amount to furnishing inaccurate particulars.3. Determination of Substantial Question of Law under Section 260A of the Income Tax Act, 1961:The Revenue appealed to the High Court under Section 260A, asserting that the case involved a substantial question of law. However, the High Court found no substantial question of law, emphasizing that the Tribunal's factual findings could not be interfered with under Section 260A. The High Court cited the Supreme Court's judgments in Sir Chunilal V. Mehta & Sons Ltd. vs Century Spg. & Mfg. Co. Ltd. and Hero Vinoth Vs. Seshammal, which outline that a substantial question of law must be debatable, not previously settled, and must have a material bearing on the decision of the case. The High Court concluded that the Tribunal's findings were factual and did not warrant interference, leading to the dismissal of the appeal.Conclusion:The High Court upheld the Tribunal's decision, dismissing the Revenue's appeal. It affirmed that the respondent assessee had not concealed income or furnished inaccurate particulars, and the penalty under Section 271(1)(c) was not justified. The appeal did not involve any substantial question of law, and thus, the High Court did not entertain it.