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2015 (7) TMI 739

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....eous and perverse in law in cancelling the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961, when the Respondent-assessee made a wrong claim of business profits on purchase and sale of land as adventure and income warranting the said penalty. 2. The facts on record are not in dispute. The case of the appellant- Department, in brief, is that the assessee had purchased agricultural lands with a clear intention to trade in buying and selling of agricultural lands, construction of residential and commercial complexes, leasing and trading in shares and securities and also leasing agricultural land. In the process of completing assessment under Section 143(3) of the Income Tax Act, the exemption claimed with respect to the capi....

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....of years had offered income as agricultural income on account of the assessee earning income on leasing of the agricultural lands. Tribunal found, as a matter of fact, that the land is outside Municipal limits i.e., beyond eight kilometres of Municipality. This finding is not challenged. The Tribunal also considered the judgment of this Court in Raghotham Reddy v. ITO 169 ITR 174, wherein this Court had held that the sale of agricultural lands would not attract income tax and exempt from tax. In other words, the claim made by the assessee cannot be said to be bona fide with the intention to evade the tax. Merely because the claim made by the assessee has not been accepted ipso facto, the said claim cannot be said to be a deliberate act of f....