TaxTMI 
TaxTMI 
2017 (8) TMI 929
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....m. 3. Section 54B of the Act provides as follows: Section 54B. Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases. (1) Subject to the provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the Assessee being an individual or his parent, or a Hindu undivided family for agricultural purposes (hereinafter referred to as the original asset), and the Assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say, (i) if the amount of the capital gain is greater than the cost of the land so purchased (hereinafter referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previo....
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....cials, after which it was found that M/s.Alpha Commercials had not purchased agricultural land on behalf of the Assessee. 6. Thereafter, in response to a notice under Section 148 of the Act, the Assessee filed a revised return of income for the assessment year 2010-2011 admitting income of Rs. 7,31,554/- (excluding capital gains of Rs. 1,90,27,203/-), after withdrawing the deduction claimed under Section 54B of the Act of Rs. 1,90,00,000/- and paid the taxes on capital gains. 7. Penalty proceedings were initiated under Section 271(1)(c) of the Act by issuance of notice under Section 274 read with Section 271 of the Act on 8.3.2014. The grounds for initiation of penalty proceedings were that the Assessee had incorrectly claimed exemption under Section 54B of the Act towards capital gains arising out of sale of agricultural lands at Neelangarai, Chennai. 8. In the course of combined survey operations conducted in the premises of Sri Ameerdeen, the said Ameerdeen had allegedly stated that no agricultural activity had been carried out at the Neelangarai land, which was only urban land. The Assessee's claim of exemption was, therefore, on the basis of materials unearthed an....
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....ered the explanation offered by the Assessee as bona fide and simply rejected the explanation stating that the Assessee had made a wrong claim in the original return of income and had failed to disclose all material facts truly and wholly. 14. The learned Tribunal observed that it was not the case of the Assessing Officer that the Assessee's claim was either false or bogus. Neither the Assessing Officer nor the Commissioner of Income Tax (Appeals) had examined the claim of the Assessee of having given money to M/s.Alpha Commercials for the purpose of investment in residential property. The learned Tribunal held that the Assessing Officer could not presume that the explanation given by the Assessee was false or bogus without making investigation. 15. The short question before us is whether this appeal filed by the department against the order of the Tribunal should be entertained? 16. Section 260A of the Act provides as follows: Section 260A. Appeal to High Court. (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal before the date of establishment of the National Tax Tribunal, if the High Court is satisfied that th....
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....uestion of law. 18. In Sir Chunilal V. Mehta & Sons Ltd. vs Century Spg. & Mfg. Co. Ltd., reported in AIR 1962 SC 1314, the Supreme Court agreed with and approved a Full Bench Judgment of this Court in Rimmalapudi Subba Rao vs Noony Veeraju And Ors reported in AIR 1951 Mad 969 and laid down the principles for deciding when a question of law becomes a substantial question of law. 19. In Hero Vinoth Vs. Seshammal reported in (2006) 5 SCC 545, the Supreme Court followed Sir Chunilal V. Mehta & Sons (supra) and other judgments and summarized the tests to find out whether a given set of questions of law were mere questions of law or substantial questions of law. 20. The relevant paragraphs of the judgment of the Supreme Court in Hero Vinoth (supra) are set out herein below : "21. The phrase substantial question of law , as occurring in the amended Section 100 CPC is not defined in the Code. The word substantial, as qualifying question of law , means of having substance, essential, real, of sound worth, important or considerable. It is to be understood as something in contradistinction with technical, of no substance or consequence, or academic merely. However, it is clear th....
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.... alternative views. If the question is settled by the highest court or the general principles to be applied in determining the question are well settled and there is a mere question of applying those principles or that the plea raised is palpably absurd the question would not be a substantial question of law. 22. In Dy. Commr. v. Rama Krishna Narain [1954 SCR 506 : AIR 1953 SC 521] also it was held that a question of law of importance to the parties was a substantial question of law entitling the appellant to a certificate under (the then) Section 100 CPC. 23. To be substantial a question of law must be debatable, not previously settled by law of the land or a binding precedent, and must have a material bearing on the decision of the case, if answered either way, insofar as the rights of the parties before it are concerned. To be a question of law involving in the case there must be first a foundation for it laid in the pleadings and the question should emerge from the sustainable findings of fact arrived at by court of facts and it must be necessary to decide that question of law for a just and proper decision of the case. An entirely new point raised for the first time befo....
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....he courts have wrongly cast the burden of proof. When we refer to decision based on no evidence , it not only refers to cases where there is a total dearth of evidence, but also refers to any case, where the evidence, taken as a whole, is not reasonably capable of supporting the finding. 21. In M.Janardhana Rao Vs. Joint Commissioner of Income Tax [2005 273 ITR 50 (SC)], the Hon'ble Supreme Court held that the principles contemplated under Section 100 of the Code of Civil Procedure would apply to Section 260-A of the IT Act too. 22. Right of appeal is not automatic. Right of appeal is conferred by statute. When statute confers a limited right of appeal only in a case which involves 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. 23. In the instant case, the learned Tribunal has arrived at the factual finding that it was not the case of the Assessing Officer that the Assessee's claim was false or bogus. Neither the Assessing Officer nor the Commissioner of Income Tax (Appeals) had examined the claim of the Assessee that the Assessee had given money to M/s.Alpha Commercials fo....
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....buy peace and it did not follow therefrom that the amount that was agreed to be added was concealed income. That it did not follow that the amount agreed to be added was concealed income is undoubtedly what was laid down by this Court in the case of Sir Shadilal Sugar and General Mills Ltd. and that, therefore, the Revenue was required to prove the mens rea of a quasi-criminal offence. But it was because of the view taken in this and other judgments that the Explanation to Section 271 was added. By reason of the addition of that Explanation, the view taken in this case can no longer be said to be applicable. 26. The case of K.P.Madhusudhanan (supra), is clearly distinguishable, as it was a case of concealment, where income of Rs. 93,000/- had not been disclosed. Only after explanation was called for, the Assessee in that case stated that it had obtained loans, which could not be established and ultimately, the concealed income was treated as additional income. In the background of the aforesaid facts, penalty was imposed. The Supreme Court rejected the contention that the onus lay on the Assessing Officer to establish mens rea. In effect and substance, the Supreme Court held tha....
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....nnelize the energy and resources towards productive work and to make amicable settlement with the Income Tax Department was not accepted. The Supreme Court held that voluntary disclosure did not release the Assessee from the mischief of penal proceedings. Voluntary disclosure of concealed income did not absolve the Assessee from penalty. Then the Supreme Court also held that the Assessing Officer was not required to record his satisfaction of concealment of particulars of income in any particular way or to reduce it into writing. 32. This was also a clear case of concealment of income. The reply of the Assessee of giving up his claim just to buy peace and avoid litigation was found unacceptable. The judgment is distinguishable. 33. In N.Ranjit (supra), a Division Bench of this Court did not find justifiable grounds to set aside the order of the Tribunal, upholding the levy of penalty under Section 271(1)(c) of the Act having regard to the facts of that case. The Division Bench, however, held that it was not that every case of addition warranted levy of penalty. To quote the Division Bench The application of penal provisions are not automatic and the levy itself depends upon t....